There is a reluctance to talk about counterfeiting in the soft drinks industry for fear of damaging the reputation of the subject brand. But recent research by the European Commission has highlighted what it calls the "disastrous" effects of these criminal activities. just-drinks delves deeper into this illegal trade.By Alan Osborn in London, Philip Fine in Montreal, and Matthew Brace in Sydney.

With a new crackdown on counterfeiting being prepared by the European Commission, some industry watchers will be surprised to hear that soft drinks is one the sectors that Brussels thinks needs close attention.

Reports of fake copies in the soft drink sectors are not new, but the Commission says that, though soft drinks is one of those industries that had previously been spared by the fraudsters, the fakes are now having "disastrous" effects.

According to Commission officials, counterfeiters are now targeting "ordinary mass-produced goods that are likely to escape the notice of those carrying out checks" and this includes soft drinks.

Brussels is preparing "major legislative changes" including a directive this year to harmonise EU legislation on the enforcement of intellectual property rights as a result.

Legitimate producers of soft drinks, like others hit by brand name pirates, are reluctant to acknowledge the scale of the problem because they feel it can adversely affect their own sales. But the British Soft Drinks Association this summer issued a warning about the counterfeiting of the concentrated syrups used by pubs, bars and others to create the finished drink at the point of sale.

Two recent examples have been highlighted:

  • Staff at two cafes in Edinburgh, Scotland, were caught trying to pass off cheap cola as "the real thing" Coca-Cola. Trading standards officers seized enough cheap concentrated syrup to make 30,000 litres of soft drink.
  • In Coventry, England, a police raid on an illicit factory seized three lorry loads of packaging, machinery and syrup used to make counterfeit cola.

Alain Beaumont, secretary-general of the Union of European Soft Drink Associations (UNESDA), told just-drinks.com that none of his members had raised the matter of counterfeiting but in view of the Commission's announcement he would now be contacting them to find out about their experiences with brand piracy.

A similar reluctance to speak out can be found on the other side of the Atlantic. "I'm certain that (soft drink counterfeiting) does exist but it's not been called to our attention enough to warrant any attention," said Sean McBride of the National Soft Drink Association in New York, USA.

There is actually an ongoing counterfeit soft drinks case before the US courts. A Wyoming distributor of Cadbury-Schweppes brand Dr Pepper is suing a Coca-Cola distributor, claiming the Coke dealer sold hundreds of tanks of pre-mixed Dr Pepper and purposefully mislabelled them as the Coke-owned product, Mr. Pibb. Fremont Beverages launched a civil lawsuit in September after it says it discovered the tanks were being sold to Wyoming restaurants.

Meanwhile, there is a web page dedicated to listing Dr Pepper clones. The site has collected 49 drinks that webmaster Charlie Smith has tasted that he says taste just like the original, with many sporting similar names. They include Dr. Topper, Dr. Perky and Dr. Whatever.

www.stat.ncsu.edu

Mike Martin, director of corporate communications for Dr Pepper/Seven-Up Companies, Inc says he has seen a number of sites like that of Mr Smith. He says most of the "knock-offs" are private label brands put out by grocery stores and manufactured by companies, such as Cott, that produce generic brands. He tried a positive spin on the situation: "We are flattered that this many people want a Dr Pepper type product. Just the fact that so many companies are trying to create the same drink increases awareness of the entire flavour category," he said. Spin aside, Mr Martin said the company is vigilant in protecting its trademark as well as its recipe, which it keeps secret.

He added the Wyoming/Mr. Pibb suit is an isolated case, adding that most known infringements involve trespassing over stipulated franchise territories.
Globally, the International Chamber of Commerce has offered advice on how all companies can fight fakes, in its Brief Overview of Counterfeiting.

"In many countries where counterfeiting is most prevalent there is an absence or inadequacy of intellectual property laws and a general lack of enforcement action," the document states. It adds that counterfeiters will usually reuse the packing of genuine products, which they then fill with the fake product."
Peter Lowe, assistant director of ICC counterfeit intelligence bureau told just-drinks.com that, regarding soft drinks, one of the easiest places to conduct counterfeiting is pubs, as they can have a label on their drink guns that is different from the brand of syrup in the source canisters. He says many pubs and bars are known to have also used the guns to water down popular brands.

Expert Analysis

Global Market for Soft Drinks

This report on the global market for soft drinks provides comprehensive strategic analysis of the latest trends in the market, as well as an overview of 8 product sectors, the major national and fast growing markets and 19 major companies. Sales of soft drinks are analysed at both world and regional levels, as well as in over 50 individual countries. The sales period under review is 1997-2001, with forecasts to 2006.

 

Soft drink counterfeiting is also becoming a headache for big firms with operations in Asia, notably China, where major foreign soft drink brands have been suffering losses caused by trademark infringements. Also in some parts of China counterfeiters have been making a cola and putting it into Coca-Cola's returnable glass bottles, say local press reports.

Soft drink multinationals are hoping a new regulation for the Implementation of the Trademark Law, which China introduced on September 15, will make clearer the protection for big brands and should help to stem the trademark infringements.

Further south, Coca-Cola's South Pacific region, covering Australia, New Zealand and the South Pacific, are on the lookout for the problem reaching their area.

Spokeswoman Jane Toner said: "We have all our trademarks and they are protected very well legally."