Authored article by Mr. Manoj Kochar, President, ASPA
In the vast realm of consumer goods, the FMCG sector in India faces a significant threat from counterfeit products. This illicit trade undermines industry integrity, endangers public health, and erodes consumer trust. India’s FMCG market, valued at Rs 4,500 billion in FY 2021 by CRISIL MI&A, is grappling with an alarming rate of counterfeiting. Industry research suggests counterfeiting in the FMCG segment could be as high as 25-30%, with 28% of consumers encountering fake products at least once. Despite known risks, especially in food items, 42% of consumers still willingly purchase counterfeit FMCG products. This widespread issue demands urgent attention to protect consumers and preserve the industry’s growth.
The Menace of Counterfeit Consumption
Alarmingly, a significant portion of consumers willingly engage in the purchase of counterfeit FMCG products. The ASPA & CRISIL survey revealed that around 42% of consumers admitted to knowingly acquiring these illicit goods, with 38% citing lower costs as the primary motivation and 26% attributing their decision to the unavailability of original products. The perception of copied products being of good quality and the lack of well-known brands in certain markets further contribute to this concerning trend.
The Health Hazards of Counterfeit Food
The health risks associated with counterfeit food products are particularly alarming. These illegitimate products often contain substandard, contaminated, or even toxic ingredients, as they circumvent the stringent quality controls and safety standards that legitimate manufacturers meticulously adhere to. Consuming these products can have severe consequences, jeopardizing public health and well-being.
Economic Devastation and Revenue Losses
Beyond the health implications, the economic impact of counterfeiting is equally devastating. Legitimate FMCG businesses suffer substantial revenue losses as fake products divert sales, hampering growth, innovation, and overall competitiveness. The FICCI CASCADE report estimated that FMCG companies lose a staggering 21.7% of their market share due to counterfeit goods. Furthermore, counterfeiting operations evade taxes, depriving governments of crucial revenue needed for public services and infrastructure development.
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The Alarming Scale of the Problem
The ASPA & CRISIL survey revealed a shocking statistic: nearly 3 lakh crore worth of FMCG products circulating in India were counterfeit, highlighting the alarming scale of the problem and the urgent need for concerted action.
Combating the Scourge: A Multifaceted Approach
To effectively combat this multifaceted issue, a multifaceted response is imperative. FMCG companies have established dedicated anti-counterfeiting departments that engage third-party consultants, conduct raids and seizures in collaboration with law enforcement, and implement authentication solutions like QR codes, holograms, and tamper-proof packaging. However, these efforts alone are not enough.
Consumer Education and Awareness
Increased consumer education is crucial, as the survey found that around 35% of consumers were unaware they had purchased counterfeit FMCG products. Brands are taking steps to address this knowledge gap, with initiatives like Bisleri’s viral #HarPaanikiBottleBisleriNahin campaign and the adoption of security hologram labels to help consumers identify fake products. Nonetheless, the survey revealed that 35-40% of consumers who encountered counterfeit FMCG products did not lodge complaints with manufacturers or consumer forums, highlighting the need for more accessible and user-friendly reporting mechanisms.
Technological Innovations and Authentication Solutions
Technological innovations like blockchain, RFID tags, and AI-driven analytics offer powerful tools for tracking and authenticating genuine products, making it increasingly difficult for counterfeiters to infiltrate supply chains. Brands must embrace these solutions and prioritize consumer awareness, fostering a vigilant and informed consumer base that can identify and report suspicious activities.
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The Societal Fallout and Collective Responsibility
The societal fallout of counterfeiting is far-reaching, fueling organized crime, contributing to job losses in legitimate businesses, eroding consumer confidence, and undermining market integrity and fair competition. The strains on public resources and services further compound the challenges faced by governments in combating this illicit trade.
The battle against counterfeit FMCG food products is not only a matter of economic survival for businesses but also a fundamental issue of public health, consumer protection, and societal stability. It demands a concerted, collaborative effort from governments, industries, and consumers, leveraging regulatory measures, technological advancements, and public awareness to create a secure and trustworthy food ecosystem for generations to come.
With heightened awareness, robust authentication measures, and a collective commitment to combating this scourge, we can protect the integrity of the FMCG sector and safeguard the well-being of consumers worldwide. The time to act is now, for the stakes are too high to ignore the alarming threat posed by counterfeit FMCG food products.
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