Sean Milmo, Ink World European Editor05.29.09
Suppliers of anti-counterfeiting, brand protection and related technologies are still finding that they have to work hard to persuade potential customers to make firm orders because of an deep-seated reluctance in some sectors to spend money on security features for their products.
The biggest rise in demand has been from printers of bank notes, as many consumers have been moving from credit cards due to the financial crisis.
“The bank notes market is absolutely booming. So many people have had to abandon their credit cards and start using bank notes again,” said Astrid Mitchell, head of the UK-based secretariat of the International Holograms Manufacturers’ Association. “Bank notes in Europe are still using a lot of traditional security items like holograms.”
European printers specializing in production of bank notes have been reporting big rises in sales. Giesecke & Devrient of Germany reported in May that the sales of the banknote processing division have been reaching record levels.
There are also signs of a greater willingness among consumer goods companies to consider spending money on brand protection because they can no longer afford to allow a sizeable proportion of their sales to be captured by counterfeiters. Many consumer product companies had been dismissing losses of sales to fakes as production waste.
“The easy option it seemed had been to do nothing,” explained Philip Berrie, sales manager of Sun Chemical’s security division. “But because of the recession, brand owners no longer have the ability to absorb 5 to 6 percent losses of market share to counterfeiters. They now want to fight back and claim back some of the lost share. They are being much more open to suggested investments in brand protection. We currently are being kept pretty busy.”
New regulations are also helping to boost sales in the anti-counterfeiting sector. Legislation in Europe on combating rising levels of counterfeit medicines is forcing pharmaceutical companies to spend more on security protection for their products.
The European Union is currently putting through the legislative process a package of measures which includes steps to improve patient safety by reducing the infiltration of counterfeit medicines into the supply chain.
Evidence of an upswing in the market for brand protection and anti-counterfeiting technologies, of which security inks and coatings account for around an estimated $300 million per year, has attracted newcomers into the sector. As a result, established players in the market, including ink and pigment producers and hologram manufacturers, are facing competition from printing equipment manufacturers, security printers themselves and even paper makers.
A rise in the numbers of companies active in the sector should help to persuade brand owners, pharmaceutical manufacturers and others to boost their spending on product security.
Despite being faced with the threat of sanctions if they do not take action to ensure that counterfeits of their medicines are not going through the distributions channels of the European market, many pharmaceutical companies are delaying expenditure on anti-counterfeiting features on their packaging.
“Pharmaceutical manufacturers still tend to be more conservative than companies in other sectors,” complained a senior executive at one security devices company. “It is particularly difficult to make them think about using innovations and new technologies. We can hope that the new EU legislation will make them change their mind. But they seem to be holding back at the moment.”
The procedure for approving the legislation is encouraging delays in anti-counterfeiting expenditure because its implementation is unlikely to start for one or two more years and some important details have yet to be worked out. The sort of safety features that pharma companies may have to incorporate into their packaging to enable medicines to be authenticates, traced and identified as they move through the supply chain have not yet been specified.
Yet in the medium term, at least, the European pharmaceutical market is now emerging as a potential high growth area for expenditure on anti-counterfeiting systems.
The outlook for demand in the brand protection segment also looks to be more promising in the medium to long term because of recent change in tactics by the counterfeiters, most of whom are based in China and the former Soviet Union but are aided by rogue traders in Western Europe.
Switch in Strategy Toward Lower-Priced Goods
The illicit trade in fake products is still concentrated mainly in the traditional targets of luxury goods, cosmetics, designer clothes, electronic products, audio-visual goods and tobacco.
But recently there have been signs that they are switching their attention more to lower value and higher volume items, such as personal care products like toothpaste and even popular brands of chocolate.
Late last year, the French customs service discovered in a market outside Paris 33,000 boxes of counterfeit Ferrero Rochers, a well-know Italian chocolate brand.
“These are counterfeits selling at around €3 to €4 ($4.10 to $5.40) instead of the usual range of €30 to €40 or more,” said Mr. Berrie. “This is evidence of a significant change in strategy by the counterfeiters as they look for new markets in which the volume is more important than the value per item. It is a chilling message for brand owners, but in a way it will help our business because it will make them take the threat more seriously.”
The trend to lower value products is even happening in pharmaceuticals in Europe, where producers of generic products like Teva Pharmaceuticals of Israel have reported that off-patent medicines are now being affected by the counterfeit trade.
In sectors for low value consumer products, holograms still remain the conventional tool for combating fakes. Despite being one of the oldest technologies for curbing illicit copying, holograms have been keeping up with advances in production and design.
“We are still only scratching the surface of the capability of holograms,” said Ms. Mitchell. “A lot has been done to renew and enhance the technologies behind their production. Because of the use of computer-aided design, the process of making the master plates or shims has been considerably speeded up. This has meant that the pattern of mini-grooves on the polyester film on which they are embossed with a wide ranges of widths and depths has become increasingly complex and difficult to copy.”
Despite the intricacy of the patterns now achievable on holograms, they remain essentially a means for the human eye to spot fakes quickly and are as a result possibly the quickest means of detecting counterfeits.
“They are now very difficult to copy so that they are one of the most cost effective ways of uncovering counterfeits, particularly in countries and areas where there is a lack of detection equipment,” said Ms. Mitchell.
Color shifting systems have become alternatives to holograms by using pigments in inks to provide optically variable images and colors. They also allow the human eye to be the primary medium in the authentication process.
Sun Chemical markets color shifting inks in a range of colors, which are suitable for application with flexo and screen printing process. It also provides thermochromic inks which change their color in response to alterations in temperature.
“There are few pigments manufacturers like ourselves which are able to make the inorganic pigments able to provide the color shifting effects stemming from refraction of light,” said Mr. Berrie. “These pigments can also be expensive and need to be applied in high concentrations. The effects are very difficult to copy and counterfeiters don’t like having to spend money on their product.”
Sun Chemical is among the ink producers that have developed taggants or chemical substances hidden in inks or coatings which can only be detected by an electronic reader. The software in the reader ensures that it responds only to the chemical which is usually unique to the product.
The taggants can be incorporated into spot colors or used in combination with other security devices such as color shift inks. The authentication is carried out by a reader costing approximately $150, which uses infrared laser rays to detect the covert chemicals.
Sun Chemical’s expertise has now also been extended to the application of software, which it uses to create hidden images in the color separations for art work before printing. The images are shown up by viewing the printed surface through a specially designed lenticular lens.
“The modification of the separations is done by ourselves electronically after the art work is sent to us over the internet, which is in line with our strategy of providing security systems which are both practical and easily available,” said Mr. Berrie.
The future of anti-counterfeiting and brand protection systems almost certainly lies in the application of a mix of methods rather than single technologies. The combinations would include serialization techniques. These place variable information on the product, usually including a range of codes and serial and unique numbers, which when sent back to a data base verify the identity of the product as well as its origin and position in the supply chain.
The information can be contained in a two-dimensional digitally printed bar code which can be scanned in two directions so that a large amount of information is contained in a relatively small area of the packaging. A similar data-providing role will be played by RFID tags when they can be manufactured cheaply enough.
“Our strategy is to offer a full range of technologies including serialization systems and specialist inks as well as laser printing systems, because in this way you can meet the specific needs of customers,” said Sheila Richardson, group marketing manager at Domino Printing Sciences, Cambridge, England, a specialist in serialization printing.