Producers get tough on fake goods

The seizure of illagel copycat FMCG products worth US$1 million by Saudi Arabian authorities will no doubt be welcome news to leading FMCG producers and traders, who are losing valuable sales to counterfeit and look-alike products.
Producers get tough on fake goods
By Staff writer
Tue 31 Oct 2006 04:00 PM

The seizure of illagel copycat FMCG products worth US$1 million by Saudi Arabian authorities will no doubt be welcome news to leading FMCG producers and traders, who are losing valuable sales to counterfeit and look-alike products. Some 90 tonnes of copycat goods, designed to look like Unilever brands including Signal toothpaste and Lipton tea, were seized from the warehouse in Jeddah, in a crack down co-ordinated by Saudi authorities and Unilever Arabia.

While the value of the seized goods is a drop in the ocean compared with the overall value of the counterfeiting problem in the Middle East, and indeed globally, the raid could mark a turning point in the fight against the illegal trade. Indeed, the raid was not only a blow to the warehouse owner and importer, who will both be facing law suits from Unilever; it also marks a sea-change in the attitude of leading FMCG producers to the problem of counterfeiting.

Just one year ago, major FMCG producers such as Unilever, Procter & Gamble and Nestle were reluctant to discuss counterfeiting - a situation that only served to exacerbate the problem and play into the hands of the counterfeiters. But the start of 2006 signalled a new approach, when leading companies from various sectors in the Middle East, including FMCG, pharmaceutical and the automotive industry, came together to form the Brand Onwers Protection Group.

Manufacturers involved in the group, including Estee Lauder, A. G. Lachen, GlaxoSmithKline, and Kraft Foods Middle East & Africa Ltd, joined forces in order to share information on counterfeiting, and to gain more clout to lobby governments in the region to take the problem more seriously. But while the recent raid in Saudi Arabia shows a greater willingness to tackle the issue, there is much room for improvement at governmental level. Indeed, as Nick Hart, Unilever’s brand protection group director says, there is little consistency in terms of punishing offenders in the MENA region. Burundi in East Africa is one case in point: those caught selling counterfeit goods in the country will be fined the grand sum of 50 US cents. “You need punishments that deter people from doing it,” Hart told Retail News Middle East. “At the moment, it’s a low risk, white-collar crime.”

The Brand Protection Group is currently co-ordinating with local authorities including governmental economic departments, chambers of commerce, customs, municipalities and police departments. It is also launching an economic impact study into the extent of the problem in the region - the results of which are likely to raise eyebrows in government. Whatever the outcome, the change in attitude from the FMCG industry and governments is welcome. The trade has been hiding from the counterfeiting issue for too long. Now that it is facing up to the problem, it could well be the counterfeiters’ turn to run.

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