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The International Market For Brand Protection Solutions For Drink & Food Products
Vandagraf International Limited, Dec 2008, Pages: 106
Though grouped together in this report, Drink & Food products generally have little in common in terms of product related crime.
Alcoholic Drink products are often counterfeited and are also subjected to various forms of refilling and / or dilution extensively. Alcoholic Drink Products are also widely targeted by smugglers (like cigarettes particularly for countries with high excise duty).
Food products are most vulnerable to tampering of various sorts, together with a few cases of counterfeiting usually in connection with high margin regional products.
Drink Products
Liquor / Spirits and wines have relatively high unit prices within the Drink sector and generally strong margins. These product categories continue to be the primary focus of product related crime in the Drink Sector. Product differentiation is a key marketing tool in the Drink business – Competing on price generally leads to a downward spiral, where nobody makes a good margin.
Most liquor / spirits brands depend upon product packaging as a barrier to counterfeiters incorporating difficult to replicate anti-counterfeiting features. All liquor / spirits bottles also utilise complex cap closures / seals to deter re-filling. These cap closures / seals often also carry authentication devices.
Liquor / spirits are also a high theft product category and EAS (electronic article surveillance) tags / labels are widely used. Such EAS devices may be re-useable removable tags or permanently attached single trip designs.
A quarter of all spirits brands claiming to be of European origin now sold in China are counterfeit, according to an EU liquor association – This poses a serious threat to public health as well as the industry's profits. China is becoming an increasingly important market for spirits exports, with further potential for growth, though there had been few significant improvements in crackdowns by authorities. The problem of fake brands is not unique to China and the Far East. There were also growing concerns regarding counterfeit alcoholic Drinks in many Eastern European nations.
Most counterfeit liquors are produced and largely consumed in Russia and China. Reports have indicated that as much as 50% of branded Vodka consumed in Russia is counterfeit and it is understood that tens of thousands of Russians may be dying each year as a direct result of consuming such counterfeit liquors / spirits.
In addition to liquors and spirits, fine wines in particular are vulnerable to counterfeiting. Such fine wines can command very high prices, running in to hundreds or even thousands of Euros.
Several systems now exist for protecting vintage wines from counterfeit attacks. RFID is already used in conjunction with security ink marking and other security features at bottle level. RFID can also provide an indication of the temperature levels experienced by the wine throughout its life in storage and as it moves through the supply chain.
Since 2005, all wine bottles that travel outside France must be traceable. Some winemakers tackle the problem by using hi-tech labels and engravings on the bottle.
Add to the mix, the high levels of Excise duties that are levied on alcoholic drinks by many countries and the high level of smuggling activity that goes on is not surprising.
Food Products
Within the huge global food market, it is generally packaged processed food products and meats that tend to be branded and hence such products are more often potential victims to counterfeiting. Although overall growth of food consumption is relatively slow, a growing proportion of this total figure is processed and packaged in today’s World.
Counterfeit versions of premium price regional luxury product delicacies such as caviar, smoked hams (eg: World famous Palma Ham) and honey have been publicised. Many other types of Food products are essentially low margin commodity products.
Other regional brands of Foods with global reputation include a wide range of cheeses, most particularly European brands, some of which are very well known (eg: Camembert cheese from France). Such strongly branded high margin products can be attractive to counterfeiters. In terms of the overall Food industry the level of counterfeiting is small as really only affects specialised sectors, as outlined above.
Tampering in its various forms is generally a more significant and concerning problem in the Food sector today, including grazing (ie: Sampling of products in the retail store without purchasing), tampering for the purpose of obtaining fraudulent cash refunds, pilfering (ie: Removal of some product from its packaging – somewhere along the supply chain or at retail), malicious criminal tampering (poisoning or spiking of products, often accompanied by extortion demands).
The market for traditional brand protection products in the Food sector is relatively small compared to the market for such products for the Drink sector. Tamper evident features and devices are, on the other hand, very widely used in the Food sector.
Specific to the Food sector, there is also a major demand for products and devices that assure ‘quality and freshness’ of products. Such ‘quality and freshness’ devices may be viewed as being a component of the market for brand protection solutions and are used widely for limited life fresh, chilled & frozen foods including fruit and vegetables, meats, cheeses and other products.
Brands and also retailers can suffer damage to reputation from selling sub-standard quality food products. There is also a significant danger to consumer health.
Some important developments in the area of ‘quality and freshness’ are anticipated with the growth in usage of time / temperature devices and the decline of traditional ‘use by date’ labels.
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