Counterfeiting of branded goods is growing globally, and losses from counterfeiting cost retailers and manufacturers nearly $1 trillion each year and more than 75,000 jobs in the U.S., according to a study from the Food Marketing Institute and Grocery Manufacturers Association.
“This study pinpoints the opportunities that retailers and manufacturers have to reduce the chance for counterfeit products from reaching shelves and finding their way into consumers’ homes,” said Mark Baum, FMI‘s senior vice president of industry relations and chief collaboration officer. “We must be vigilant about safeguarding our supply chain from counterfeiters and step up our efforts to stop organized retail theft.”
The study, “Brand Protection and Supply Chain Integrity: Methods for Counterfeit Detection, Prevention and Deterrence,” includes guidelines for manufacturers and retailers based on a survey of consumer packaged goods manufacturers across the globe and retailers across the U.S., as well as input from a committee of industry leaders in manufacturing and retailing.
Through the study, FMI and GMA found that retailers and manufacturers should take the following steps to prevent counterfeit products from reaching consumers and minimize the cost and reputational damage associated with counterfeit branded products:
- Develop and implement a tool that assesses counterfeit risk that includes risk categories and the potential effects of counterfeiting.
- Develop a counterfeit protocol that includes notifying stakeholders and law enforcement, withdrawing and isolating counterfeiting products and preparing call centers for consumers.
- Establish a dedicated group that includes members who are well-versed in law enforcement, supply chain and packaging technology.
- Include anti-counterfeit and brand protection in product designs that can be used to authenticate branded products.
- Add anti-counterfeiting audits to corporate risk management and audit procedures that check for authentication measures, package quality and shipping quality and integrity.
- Establish material oversight security measures at warehouses and distribution centers that include employee background checks, cameras, motion detectors and pallet tracking collaboration.
- Educate retailers and consumers by informing them about the products that are most likely to be counterfeit through product awareness programs that include examples of authentic and counterfeit products and steps to take to validate products.
- Create a counterfeit playbook that specifies what steps retailers and manufacturers should take in the event of product counterfeiting.
“When inauthentic products wind up in the hands of consumers, they lose confidence in the stores and brands they trust. This guide is intended to share best practices with manufacturers and retailers to prevent that from happening, from production and packaging to purchasing and stocking,” said Jim Flannery, GMA’s executive vice president of operations and industry collaboration.