How to block brand counterfeiting?

In the second of a four-part series on anti-counterfeiting measures, Nityanand Shenoy looks at the necessity to fight brand attack and the solutions on offer to keep counterfeiters at bay

21 Mar 2013 | By PrintWeek India

In the last article, we discussed how counterfeiting has become a global business. In India it continues to be the bane to the economy, with the exchequer loss by way of taxes to be roughly around Rs 2,000-crore every year.

We also discussed what is brand, its value to the company, and why in today’s business, most well-known brands and brands with strong consumers are under attack. Hence the importance to understand the various forms of brand attack, which come in the form of ‘tampering’, ‘replication’,  ‘diversion’ and ‘recirculation’.
Why fight brand attack?
There’s an answer to this question: low-priced alternatives for expensive products sell well, but at what cost? It’s at the loss of the original products. With alternatives looking better than the real thing and people are opting for the former, there’s a need to fight this attack.
According to studies, activities which are most strongly associated with brand include personification of innovative technology within the product design and creation. Constantly improving the existing products and introduction of new products have been found useful in keeping the counterfeiters at bay. The idea is to create a barrier that either hinders or delays counterfeiting, because it takes time for counterfeiters to develop technical skills to produce credible counterfeits. 
The current solutions used by customer in India vary based on the type and extent of brand attack. These are broadly classified under four heads: product- packaging-based solution; distribution related solutions; direct market solutions; and others.
From the print and packaging industry’s point, the first two come into play.
Product and packaging related solutions 
There are various solutions against tampering, replication, diversion and recirculation of product and packaging.
Current solutions against ‘Tampering’
To tinker with the product or packaging or both, with an intention to steal, replace, modify or adulterate is called tampering. In the Indian environment, this is very prevalent. Overall the actions taken against tampering are design-driven or design-effective packaging, which makes tampering evident in addition to use of variety of seals.
Packaged cartons can be sealed by hot melt glue on one or both sides.  The objective behind using this solution is that the carton gets destroyed or torn.  This gives a clear indication to the buyer that tampering has taken place.
A ‘tamper evident seal’ is used to seal the box which is of a self looking design.  This seal normally displays a ‘void pattern’ when an attempt is made to remove it.  This serves as a warning to customers that the package has been tampered.
An extension of the ‘void pattern’ label is a ‘void pattern tape’, which is seen in many ‘courier envelopes’, carrying credit cards or ‘important documents’
In case of water and electricity meters, a plastic meter seal is used.
Total ‘shrink-wrapping’ is done with a message not to buy – if shrink wrap is removed. Similarly, shrink sleeves are used on mouths of many bottles.
In outer carton, carrying a number of inner cartons ‘tamper evident’ seals are used over the BOPP packaging tapes.  These ‘tamper evident seals’ leave a pattern if someone tries to remove and change colour, if a cut across it is given.
Liquor bottles have ‘guala caps’ to ensure that flow is only in one  direction to make refilling difficult.
Tear strips (common example-cigarettes) and pilfer proof caps are also currently used. 
Current solutions against ‘Replication’
Replicating a product or packaging is done with the intention of fooling the customer by creating an impression that he is buying the original. Solutions for replication are totally dependent upon the industry in which the replication occurs.  The most common solutions are:
In plastic containers/bottles the secret is to make the packaging very complex.  Complex packaging makes the ‘investment’ in moulds high, which may deter the interested duplicator.
Perfume manufacturers change the design of the glass bottles very frequently.  The replicator finds is difficult to catch up.
Multicolour (8-10 colours) packs are made.  Machines available to print multicolour are not very common. This serves as a deterrent for lower-end duplicators.
Carton shapes are made using special tooling and dies.  The investment in this expensive tooling acts as a deterrent to many interested duplicators.
The use of holograms is very common to help consumers identify a genuine from a counterfeit.  The advantages of holograms are that it immediately stands out in attracting customer attention; is cost-effective; difficult to copy all features in the hologram; is available in various colours and can be modified in ways to suit production. The process includes self-adhesive label form, hot foil/cold foil stampable form, incorporated in shrink sleeves, on aluminium foil, suitable for cold lamination, and can have built-in forensic features.
Unique product marking are also used by many companies.  These are not publicised at all. They are used mainly as forensic evidence.
Current solutions for ‘Diversion’
Diversion is a form of counterfeiting which diverts the product from the market and sold to other markets. In this case, the sale proceeds go to the brand owner, but is normally associated with a significant profit loss.
The long supply chains that occur during distribution from producer to point of dispensation are often open to substitution, switching and/or false labelling.
Here are ways of combating diversion through the implementation of properly considered solutions.
Colour coding of products to identify markets
Creating a new brand for a different market. This is seen with makers of MCCBs, copier paper and other industrial consumables.
Packaging modifications – unique packaging for a specific market. This is being used fairly successfully by many FMCG companies.
Use of holograms/other security devices in markets where the market for diverted products is high.  These devices are used to help consumers recognise/identify the ‘original’ market product from the diverted product.
Product markings – ‘for sale in XYZ only’. Very common on printed books, liquor, pharmaceuticals and some FMCG brands.
Bar coding/e-verification/sms verification are also catching up. This has started with high-end luxury goods, some agro chemicals and auto spare companies.
These measures enable tracking along the supply chain, and block the progress of the products that are not coming from a legitimate source.
Current solutions in ‘Recirculation’
This type of counterfeiting is rampant in developing countries, where the original packaging is filled with substandard products, for example, the bottled water, which when not destroyed can be re-packaged with substandard water and recirculated. 
Solutions come in the form of:
Making packaging good for one time use. Most packaging which has to be torn to get to the final product fall under this category.
Buying back packaging through schemes. This has been adopted by many auto spare part companies. 
Use of one way ‘valves’ in liquids. These are used in chemicals , oils and lubrication oil industries.
Decision makers on brand protection
In summary, all brand owners are concerned about the serious menace of brand attack and are taking actions in some form or the other in fighting this menace.
Unfortunately in most Indian companies the responsibility lines are not very clear and they vary from industry to industry. In automotive OEs, the spare part department is normally the decision maker. In automotive parts companies the aftermarket sales head decides. In FMCG and pharma, the marketing/product or brand management decides the need. But packaging decides on vendor and solution.
In Indian subsidiaries of MNC companies, the legal department is at the forefront and in  the industrial product manufacturing companies, the purchase department plays a major role. Some companies where problems are large, brand protection manager is assigned. Only in enlightened companies who value their brand and respect it, the CEO gets involved. 
Have these solutions helped the brand owners?
The success of brand protection solutions has been mixed.  A lot of ‘money’ has been spent by the brand owners but most of them have not been satisfied with the results. Why have current brand protection solutions failed?  What can be done by brand owners to make their solutions more effective?
Look forward to these answers in the next edition.
(Nityanand Shenoy is the managing director of PRS Permacel, an important player in the automative graphic segment. A division of PRS Permacel, Kavach, is dedicated to help brand owners fight the menace of counterfeiting, duplication, re-circulation, diversion, refilling and various other forms of brand attack. It provides customised and technical security solutions to its customers for brand protection. The April issue of PrintWeek India will carry part III on this subject.)