Wednesday, January 25, 2006

Facts on Fakes

We believe one of the problems in tackling fakes, is the lack of data about them. Partly this reflects companies' reluctance to disclose the size of their problem, but perhaps more importantly it is because there's so little feedback from the marketplace to the brand owners.

We can infer the size of the problem (it's big), from culling some recent news items:

  • Louis Vuitton - a much copied brand and a division of luxury brand owner LVMH - says its network of 250 agents, investigators and lawyers engaged in the anti-counterfeiting struggle conducted 6,000 raids worldwide in 2004, resulting in 1,000 arrests.
  • In any one day, the Scotch Whisky Association (SWA) are prosecuting 50 cases [of Scotch whisky counterfeiting] around the world with people trying to pass products off as Scotch whisky. For example, the SWA estimates that there are 22-30 million cases of counterfeit Scotch sloshing around the Indian whisky market. It is not unknown for producers of allegedly genuine Scotch whisky to give substantial discounts if the bottles and screw tops were returned after use (a simple ploy to circumvent many anti-counterfeit devices on legitimate packaging).
  • Counterfeit drugs continues to be the most newsworthy. The Food and Drug Administration investigated 58 cases of drug counterfeiting in 2004, up from four cases in 1998, according to an agency report. Last year, about 1.7 million tablets of fake Viagra, one million tablets of Lipitor, and half a million tablets of Norvasc were seized in China.

In other words - millions of people every year are (often unknowingly) buying fake Scotch, fake Viagra, fake Lipitor, and fake Norvasc.