By Tim Probert – Product Assurance Director, Tracerco and Damian Gardiner – Business Development Manager, Tracerco
COUNTERFEITING, duty evasion and other forms of illicit trade are a substantial and growing problem across all market sectors, leading to increased calls for businesses to make use of highly secure product and brand authentication programs.
With estimates ranging from $200bn (OECD) to $650bn (Progressive Policy Institute 2006) per annum, the global cost is exceedingly high for society, governments, consumers and corporations hindering investment in social and development projects.
Counterfeiting of items such as banknotes and consumer goods is well known. The problem, however, goes far wider, with counterfeiting and duty evasion affecting a great diversity of markets from perfumery and cosmetics, through to fuels, aircraft parts, agricultural chemicals, pharmaceuticals and other speciality industrial materials. Wherever valuable products and brands move through unprotected supply chains, unlawful trade is likely to occur.
The impact goes far beyond the erosion of sales revenue and hence corporate profitability. Consumers are frequently harmed by counterfeit products, such as pharmaceuticals, and livelihoods are destroyed when important products, such as crop protection products, do not function. Brand owners not only lose sales but can bear significant false liability claims that are hard to fight and they can suffer considerable and sustained damage to brand equity unless it can be categorically proven that a product is a fake. Governments, and ultimately legitimate tax payers, lose billions of dollars through duty evasion in fuels, tobacco and alcohol.
Counterfeiters can often afford to make significant investments in plant and equipment to produce fake products. If valued brands are unprotected they are susceptible to counterfeiting or interference. In tough economic times, licensed users of patented materials can be tempted to substitute cheap illegal generics; a phenomenon that, without appropriate authentication, can be difficult to detect or prove.
Technology alone will not cure all the problems of unlawful trade but highly secure brand and product authentication programs provide an invaluable tool as part of an overall strategy to combat criminality. Solutions providing rapid incontrovertible evidence that a product is genuine or not can play a vital mitigating role. They are used to detect and deter counterfeiting, counter duty evasion, manage liability issues, detect product adulteration or dilution and manage licenced use.
Forensic solutions can be used where necessary to prosecute perpetrators, whilst wide-scale publicity within the supply chain for an authentication program will provide strong deterrence without the need to revert to court action.
Tracerco’s corporate authentication solutions (from straightforward marker system supply through to full turnkey project management) create significant value. The return on investment provided by adopting these technologies is high, with the program cost rapidly recovered against sustained brand equity, increased sales, reduced liabilities and all leading to improved shareholder value.