US personal care companies bear counterfeit brunt

By Simon Pitman

- Last updated on GMT

Related tags: Personal care, Counterfeit, Us

A recent report by the Organisation for Economic Co-operation on
how US consumer goods companies, including many personal care and
fragrance makers, are suffering as the continued of infiltration of
counterfeit goods hits sales, but there are solutions.

Alongside the globalization of world economies, the importation of counterfeit and gray market goods has grown enormously in recent years, with the personal care market in the US being flooded by fake products, mainly imported from Asia, and more specifically China. In the past counterfeiters have concentrated on high margin product lines, such as fragrances and expensive skin care lines, but increasingly every day products such as soaps and toothpastes are finding their way on to the shelves of discount retailers and markets across the nation. Many of these products are of inferior quality, containing ingredients that are cheaper and of inferior quality, a fact that often leads to repercussions for human health. This has recently been underlined by the worldwide scare over toothpastes exported from China. Batch after batch has tested positive for traces of the harmful chemical diethylene glycol (DEG). Indeed many such batches of toothpaste have been uncovered in the US market, with nearly one million tubes being traced to institutions including prisons and hospitals. Although there are no specific figures for personal care companies, the OEC estimates that counterfeiting is costing US consumer goods companies up to $250bn in lost revenues each year, compared to an estimated figure of up to $600bn worldwide. Under personal care products, the OEC highlights shampoos, fine fragrances, feminine protection products, skin care products, deodorants, toothpastes, dental care products and shaving systems as being the main product categories targeted by the counterfeiters. Highlighting the fact that most seizures are taking place in Asia, where the products are made, the OEC estimates that nearly 70 per cent of all seizures of counterfeit goods took place in Asia, while only 1.1 per cent took place in the US. The figure for the US, which is significantly lower than that for the Middle East, Africa and Europe, reflects the extent of the problem in these regions, but also how much it is being tackled, which, considering the extent to which the US industry is affected by counterfeiting, suggests not enough is being done to stamp it out. The report goes on to highlight how this kind of trade can damage brands that companies have invested heavily in developing, especially when counterfeiters copy the product, flooding the market with inferior products that often do not have the claimed efficacy or effect of the original goods, not to mention possible dangers from inferior formulation. The OEC report highlights the fact that in order to develop anticounterfeiting and antipiracy strategies it says that stakeholders need to work together to improve information about counterfeiters in order to crack what are often highly organized syndicates. It details that comprehensive efforts must be made by consumer goods companies to develop basic information about counterfeiters that can be shared amongst other companies and stakeholders in an effort to help control the activities. The report then goes on to highlight that, specific to the need for information sharing, consumer surveys to determine more about spending patterns will also be a good way to uncover spending patterns on counterfeit goods and find out how and why consumers go for fake goods as opposed to originals. Likewise, specific industry initiatives also include the supporting of research and analysis of issues related to counterfeiting and piracy, like counterfeit-proof packaging, pursuing violators with court action and through promoting awareness about the dangers of fake goods.

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