Analysis

Focus - The Battle Against the Counterfeiters

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News emerged in the UK late last month that 2,500 litres of fake wine and spirits were seized by police in the country as part of the worldwide Operation OPSON, run by Interpol. The counterfeit drinks industry is very much alive and kicking, even in developed markets like the UK, and drinks companies need to be more vigilant if they wish to protect their brands.

In the Western world, we can assume that consumers will be more willing to part with their cash and purchase genuine drinks brands. However, many may be unaware that the product they are purchasing is counterfeit, especially when buying from smaller independent retailers.

Last year, a conference hosted by the Intellectual Property Office heard that alcohol accounts for 73% of all UK Trading Standard investigations – a rise of 51% from four years ago.

Recently, a plant in Derbyshire was uncovered by Trading Standards and HMRC officers for bottling counterfeit vodka, and found a cleaning agent was used in creating the alcohol. The side effects of drinking such a toxic mixture include nausea, abdominal pain or even death.

The dangerous implications of drinking counterfeit alcohol must be made clear to the public. However, when reputable brands including Glen’s, Stolichnaya and Smirnoff have all fallen victim to counterfeiting, consumers are likely to lose faith in brands that were once their mainstays.

Some consumers may choose to avoid these brands altogether rather than risk purchasing a fake bottle. Such negative connotations for popular drinks brands could harm their brand reputation and consumer loyalty, and consequently negatively impact sales. The alcohol black market not only affects drinks companies but also costs the Government billions in tax revenue.

At present, the Food Standards Agency is warning of a number of counterfeit bottles of Glen’s Vodka being sold in several locations around the UK. Consumers are encouraged to be extra vigilant when buying alcohol – especially if the price appears to be suspiciously low. Another key indicator of the legitimacy of an alcohol brand is the label. The counterfeit bottles wrongly refer to the website DrinkAware.co.uk as D-rinkAware, and also claim the vodka to be “produced and bottled in Great Britain”.

How can brands protect themselves from the black market?

  • Holograms and watermarked labels

Replication of drinks labels and branding has become increasingly sophisticated, making it difficult to differentiate a legitimate product from a counterfeit one. Drinks companies may be able to prevent this by including holograms or watermarks on their packaging. Holograms cannot be removed and are extremely difficult to replicate, whilst watermarks are impossible to photocopy. Both methods can be utilised to demonstrate the authenticity of the product and regain consumer buying confidence.

  • Advertising – educate as well as promote 

Advertising and PR can be used to educate consumers and promote the genuine brand over its fake counterparts. Emphasising the originality and heritage of a brand can lead to more consumer awareness of what makes the brand reputable. Stolichnaya, for example, sells itself as ‘the original vodka’ with an 80-year legacy. 

How drinks companies are tackling the black market?

The drinks industry still needs to do more to protect itself from this problem. Glen’s Vodka has been working with Trading Standards and the FSA to tackle these cases. Openly collaborating with government agencies is a step in the right direction in order to protect brand reputation as well as consumers.

Operation OPSON has been employed in a number of countries, including the UK, US and Germany, to bring down illegitimate food and drink companies. Cross-border cooperation on this issue can help prevent the import and export of counterfeit alcohol, aiding in curtailing trade on the global alcohol black market.

It is important brands do not neglect their responsibility to consumers. A minimal number of reports of a reputable brand being counterfeited can cause irreparable damage, especially when linked with severe health problems. Publically renouncing these counterfeit schemes by changing elements of the packaging, campaigning to educate consumers and working in conjunction with industry body’s will help brands maintain their trustworthy reputations.

Such actions will also send a message to consumers that drinks companies care about their customers, and will ensure that counterfeiters remain on the back foot.

Stuart Whitwell is joint managing director at brand valuation consultancy Intangible Business.


Sectors: Beer & cider, Spirits, Wine

Companies: Smirnoff, Stolichnaya

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