In Iraq, a leading oral care product of Unilever is available which mentions that the product is manufactured in France. Nothing strange here. Except 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 MNC is the largest Fast Moving Consumer Goods (FMCG) player, there are over 113 look alike of their 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 effected by pass-offs and counterfeits. "Of the Rs 1,13,000 crore FMCG market in India, counterfeits and pass-offs account for a revenue loss of Rs 5000 crore to the sector," says Bharat Patel, chairman, Procter & Gamble and chairman, Brand Protection Committee, FICCI while speaking at the FICCI CEO Conclave in Mumbai.
Pass-offs are look-alike products, that resemble the original products either phonetically (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, is the infringement of trademarks and copyrights and here duplicate/ fake products are passed of as products of the company.
According at AC Nielsen, 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 (Rs 2000 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 Ltd and executive committee member FICCI.
Besides revenue losses, counterfeits and pass-offs also effect the brand as they are unsafe, or adulterated and could be a loss of customer to the companies as they do not give the desired results promised by the brand. "Its a double whammy for FMCG companies as besides revenues, the brand takes a hit," says Patel and explains, "In 8 out of 10 cases, customers do not realise that they have purchased a pass-off and they felt cheated."
FMCG companies are a business of brands, where-in the companies invest significant monies in building, advertising and marketing the brands. However, "When it comes to protecting the brands companies think twice," notes Nitin Paranjpe, chief executive officer, Hindustan Unilever (HUL) while highlighting the fact that the losses arising from counterfeits and pass-offs would be much higher then what the various reports mention. "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." The company 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.
