Conceptualized by Inventicon Business Intelligence and sponsored by Uniqo Label in association with Stratint Technologies and Prooftag, the Anti-Counterfeiting and Brand Protection Summit 2018 was held at Holiday Inn hotel in Mumbai this January. During the Summit, a discussion was held on measures to be taken to combat challenges that brands face from counterfeiters across industries.
Counterfeiting: A global challenge
The Summit kick-started with an opening address by the chairperson of the conference, Pramod Krishna, director general, Confederation of Indian Alcoholic Beverage Companies (CIABC). Krishna, in his address, talked about the current counterfeiting scenario and how counterfeits are a serious threat to businesses. He said, “Counterfeiting has infiltrated almost every industry, with China being the major contributor. Globally, Asia and East Asia
Confederation of Indian Alcoholic
Beverage Companies (CIABC)
are the regions where counterfeiting is high and is posing a giant treat to well-established brands around the world. The International Trademark Association and International Chamber of Commerce jointly observe that counterfeited goods all over the globe account to $2 trillion. This is expected to rise to $2.5 trillion in 2022. Other disturbing figures from the Frontline Economics state that 4.2 trillion jobs were lost in the last two decades due to counterfeiting activities, across the globe.”
Krishna further observed that China and India are leading in counterfeited medicines. Talking on the positive actions taken, he stated, “The government of Cambodia has closed 60 illegal pharma companies handling counterfeited products. Actions through legal and penal ways are also being carried out in the zones where the counterfeiting ratios are huge, like in India.”
He then turned his focus on alcoholic beverages and called it the most affected category among counterfeited products, followed by pharmaceuticals and footwear.
Counterfeiting in India
Shakil Ahmed, head – Brand Protection, Diageo India, spoke about the effects of counterfeiting on alcoholic beverages in India and factors leading to the menace. He observed, “Counterfeiting is a means to develop and build easy money through the illegal way. From the last three decades, counterfeiting has increased to 10000%, which is a very alarming rate and a serious threat to brands. Alcoholic beverages in India are the hardest hit. Around 16% of the products in this category are counterfeited. One of the factors leading to such a huge figure is that 30% of the population in India between the age group of 15 and 29 years are either unemployed or not educated. This creates a base for all illegal activities to thrive. We need to create more jobs and employ this unemployed population. Around 5.4 million people lost their jobs in India in the last decade due to counterfeiting activities.”
Challenges
Talking about the challenges with Packaging South Asia, Ahmed said, “The alcoholic beverages segment is one of the highly regulated markets in India. Manufacturers of these products cannot change their labels frequently and if one has the courage to do so, the manufacturer has to undergo a very complex procedure with the regulatory authorities. This makes it easier for counterfeiters to imitate the products. There is a need to collaborate and fight against this new cancer of counterfeiting through three important measures: identification of such activities, innovative authentication systems on products like AI or smart apps which can scan and tell whether the product is genuine or not, and taking actions against such activities with collaborations and collective effort.”
Overcoming counterfeits
Technology and track & trace: Innovative solutions for product packaging backed by multi-pronged strategy for labelling and ensuring security from the counterfeiters is a trend today. Clement Kaiser, chief executive officer, Prooftag, said, “We have been informed by our clients that counterfeiters have copied their security features like holograms and others. Through this feedback from our clients we observed that all the copying of security solutions happens when the solutions are developed by human effort or intervention. We have brought solutions like Bubble Tag and Fiber Tag, which are developed on the basis of unique constellations of bubbles of fiber. These are generated completely at the moment they are checked. An image is then sent to the receiver, which clearly cuts the duplication process.”
Dinesh Jain, managing director, Uniqolabel, in his presentation, highlighted how a label can help overcome counterfeiting with a case study. Kitply, a plywood brand from South India, faced a severe counterfeiting threat. Uniqolabel, with its AI features made it more interactive and helped to regain their lost customers and developed trust on their product. Sharing details, Jain said, “Kitply, a plywood sheet, saw duplication that led to loss of its market hold and trust. It was a well-known brand then. The company thus developed a feature that scans the brand name on the product and tells whether the product is genuine or fake. This interactive feature was communicated well to the carpenters across India with workshops to spread word about buying genuine Kitply products, helping the company to regain 40% of its market share within six months.”
Pankaj Bhasin, chief executive officer – Holography Division, Uflex Limited spoke about how technology will bring in change for a better future. He said, “Of all the solutions available globally for companies who would want to secure their products, the best solution is that consumers are able to identify genuine products quickly, without the help of any gadgets. The business model in companies needs a certain kind of remodelling or rearrangement to keep budgets aside for brand protection. We have not come across a single complaint from our clients on counterfeits.”
He further briefed on the solutions delivered by Uflex. The company sells around one crore holograms a month. For better feel and aesthetics, Uflex offers Fresnel lens that shows a 3D ball or bubble-like structure on the surface of the packaging, thus making it easier to identify and offering stringent security. At the end of his presentation, Bhasin hinted towards Uflex developing an edible holography solution.
Strong laws and legal aids: The seminar looked at various aspects on the regulatory front, which need strengthening. Sunil Kumar, Indian Revenue Service (Customs and CGST), educated on the import of counterfeited products and how government mechanisms deal with it. He said, “At the point of entry or during imports, products are sampled regularly based on risk-based-sampling approach. This enables the customs officials to examine the consignments in case of any suspicious activity identified. If suspicions are raised, the agent appointed by the company for import is informed for physical examination of the goods. The agent is given a 10-day timeframe within which to submit a report on the suspicious consignment. Once the agent confirms on the counterfeiting of goods, the company’s authorized personnel is called for undertaking the destruction of the counterfeited consignment. If an agent fails to submit his report within the 10-day timeframe, the goods are cleared. Here the destruction cost is borne by the company fully, according to the law.”
Kumar believes that action should be taken against the respective country department which passed the counterfeited consignment.
Shreedhar Parundekar, senior manager, Brand Protection & Product Safety, Pidilite Industries Limited, shared, “Under Section 28 of the Indian Penal Code (IPC), counterfeiting has been defined very well but it does not actually deliver anything on it.” Sharing recent activities in this regard, he said that the new Consumer Protection Bill 2018 was presented on 24 December 2017, and is undergoing changes. It suggests imposing heavy penalties and fining over counterfeited products.
Mandar Chandrachud, general manager, Legal & Head of IP, Godrej Industries and Associated Companies, spoke about having a standard operating procedure (SOP) in place to handle these issues legally as well as internally. “We have set up SOPs and the legal team works with the sales team on software. Once a complaint is raised, our system instantly issues alerts. The sales team validates whether the complaint is genuine and informs the legal team. If the complaint is validated, we conduct raids. We conducted around 50 raids in 2011 and now we only conduct 10 a month.”
Surprise inspection and checks: Today, companies which are conscious about their brand image do dedicate a team or personnel to take care of their brand. A Brand Protection officer is a person who looks after any such issues like infringements, duplication or fake products circulated in the market. Companies in India should treat its spends on brand protection and legal actions for the same as an investment rather than just a cost. These were some of the points highlighted by Parundekar of Pidilite Industries. He listed some measures that can be included to overcome the challenge of counterfeiting. Setting up a brand protection department which works hand-in-hand with other departments right from the design level, the industry should collectively vow for a change in regulations for counterfeiting like refilling in the used containers is not identified as counterfeiting, surprise audits and inspections, strong in-house communication, regular training for enforcement agencies like customs and police, and use of latest technology for packaging of products.
Brand protection team/department: Vikas Ranjan, brand protection manager, Adidas Group, India, believes that there is a necessity to set up a team or a department dedicated to brand protection and IPR. He said, “We at Adidas Group have experienced a lot of complaints regarding counterfeits. Footwear being one of the most counterfeited category, our company had launched exclusive business outlets (EBOs) that sell products under the Adidas Group. There is a need to keep a track and audits of your supply chain, which will surely help bring down the counterfeiting issues.” He also informed that the holographic tamper-evident seals are already used by all Adidas products but people are not buying those which are original. This is due to counterfeits being sold at a very low price.
Gaurav Mediratta, general manager – Legal, Hindustan Unilever Limited, opined, “We have our team of eight people dedicated for brand protection. We have tied up with research agencies like Nielsen, who undertakes research on look-alikes that we have in the market. Many of our FMCG brands have look-alike packaging.”
Suggesting mechanisms to overcome these challenges, he said, “To combat counterfeits, a company should have track and trace, connections for regulating with customs, reduced turnaround time for actions on counterfeiting, use of IT services, and legislation.” The discussions also hinted at having a fifth P in marketing that is of Protection with regard to brand.
Panel discussions
During the panel discussions, Diwaker Bharadwaj, president – marketing communication and packaging development, Polycab Wires gave a presentation on how Polycab conducted anti-counterfeiting with their brand. He explained, “We ensured that our all security features are up to the mark, so we zeroed down on seven security features including a mix of holograms, barcode, micro text and others to make it difficult to duplicate. Further, we also run loyalty programs for the electricians who are our primary target. We rewarded all electricians who reported fake products, which helped us to catch the retailers. We have got a very good response from the electricians and our sales increased manifold.” He also said that parallelly an advertisement campaign was run to educate people on buying genuine products.
Some of the key points discussed during the course of the seminar included:
– 15-20% medicines are fake in India according to FICCI Report, 2015
– 45-50% drugs are substandard in countries like India, China and Indonesia
– Trade incidents reported in a year are worth Rs. 75 billion dollars
– Despite of all this, the Indian Drugs and Cosmetics Act, 1940 does not even mention the word counterfeit in its 168 provisions.
The conference concluded on the note that every company should have a dedicated team or department for brand protection. As the industry is in a transition state with regard to anti-counterfeiting, there should be stringent laws to safeguard the interests of the companies.
