The true cost of counterfeiting to global brands
We’ve talked previously about the impact of counterfeiting on various sectors, including the toy industry and automotive. But in terms of the bigger picture, we’re potentially talking about international costs in the trillions of $USD, not billions.
Global brands are paying for this crisis, not just with profits but also with customer trust and future growth.
How much does counterfeiting cost?
According to a study by the Organisation for Economic Co-operation and Development (OECD), worldwide counterfeiting cost $509bn in 2016. After a slight slump during the COVID-19 pandemic, the international cost continued to escalate. OECD estimates now point to it reaching a staggering $1.79tn by 2030 – that’s almost 18 hundred billion dollars. And while that number may seem unfathomable, it’s a very real figure that global brands are tasked with tackling.
How does counterfeiting threaten brand value?
If the value of a brand has been built on decades – and in some cases, centuries – of development, it’s alarming to see how quickly this can be harmed.
The maintenance of good customer relationships through consistency, investment in quality and innovation understandably takes time. But these efforts don’t matter to those flooding the markets with fake products.
By diluting the exclusivity and perceived worth of genuine items, counterfeiters can do more damage in a much shorter timescale. If the fakes are particularly sophisticated, it can be harder for potential customers to tell the difference. This understandably erodes the value of genuine items, particularly with buyers unable to spot the telltale signs.
How else do fakes cost global brands?
Beyond the obvious impact on perceived product value, counterfeiting also affects global brands in other negative ways. For example, the costs associated with legal actions and supply chain disruption are significant. Also, consumers who unknowingly purchase an inferior product can feel betrayed or ripped off. And these negative sentiments may come to be associated with the legitimate brand, in the eyes of the individual. This results in higher spending on marketing campaigns to reassure or win back customers who have had their trust shaken.
Why should global brands invest in anti-counterfeiting measures?
Unlike the costs highlighted above, which focus on reputation management after the event, investing in security gets ahead of the problem. By safeguarding authenticity through measures such as the patent protected Q-ID system, brands can stop the rot.
As well as continuing to educate customers on the risks of fake products, it’s essential for businesses to ensure the quality of their genuine items. And by adopting a measure that is:
- Cannot be practically copied, cloned or faked
- Simply authenticated in seconds with any standard smartphone
- Easily integrated into existing manufacturing processes
Global brands can start to fight back against continually rising counterfeit costs.
Want to protect your brand?
Our innovative security measures are globally scalable and help brands prevent future losses to counterfeiters. If you’d like to find out more or have any questions, please contact us to speak to one of our experts.
