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In India alone, the FMCG sector loses 30%* of its business due to fake products. In fact, the counterfeit FMCG market in India is growing at an annual rate of 44.4%* (which is even higher than the growth rate of the overall FMCG market!) Alarming, isn’t it? Just imagine the havoc wreaked around the globe! Not just the customer suffers, but the brand does too! If your brand doesn’t act now, you’ll lose sooner or later.
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Potential risks to the brand:
- Loss of brand identity & integrity
- Loss of revenues
- Threat to brand investments
- Decline in customer base
Key factors in the menace of counterfeit FMCG products
The growth of Ecommerce
Ecommerce has dramatically increased the penetration of counterfeit products. Fake FMCG products are traded on well known and trusted solutions, by unscrupulous sellers. The presence of thousands (and growing) sellers on these solutions makes it difficult to trace and close them down. In addition, they can still enter the solution using a new identity.
Loss of brand trust
The counterfeit products affect consumers who pay a premium for what they believe to be a trustworthy brand. Food products with low quality ingredients or illegal and harmful additives can harm people of all ages, including children and babies. This erodes the brands trust, and impacts the brand’s ability to invest further in innovation.
Large, global distribution systems
FMCG products are produced in the billions, with very large distribution systems across countries. The size of these systems makes them susceptible to penetration by counterfeit products. A few weak points in the supply chain can cause the insertion of counterfeit products.
Variable regulation and monitoring
Many FMCG products can be low-priced and high volume. Such product types may not attract the regulation associated with high value products or regulated verticals like healthcare. This gives counterfeiters a higher chance of success.
Frequency of new products
The FMCG industry generates a lot of interest with new product lines – consumers may be open to trying new products and new packaging. These new products maybe available only at certain locations. This gives an opportunity for counterfeiters to create fake products to be sold to meet the consumer demand. Since the product is new, the consumers may not be able to recognise a fake product through the packaging alone.
Large variety of products
The sheer number of brands and products within the FMCG space offers more opportunity for counterfeiters to operate. It is difficult for government and industry bodies to constantly keep tracking the large variety of products on the market.
Marketing channels for counterfeiters
Counterfeiters deploy sophisticated marketing campaigns through digital channels, to reach potential partners and distributors across the globe. They advertise on search engines and social media solutions to brazenly highlight the availability of fake products.
Globally known FMCG branding
FMCG brands tend to have a global following. It is easy for counterfeiters to find a market, while producing the fake products in another country with low regulation. The counterfeiters know that adulterating a well-known brand will ensure that there is a constant demand for their inventory.
Ease of online payments
Consumers can easily pay for FMCG products online. This is particularly true for small sized products or those that are non-perishable. This makes it easy for counterfeiters to send across fake products and collect payment without revealing themselves.
High brand recall for FMCG products
The FMCG brands have created powerful brand recall around their logos, colours and product packaging. Consumers don’t think twice when picking up what they believe to be an original product. The use of some basic brand colours maybe enough to trick the consumer, who may not pay attention to notice the small differences in the packaging between a genuine and fake product.
Source of fake products
FMCG products are often manufactured in countries with a lower cost of production, or a better access to raw materials. The same countries may have lower regulation. It becomes easier for counterfeiters to utilize the same accessibility to resources, to create poorer quality products.
Long term impact of usage
For many FMCG products, the adulteration caused by fake products is not easy to detect. The damage to the consumers health builds up over time through the accumulation of toxins used to create the counterfeit product. The consumer may not detect a fake product even when using it for a period of time.
Prevalence of heavy discounting
Consumers are used to getting discounts on FMCG products and may not question why a product is priced so much cheaper than the original price. Counterfeiters use this to their advantage by offering fake products at artificially low prices, in the guise of a discount. Consumers would then select the fake products over an original as they perceive it to be of better value.
Make analog packages digital, enabling interactions with customers. This enables cross selling, management of loyalty programs and gamification.
Identify authentic products ranging from beverages to home care products using our brand protection solutions.
Customized interaction across the value chain providing rich data on consumer interactions.
Identify locations where original or fake goods are sold or delivered and identify cross border sales.
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