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| Counterfeit products dog FMCG companies too |
| BS Reporter / Mumbai Jan 18, 2009, 00:14 IST |
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In Iraq, a leading oral care product of Unilever is available, which mentions that it is manufactured in France. There is nothing strange about it unless you know that Unilever does not do business in Iraq. Moreover, the company has not been manufacturing in France for the last 10 years.
In India, a market where the multinational company is the largest fast moving consumer goods (FMCG) player, there are over 113 look-alike of its leading fairness cream, Fair & Lovely, available.
Vicks, Axe, Ariel, Parachute, Johnson’s Baby Powder, Clinic Plus, Dove, Lux, Colgate, Pears, Fair & lovely, Coldarin are just a few of the brands that are affected by pass-offs and counterfeits.
“Of the Rs 113,000-crore FMCG market in India, counterfeits and pass-offs account for a revenue loss of Rs 5,000 crore to the sector,” says Bharat Patel, chairman, Procter & Gamble and chairman of Brand Protection Committee, FICCI, while speaking at a FICCI-organised event in Mumbai.
Pass-offs are look-alike products that resemble the original products, mainly through misspelling of the trademark. For example, Sunslik instead of Sunsilk, Clemic Plus or Climic Plus or Cosmic Plus instead of Clinic Plus, Collegiate for Colgate, Vips Rub or Vives Rub as a pass-off for Vicks Vaporub.
Whereas counterfeits are the infringement of trademarks and copyrights, duplicate/fake products are passed off as products of the company.
According to AC Nielsen, a global marketing research firm, 10-30 per cent of cosmetics, toiletries and packaged food are counterfeits. “The bigger the brand, the larger the problem. The top two brands within any category be it pharma, cosmetics, soaps and detergents or tyres are effected the most by counterfeiting and pass-offs,” said E S Chakraborti, assistant director, Western Regional Council, FICCI.
Counterfeits and pass-offs not only present the companies with a loss of revenues, but also employment and income tax loss (at least Rs 2,000 crore) to the government. “Duplicates and pass-offs result in a 8-10 per cent revenue loss for FMCG companies,” said Dilip Dandekar, chairman and managing director, Camlin, and executive committee member FICCI.
Besides revenue losses, counterfeits and pass-offs also effect the brand as they are unsafe or adulterated and could hit the customer confidence as the fake product does not give the desired results promised by the brand. “It is a double whammy for FMCG companies as besides revenues, the brand takes a hit,” says Patel and explains, “In eight out of ten cases, customers do not realise that they have purchased a pass-off and they felt cheated.”
Highlighting the fact that the losses arising from counterfeits and pass-offs would be much higher then what the various reports mention, Nitin Paranjpe, chief executive officer, Hindustan Unilever (HUL), says, “This is a big problem and the advancements in technology makes it easier for counterfeits.”
The magnitude can be estimated when a reluctant Patel tells Business Standard, “Close to 10-15 per cent of people within the retail sales and distribution channel sell counterfeits and pass-offs.” He says Procter & Gamble is engaged in various initiatives to train its sales force and field staff to create awareness on the problem and also initiate action at the point of sale where counterfeits and pass-offs are available.
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