Counterfeits Are on the Rise, So Too Are Anti-Counterfeiting Technologies

Counterfeits are on the rise. To protect growth of authentic goods, specifically in terms of annual sales, brands – including fashion ones – are beginning to invest somewhat significantly in anti-counterfeit mechanisms, including coding & printing, Radio Frequency Identification (“RFID”), holograms, security labels, and packaging designs. Business intelligence provider Visiongain has released its latest report, shedding light on the global anti-counterfeit packaging technologies market and predicts that this market will generate revenues of $18.14 billion in 2016 alone.

Already a trillion dollar industry, counterfeiting (the practice of manufacturing, importing/exporting, distributing, selling, or otherwise dealing in goods, often of inferior quality, under a trademark that is identical to or substantially indistinguishable from a registered trademark, without the approval or oversight of the registered trademark owner) is one of the fastest growing economic crimes worldwide. In fact, according to the World Customs Organization, clothing and fashion accessories account for a significant share of counterfeiting, with over 10% of world trade in fashion estimated to be counterfeit. The International AntiCounterfeiting Coalition reports that nearly 20% of the counterfeit products seized by U.S. Customs each year are made up of fashion-related items.

In the long-term, Visiongain anticipates the prospects of anti-counterfeit packaging technologies to remain bright due to an array of innovative and cost-effective anti-counterfeit solutions, which are being launched into the market. Growth will be driven by the increasing publicity of technological solutions for track-and-trace purposes and serialization.

ANTI-COUNTERFEITING IN FASHION

Fashion brands have begun jumping on the anti-counterfeiting bandwagon with increasing frequency. Sure, there are the traditional anti-counterfeiting efforts that brands have relied upon for years, such as allocating resources to bring enforcement efforts in-house, employing anti-counterfeiting professionals to develop educational materials and travel to various ports, and training U.S. Customs officers to spot counterfeits before they enter into commerce. Brands have also utilized custom manufacturing techniques to ward off copyists (Paris-based design house, Hermès, for instance uses mouline linen thread coated in beeswax, for all of the stitching on its coveted handbags, which serves as a distinguishing factor, as synthetic threads have a markedly different appearance). However, as the market for fakes grows, fashion brands are supplementing these efforts with additional technology-driven anti-counterfeiting mechanisms.

Innovative technologies, particularly from the fast growing RFID sectors, have enabled brands to adopt global anti-counterfeit packaging technologies programs. Electronic Product Code-enabled RFID allows brand owners to assign a unique serial number to each item, which is then stored in a common database for purposes of tracking shipments and detecting authentic versus counterfeit goods, and also for increasing inventory efficiencies.

Prada, for instance, began experimenting with RFID by attaching tags to clothing and accessories in its Soho, New York store in 2002. That did not last very long, though, as in 2003, amid howls from privacy advocates, Prada quietly dismantled the system. And high fashion houses aren’t the only ones adopting such technology – middle market brands want in, too. Levi Strauss & Co. announced last year that it is equipping all items in its San Francisco flagship with RFID tags, and using Intel gateways, Intel-powered sensors, and cloud-based analytics to gain visibility into what’s on the shelf or what might be running low, making the process of inventory management more effective. Such tags also serve the dual purpose of distinguishing between the real thing and fakes. Burberry, American Apparel, Bloomingdale’s, Macy’s, Zara, New Balance, and Nine West, among other brands, have adopted similar technologies.

RFID technology has advanced quite a bit in recent years: there are now RFID tags that can be woven directly into a textile or fabric product, something that several industrial linen companies in the United Kingdom and France have been testing for a few years now.

But anti-counterfeiting techniques do not stop at RFID. The inclusion of extremely difficult to remove hologram stickers with serial numbers has proven a popular tactic for brands, including (but certainly not limited to) Fendi, Dolce & Gabbana, Roberto Cavalli, Chanel, Canada Goose, Rolex, and Moncler. According to eBay’s legal counsel, holograms have proven to be a very effective way to fight fakes because they're extremely difficult to reproduce with significant accuracy.

Along with advancements in anti-counterfeit technologies, tougher government legislations for protecting intellectual properties, as well as stronger collaboration of organizations and manufacturers for protecting brand integrity, will further support the anti-counterfeit packaging technologies market in the developing and emerging markets.

According to Visiongain’s study, the main driver of the adoption of anti-counterfeiting technologies will be more media attention to specific counterfeit examples and pressure from consumers for protection. But there are additional incentives to adopt such technologies, such as the potential to avoid the high cost of recalls and losses incurred by counterfeit goods. By tracking products to the unit level, companies may employ a more controlled recall methodology, ultimately reducing the number of recalled units, reducing the associated costs, and minimizing unwanted brand exposure.