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Sun 8 Jan 2006 04:00 AM

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Brand owners count the cost

With counterfeiting costing the GCC some US $7 billion a year, it is time for brand owners to take action.

|~||~||~|Counterfeiting has long been viewed as a thorn in the side of industries including clothing and electronics, but less is heard about fake FMCG goods. This lack of awareness presents a problem for many consumers who are unaware they could be buying fake items such as shampoo or toothpaste, and it is also likely to be costing brand owners a fortune.

Indeed, producers of branded goods that are being counterfeited face a double whammy; they are losing market share to illegally produced goods, and they are also losing brand equity, with cheaply produced fakes damaging the hard-earned reputation of genuine brands.

While anti-counterfeiting experts think countries such as Egypt and Syria face a particularly serious problem with fake foods, GCC countries are also suffering. Counterfeiting is estimated to cost the region some US $7 billion annually, against a global counterfeiting problem that is thought to cost US $685 billion a year. Furthermore, with the problem showing few signs of abating, it is essential for those involved in the FMCG sector, particularly brand owners, to address the issue head-on.

Traditionally, companies losing out to the counterfeiters have faced an uphill struggle, often trying to tackle the problem with little or no outside help. But there are signs that the situation is starting change, with a new breed of anti-counterfeiting specialists increasingly working with corporate clients to help bring the people behind this crime to justice.

One such anti-counterfeiting company, KSA-based Hemaya Universal, spoke to Retail News Middle East about the problem, and the challenges faced by brand owners who are having to face up to it. For Ahmed S. Al-Zubeidi, president and CEO of Hemaya Universal, it is important for brand owners to seek outside help to tackle the problem, not least because these companies lack the detailed knowledge and experience of dealing with the issue, and also because it detracts from their core operations.

Furthermore, one of the most important aspects of dealing with counterfeiting is for brand owners to work with other organisations, from governments to customs officials, distributors and international bodies such as the Anti Counterfeiting Group, rather than working alone. While it is understandable that some of the biggest players in the FMCG industry are reluctant to discuss the problem for fear of scaring consumers, it is vital that they are open enough to tackle counterfeiting effectively.


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