Chris De Buysscher, a Belgian customs official, intercepted a shipment of 20,000kg of fake Lipton tea from China last year. He also discovered 800,000 knock-off Oral-B toothbrushes because the accompanying paperwork was vague about their final destination.
De Buysscher, head of the port of Antwerp’s counterfeit-hunting squad, is on the frontline of a new battle in the war against knock-offs: fake brand-name items including tea, shampoo and soap. Colgate-Palmolive Co. warned American consumers on Thursday that counterfeit toothpaste that may contain a chemical used in antifreeze was found at stores in four US states. Fraudulent products hurt sales of companies such as Nestlé SA, Procter & Gamble Co and Unilever Plc., the owner of Lipton tea, and may pose health risks.
Multinational manufacturers in general lose about 10% of sales to counterfeiting, said Guy Sebban, secretary general of the International Chamber of Commerce. That would amount to about $20 billion a year for Nestlé, Procter & Gamble and Unilever combined, though none of them would confirm it.
“It’s gone from being a local problem to a multinational problem,” said Richard Heath, Unilever’s global anti-counterfeiting counsel, who is based in London. “All the investment the counterfeiters make is in the packaging and not what goes inside, and that’s the worrying thing.”
In 2006, European Union customs officers seized 253 million fake products at the external borders of the bloc, up from 85 million in 2002. Seizures of personal-care products and perfume rose to 1.6 million items from 112,132 in 2002. Officers caught 1.2 million food and beverage products, up from 841,000.
The damage to companies is “immeasurable” because seizures represent a tiny portion of counterfeit goods and lost sales are only one part of the equation, said Bryan Roberts, an analyst at Planet Retail in London. “Any attempt to quantify it seriously will underestimate the extent of the problem,” he said. “But they will suffer in terms of the reputation of their brands.”
An influx of bogus consumer goods began raising concerns in Europe in late 2003, said Christophe Zimmermann, anti-counterfeiting chief at the World Customs Organization. “It’s a problem that becomes worse every year as they’ve taken on industrial proportions,” he said, citing seizures of Nestlé’s Nescafe and Maggi stock cubes.
The boom is being driven by the Internet, which makes it easier to find customers, and the development of cheap, high-quality printing equipment that allows criminals to mass produce packaging, said Heath of Unilever. Rising trade with Asia, where trademark rules are less rigorously enforced, is also contributing to the trend.
The potential danger of counterfeit food was driven home in 2004, when at least 13 babies in China died after they were fed fake infant formula that had no nutritional value, the official Chinese press service, Xinhua, reported at the time.
Unilever officials in Pakistan have witnessed how sophisticated some counterfeiters have become. Sometimes the packaging is so good that company officials struggle to determine whether a product is genuine, said Amar Naseer, Unilever’s legal counsel in Karachi.
A factory in the eastern trading town of Multan had 20 people making at least one tonne of counterfeit tea a day, he said, often containing sawdust or dyed wood chips.
At Boulton Market in Karachi, a young vendor was selling soap with packing resembling that of Unilever’s Dove brand. Another stall was selling bulk rolls of plastic packaging for PepsiCo’s Lay’s potato chips.
“See how easy it is,” Naseer said. “You can just decide to make potato chips at home, come here, buy a bunch of Lay’s packets, fill them and sell them. It’s that easy.”