A First Line of Defense

Overt Brand Security Strategies Can Discourage Counterfeiters And Encourage Consumers

Optically variable security devices, like these Trustseal® labels from KURZ, now have multiple levels of sophistication.

By Ron Romanik

It's no secret that counterfeit products and packages are a growing concern to both consumers and brand owners. The risks of counterfeiting are many, including direct loss of revenue, damage to a company's reputation, erosion of brand integrity, and potential liability and litigation costs. Though the consumer goods industry is responding to these threats in various ways, the argument for quick action on packaging brand security measures often falls on deaf ears.

Strategies for dealing with this growing problem in package design and development include visible overt markings and codes and invisible covert materials and methods. From a consumer product goods (CPG) company perspective, overt strategies are used to deter future counterfeiting and covert strategies are used to detect counterfeiting and root out its source. From a consumer's perspective, overt strategies can increase consumer confidence while covert strategies can authenticate every single package.

Of course, some overt brand security methods can achieve some of the same ends as covert strategies in validating the supply chain, but usually to a less definitive degree. This article focuses on overt brand security because package design as a profession is not usually affected by the implementation of covert methods, and there is no value in having package design alert consumers to the presence of covert features on a package.

Reluctance in the industry

Many CPG companies are playing the brand security waiting game on account of several factors. Many are looking for a single "silver bullet" solution that will achieve all of the overt and covert brand security goals. According to industry experts, this is an unrealistic hope. Another factor is that CPG companies are concerned that adding overt features to their packages is tantamount to an admission of a counterfeit threat. This is a belief that may soon be irrelevant because of the sheer number of counterfeiters trying to copy packages and products.

Dick Warner, a private brand security consultant and v.p. and research director at PIA/GATF (Printing Industries of America/Graphic Arts Technical Foundation), says the current conventional wisdom is to have multiple layers of brand security features to take the counterfeiter's job from low risk/high return to high risk/low return.

Spotting counterfeit holograms is not always as easy as it looks for casual consumers.

"You've got to have several deterrents to ward off counterfeiters," Warner says. "I look at the overt as being the first line of defense, and sometimes that's the only line of defense." Warner points out that most consumers have only a few memory points about how a package should look, and would be hard-pressed to identify the high-quality counterfeit packages being made today with a merely visual inspection.

As the press coverage of highly visible cases increases, safety concerns may sway public to accept—or even demand—overt and covert features on their products and packages. It is not unreasonable to presume that overt features may become as accepted as plastic tamper-evident seals and foil bottle lid seals are today. The tipping point may come when consumers begin to seek out "safer" alternatives in categories at risk.

In the meantime, coalitions and alliances are forming to educate and advise businesses navigating the treacherous brand security waters. The Coalition Against Counterfeiting and Piracy (CACP; www.thecacp.com) is broad-based business organization of over 80 associations and over 280 companies. The CACP website provides a number of resources, including a downloadable PDF entitled "No Trade in Fakes Supply Chain Tool Kit." This fall will be an active time for the CACP, as they will introduce a matrix resource that will help businesses find the right brand security solutions and publish detailed case studies of successful brand security initiatives.

The Brand Protection Alliance (BPA; www.brandprotectionalliance.com) is another reliable resource for advice on implementing overt and covert strategies. Lynn Crutchfield, president of the BPA and president of Acucote Inc., sees the reluctance as a result of the proliferation of technologies has created a confusing maze of options. The fears of companies considering the options are: "Will it work?" "Will it be outdated soon?" "Is there an ROI?" "Is it a universal solution?" "Will it need an elaborate infrastructure?"

"There really is a complex web you have to weave to make it very secure," says Crutchfield. He stresses that CPG companies should look on overt and covert security features as an insurance policy on the intangible value of a brand, and it is important is to educate consumers without fear. Crutchfield mentions that Eli Lilly recently employed a non-intrusive way to explain that their packages had several brand and product security features by including a leaflet inside drug packages.

Code verification technologies like Yottamark can be very effective at cleaning up supply chains.

Overt communications

In a way, overt brand security measures are a communication tool between the company and the consumer, communicating that the company cares about the safety of their consumers. One of the simplest ways to discourage counterfeiters is to start with original font sets for your logos and label text elements. If counterfeiters have to re-create labels and designs "by hand" with graphics software, that really adds to their time and effort. Other first defense strategies include vector images, embossing, die cutting, complicated folds, thermoforming, and special inks.

Warner points out that a trademarked spot color with a single pigment ink can go a long way to discouraging counterfeiters. Random patterns and full bleeds also frustrate counterfeiters because those force them to make a guess as to the original graphic files. The best overall overt strategy is to have sophistication in the package design, have an array of brand security strategies, and have a plan to rotate methods to throw off counterfeiters.

Brand owners are often afraid of changing package designs to include overt brand security strategies because they're worried that they might send the wrong message, tantamount to admitting that their brand is a target of counterfeiting. They think: "We don't want to look like we're scared or under attack."

Warner and other veterans of the industry feel this is rather shortsighted in a way, because finding a brand that is not a target today is more difficult than finding one that is. After admitting there is a concern, the next objection to brand security methods is: "If it's not 100% effective, why should I do it?"

Kees-Jan Delst, product line manager for brand protection at JDSU, flatly states: "There will never be a perfect solution." Delst says that companies must weigh several factors in determining what strategies will be right for them. For overt strategies, they should have enough exposure to be useful but not obvious to consumers who might view the method suspiciously.

Delst has seen successful case studies where the brand security strategies are incorporated and integrated into package designs in a decorative context. "It's a very intricate communication that happens," Delst says. Crutchfield also suggests that designers should take a fresh look at how these features could add aesthetic value to a package. "It makes it a little more palatable if it's incorporated into the design," he says.

Public insurance policies

Elliott Grant, president and CEO of YottaMark, emphasizes that counterfeiters can not be defeated by package design alone. Considering how much is spent on brand marketing, it's quite alarming how little is spent on brand insurance. "The last four decades have been about building brands," says Grant. "The coming decade will be about protecting the investment in the brand. There are very few investments so big without protection."

Grant emphasizes that it is impossible to eliminate counterfeiting; you can only deter future threats and detect present threats. Delst explains that there is a definite drive to clean up distribution channels in many consumer goods categories. He stresses that the right combinationof overt and covert strategies implemented correctly can essentially "self-clean" distribution channels.

Rooting out sources of supply chain diversion is the most difficult task for brand security. Companies with wide distribution are looking for ways to pass the responsibility of authentication on to their distributors or retail stores. When they do find a counterfeit at the retail level, they want to be able to say to their store managers: "You should have known it was counterfeit." On top of that, some consumers will want a "certificate of genuine status," especially when it comes to pharmaceuticals.

Rob Calia, senior manager for anti-counterfeiting and piracy at CACP, believes that what is holding brand owners back is a reluctance to invest in layered approaches and the sheer number of confusing, intimidating, and competing technologies. "It's definitely a slow process, and the brand owners definitely need to see a return on investment," says Calia.

Calia believes many companies get stuck on the fact that no one technology is fool proof. Part of the CACP mission is to educate brand owners about the realities of the counterfeiting environment and the best strategies in a case-by-case basis. One simple message is that brand security technologies are indeed effective when used in the proper ways. Another message is to consumers that threats are everywhere and brand security features on packages are definitely coming. "Part of using an overt technology is letting people know it's there," reminds Calia.

Engaging the consumer

Grant explains that overt and covert strategies can also help greatly in consumer safety situations that are not necessarily caused by counterfeiting, as in the case of legit products and packages that are contaminated. "The average consumer has become very aware about sourcing around the world and the lack of controls," says Grant. What frustrated many consumers in the recent pet food and toothpaste scares was that when tainted products were discovered, accurate and reliable information about products and their safety was difficult to come by.

When considering any overt or covert strategy, the first step is to determine the extent of the risk to your brand and the goals of your company. Every case is different, so it is important to find a baseline of how much you can budget and what exact threats you want to target. Next, you must decide whether or not you want your customers to be part of the solution. If so, then the next decision is how to train consumers in new technology and encourage their participation.

Variable data code systems, such as Grant's YottaMark, are a plausible solution for both counterfeit deterrence and recall assistance because they can be applied to high-volume packages, can be encrypted, can prove authenticity, and can be traced back to the source. Grant points to studies that indicate only a very small percentage of "checkers" is needed to prove a supply chain has not been compromised. "The beauty of codes is that when someone checks, you find out about it," Grant explains.

Grant suggests that overt strategies can be turned into positives for the brand owner. Contests, coupons, or consumer feedback can originate from customers checking their packages for authenticity. Brand owners should be asking themselves: "How can we make this enhance our brand and enhance the trust in the brand?" The answer may be to make overt strategies an integral part of the package and engage the consumer at the same time.

Shifting the Attitudes

Ed Dietrich is co-coordinator of CACP's technology task force and director, Americas, at Reconnaissance International Ltd., which publishes "Authentication News." Dietrich believes that brand owners should be taking a proactive stance on brand security, and should start to think about it early in the product development and package design process. He has noticed that CPG companies in different market segments are getting interested in brand security. "It's starting to shift the consumer consciousness as never before," Dietrich says.

Dietrich says that CPG companies are reluctant to adopt brand security features on packages because of the added costs, concern about sending the wrong message, and the limited space on packages and labels. "In a lot of these situations, marketing really rules the roost," Dietrich says. Jon Guy, president of Gallus Incorporated, agrees that most brand owners are still marketing minded. "As long as their brand is winning on shelf, they feel that they're winning," Guy says.

This color changing solution from Sherwood Technology is very difficult to counterfeit because it is laser-activated.

Dietrich notes some successes in more sophisticated holograms, defracting technologies, and micro-optic applications. Some semi-overt solutions require an optic reader or filter. In Malaysia, consumers now check their drug packages at "testing stations" where optical screens are available to authenticate products with a federally mandated hologram.

One PR conundrum for the brand security industry is that companies do not brag about their brand security successes, for obvious reasons. Dietrich believes that it is time that companies get past the apprehension of admitting counterfeiting exists and be candid about it. "You will get more points with your customer base by being up front," says Dietrich.

Guy says that overt brand security strategies are a natural first step for any CPG company looking to take leadership role in this area. Guy points out that first-time purchasers of a consumer goods product do not always know what the package should look like or even how the product should perform. "If consumers become more informed, they are going to demand that CPG companies insure their products," predicts Guy.

The question brand owners are wary of asking is: "Are our consumers willing to pay for the added security?" Guy points out that there many simple solutions that companies can apply right away, and there's really no point in waiting for a silver bullet technology. "The companies that move the earliest in this will benefit later on," Guy predicts.