The Authentication Forum addresses counterfeiting concerns in India – online exclusive

Aakriti Agarwal reports from the first The Authentication Forum, where new technology, standards and relevant case studies were discussed.
The Authentication Forum addresses counterfeiting concerns in India – online exclusive

The inaugural The Authentication Forum, which addressed counterfeiting concerns in India, attracted more than 200 professionals to New Delhi on February 8-9.

Jointly organized by Authentication Solution Providers’ Association (ASPA) and Messe Frankfurt India, the forum featured a full conference program targeted at segments including FMCG, auto, pharma, healthcare, electronics, pesticides, alcohol and tobacco, amongst others. The forum also featured an exhibition alongside the conference. While the exhibition was focused on showcasing authentication technologies by suppliers, the conference discussed an overall approach to fight counterfeit products across categories in India and shared some new ideas, available technologies and standards to combat this menace.

While discussing issues of counterfeiting in the automotive sector, Gajanana M Gokhale, brand protection manager, Automotive Aftermarket, Bosch, said: ‘Old auto parts get reconditioned and are being sold as genuine new products. We have started getting some products back to our factory and destroying them, but we can’t possibly get all products from across the country. Another problem is lookalike names that fool customers. Some products, such as HID kits, shock absorbers and clutch plates, being sold in the market with Bosch branding are not even manufactured by the company. We don’t have registration for these products but they are available with our branding in Delhi and Mumbai.’

Bosch is introducing new packaging for its products to counter this, with 13 overt and covert features. The company aims to change the packaging of all its products by 2018. ‘Changing packaging of some products in the initial phase has helped the business grow in the group. The company is also training police and customs to identify spurious products,’ said Gokhale.

Talking of challenges in the pharmaceutical industry, A K Datta, packaging expert and former head, packaging at Jubilant Life Services, said: ‘Of the 800 billion USD global pharmaceutical industry, approximately 10 percent is believed to be counterfeit.’ He suggested that fake products be identified using three Ps, namely: price, place and packaging.

Sumantra Mukherjee, director, Forensics Practice at KPMG, pointed out that the FMCG market was valued at 49 billion USD in India in 2016 and is expected to reach 104 billion USD by 2020. Addressing the concerns of FMCG counterfeiting, he said: ‘Counterfeit products are growing at a staggering rate of 44 percent, as opposed to 30 percent a couple of years back.’ The increase, he said, was due to online business where it is easy for counterfeiters to sell fake products and dupe customers. It is, therefore, important to locate the real source of the product before making a purchase.

Citing an example of the counterfeiter’s scale of operation, Mukherjee referred to a raid initiated by Lacoste India in 2012 on factories that were manufacturing fake products under its brand. This found that one such factory was much bigger than Lacoste’s own unit. He, therefore, suggested that brands could look at partnering with such counterfeiters and have them manufacture genuine products of the brand in their already set-up infrastructure.

He was then reminded of how Starbucks did not register for using the brand in Mandarin Chinese. The counterfeiters went on to use the name Starbucks in the local language and the company could not take any action. It is thus important for companies to have a comprehensive IPR strategy to fight counterfeiters.

Pramod Krishna, director general, Confederation of Indian Alcoholic Beverage Companies, pointed out that counterfeiters take advantage of different taxes charged by state governments on alcohol. So the cost of alcohol can vary significantly for the same brand in different states. ‘The gray market of liquor increased from 10.2 percent in 2010 to 16.7 percent in 2012 and is estimated to be more than 20 percent now,’ he said.

Sundar Moorthi, senior manager, packaging at Coca Cola India and Indian Beverage Association (IBA), said that there were more than 18,000 companies that are part of IBA with 36,00,000 outlets in India and made 56,000 crore rupees worth of market value in 2016. 'The growth of this sector has been more than 14 percent CAGR in the last five years and investment in the industry in the next five years is expected to be 60,000 crore INR.’

Moorthi said that Coca Cola, the second most recognized word after ‘OK’, has multiple trademark registrations for various scripts, logo, color and shape of the bottle, amongst others. Coca Cola has shifted from using RGB bottles to PET bottles and cans. The light weight and nitrogen filled PET bottles do not retain their shape once opened and are tough to refill by the counterfeiters. Brands need to take such steps to protect the brand value. ‘Caps and closures must be tamper-evident so consumers can easily identify a spurious product. Retailers tend to remove inkjet printed dates, so it is suggested to go for laser coding to reduce tampering of manufacturing and expiration dates,’ he added.  

Pankaj Mohindroo, founder and national president, Indian Cellular Association, said: ‘Counterfeiters make copies of mid-segment mobile phones and make huge margins off them.’ He highly recommended not exposing yourself to high risk by performing large financial transactions on mobile phones.

Pradeep Shroff, anti-counterfeiting expert and former ASPA president, suggested that brands look at counterfeiters as competitors, do a SWOT analysis and understand their strategy. ‘Make a business plan against counterfeiters and measure lost sales and business opportunity to act against them,’ he said.

He further added that brands should study their own supply chain to identify where these counterfeit products enter the chain. ‘Identify what can stop their entry and what can be done to co-opt support. It is important to educate consumers and motivate your distribution network. Brands must plan for periodic surveillance and should keep security in mind at every stage. There should be constant measurement of risk and upgrade of plan. Covert features on packaging are for brands to identify their products at each stage of the supply chain. These should be kept confidential within the organization,’ he explained.

Shroff further recommended that sales and marketing teams should work as consultants so they show companies the opportunity that helps them grow, and how new innovations would benefit the company. ‘Your solution should become a part of the business and not just an additional cost,’ he advised.

He also strongly suggested that companies adopt ISO 12931. Dr Bhattacharya, expert in standards, explained that it is the only standard meant for brand owners, and guides them on how to protect their products from counterfeiters. ‘This standard is meant for brand management; not process management – unlike all other standards. It requires no mandatory documentation or certification. There is no registration and it is completely voluntary. By adopting this standard, brands don’t have to disclose all security features that they may be using. This ISO standard does not even deal with economical criterion to correlate performance.’

Puneet Garkhel, partner, Pricewaterhouse Coopers, said that an estimated 24 percent of consumers have bought a product online that turned out to be fake. New technology helps counterfeiters make spurious products so it is important to tighten control on the distribution network. ‘We need revision of legislation at country level to fight counterfeiters,’ he said.

Dewakar Mahendru, associate vice president, authentication solutions, Holostik, added that the need of the hour is to create awareness in tier-II and –III cities and villages.

Rajiv Hiranandani, executive director and country head at Onspot Solutions, summarized that suppliers need to work together; not in isolation. ‘They need to stop giving conflicting pitches to brands. It is also important that the authentication solution should adapt to the changing environment and should be cost effective for brands to adopt. It needs to be a complete end-to-end solution. It has to be a fast and reliable solution that is unique, so customers can easily identify product authenticity. It needs to include all stakeholders in the company. Before implementation of the authentication solution, brands must note down their qualitative and quantitative targets so they know how they benefit from it.’

In his concluding remarks, U K Gupta, ASPA president, said: ‘The need of the hour is to become security partners, not just a supplier to brands.’