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There are reasons why people who handle security often refuse to discuss it

January 30, 2014

3 Min Read
There are reasons why people who handle security often refuse to discuss it

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Counterfeiting is a dirty word to consumer product goods companies (CPG). This scourge is a threat to one of the most valuable assets the companies own: Brand equity. Counterfeiting also steals directly from a business's bottom line. This is a problem most CPGs recognize, but one they'd really rather not discuss.

According to a World Customs Organization estimate, counterfeiting cost the world economy about $512 billion in 2005. While world trade is growing at a rate of three to four percent each year, counterfeiting is estimated to be growing at 150 percent annually. That's about five percent of all global trade.

Even with the enormity of this problem, you just don't hear people talking that much about the situation. After all, who wants to admit that due to counterfeiting, their company may lose millions of dollars each year?

Many in the packaging industry want to help. After all, a primary purpose of packaging is to protect the product. However, these packaging companies frequently meet stone walls when they try to discuss security measures with companies whose products are targets of trade pirates.

There are three main reasons why CPGs don't like to discuss counterfeiting: They simply don't know where these actions are taking place and how much they are costing; the CPG has an understanding of the losses but doesn't want open knowledge to damage their business reputation; and/or the company has recognized and quantified the problem and is fighting it with an aggressive security program.

When combating counterfeiting, restricting knowledge about what security measures are employed, how they work and where they are obtained is essential. What a counterfeiter doesn't know makes duplication more difficult.

There is a dizzying array of companies providing security elements, such as special papers, inks, foils, holograms, taggants or even forensic authentification tests. Most CPGs know they cannot rely on a single method, so they deploy a layered defense that incorporates overt and covert elements. The overt elements, like watermarks or optically-varying inks, serve as a very public warning, but can be easier for counterfeiters to either duplicate or obtain like materials. Covert effects remain hidden from the consumer and often require special instruments for detection. One covert solution is the use of invisible variable marking, which might include a code that gives significant information about the product, its source and channel to market. Being able to track and trace an authentic product is important to the success of a security program.

The exact combination of security methods used is a closely held secret at most companies. Sometimes only the security director, CFO and a few others may know all of the elements employed. Packaging suppliers don't even know all the security components.

Even the security suppliers are reluctant to talk. Their targets are brand owners who must decide the security strategy and tactics. The suppliers almost always have nondisclosure agreements with their customers. In most cases, suppliers develop custom products for each CPG. Besides, they are able to maintain their value only by creating innovative techniques, severely limiting product availability and maintaining a strict chain of custody. Even miniscule amounts of waste ink or paper must be accounted for when production is completed.

So, don't be surprised if anyone involved in brand security will only talk in generalities. It's a matter of trust.

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