transparency Archives

The U.S. Uyghur Forced Labor Prevention Act and Supply Chain Ethics

Posted on May 23, 2023May 23, 2023 by rfxadmin

Signed into law on Dec. 23, 2021, the U.S. Uyghur Forced Labor Prevention Act (UFLPA) prohibits the importation of certain goods into the United States and aims to ensure that businesses are not complicit in human rights abuses. It’s one of many regulations around the world that aim to make supply chains more ethical, transparent, and sustainable.

Let’s see what the act says and examine why supply chain transparency is the key to making such legislation viable and successful. For another example of recent laws, see our blog post about Germany’s Supply Chain Due Diligence Act.

What is the Uyghur Forced Labor Prevention Act?

The Uyghur Forced Labor Prevention Act, or UFLPA, is a response to concerns over forced labor and human rights violations in the Xinjiang Uyghur Autonomous Region in northwest China.

It’s worth quoting the U.S. Customs and Border Patrol website at length for a thorough description. It says the act:

“establishes a rebuttable presumption that the importation of any goods, wares, articles, and merchandise mined, produced, or manufactured wholly or in part in the Xinjiang Uyghur Autonomous Region of the People’s Republic of China, or produced by certain entities, is prohibited by Section 307 of the Tariff Act of 1930 and that such goods, wares, articles, and merchandise are not entitled to entry to the United States.

“The presumption applies unless the Commissioner of U.S. Customs and Border Protection (CBP) determines that the importer of record has complied with specified conditions and, by clear and convincing evidence, that the goods, wares, articles, or merchandise were not produced using forced labor.”

Furthermore, the act required the Forced Labor Enforcement Task Force, chaired by the U.S. Department of Homeland Security, to develop a strategy for supporting the legislation. This strategy was published on June, 1, 2021, and includes the UFLPA Entity List, which names “entities in Xinjiang that mine, produce, or manufacture wholly or in part any goods, wares, articles and merchandise with forced labor.”

Key provisions

The Uyghur Forced Labor Prevention Act has provisions to combat forced labor and enhance supply chain transparency, including:

- - Import restrictions: As we noted above, the act bans the importation of goods produced wholly or in part in China’s Xinjiang Uyghur Autonomous Region, unless importers can provide clear and convincing evidence that the goods were not produced with forced labor.
  - Enhanced due diligence: The act places the responsibility on companies to exercise due diligence and conduct comprehensive risk assessments of their supply chains to identify any forced labor risks or links to Xinjiang.
  - Publicly available information: Companies must disclose information on their efforts to ensure their supply chains are free from forced labor, including the specific measures they have implemented and the results of their due diligence assessments.
  - Coordination with government agencies: The act requires collaboration between government agencies, including the Department of Homeland Security, Department of Labor, and Department of State, to ensure effective enforcement and implementation of the legislation.

Implications and challenges for businesses

The act has very real implications for businesses operating in the United States. They must have the means to see into their partners’ operations, as well as into the often opaque landscape of secondary and tertiary suppliers. Other challenges include:

- - Not being able to produce audits that meet Forced Labor Enforcement Task Force credibility requirements
  - Traceability challenges in the supply chain (e.g., aggregated and commingled products with difficult-to-prove provenance)
  - Regulations in other countries that make compliance more difficult/complicated
  - Challenges related to sourcing (i.e., not being able to find a crucial raw material or item outside of China)

The government provides resources for businesses concerning the Uyghur Forced Labor Prevention Act. For example, see the U.S. Customs and Border Protection’s UFLPA Operational Guidance for Importers and its FAQs about the act.

Final thoughts

The Uyghur Forced Labor Prevention Act is part of broader regulatory efforts to eliminate forced labor and human rights abuses in global supply chains. Businesses must be prepared (and willing) to audit and assess their operations, engage with their suppliers (and their suppliers’ suppliers), and establish mechanisms to trace the origin of goods to ensure compliance.

And they should be proactive about it. A first step is contacting us to talk about supply chain transparency. Our transparency solutions enable companies to track and trace their supply chains in real time from virtually anywhere in the world. Our technology makes every product a “digital asset” with a certified, provable, and sharable provenance. We can show you how it works with a short demo.

If you’re interested in learning more about supply chain transparency, check out the articles below. “Transparency” means just about the same thing in every supply chain, so consider these as case studies about how it works, why it’s important, and the business benefits it can bring.

Antares Vision Group Acquires SmartPoint Technologies

Posted on May 2, 2023May 2, 2023 by rfxadmin

Travagliato (Brescia), May 2, 2023 – Antares Vision Group (EXM, AV:IM), a leading provider of track and trace and quality control systems, has acquired through its subsidiary rfxcel 100 percent of SmartPoint Technologies Ltd (SmartPoint), an Indian software product development company that builds powerful and intuitive software solutions.

SmartPoint, founded in 2010 by three entrepreneurs and headquartered in Chennai, offers diverse services and solutions to clients in more than 30 countries. It helps its customers to enhance their business prospects through software enhancement and development options in the IT arena. In Fiscal Year 2022–23 (year end March), Smart Point had 124 employees in India and Germany, and revenues of approximately €3.9 million, of which about 90 percent were generated with rfxcel.

“We have been working with SmartPoint for many years,” said rfxcel CEO Glenn Abood. “With this acquisition, we are internalizing very skilled and talented people, with exceptional expertise and specific abilities that match our interests. SmartPoint’s software development team has been working together for a long time and their know-how is a valuable asset for Antares Vision Group as we continue to invest in technological development to support our growth and to drive the innovation and digitalization process of supply chains.”

Strategic rationale

- - SmartPoint has proven expertise in pharmaceutical track and trace business verticals, and its software developments are directly implemented within the IT systems of top pharmaceutical companies that are rfxcel customers.
  - Its software development team will support rfxcel’s robust future growth.
  - The acquisition is an opportunity for rfxcel to prioritize software initiatives.
  - SmartPoint has approximately 20 full-time staff whose capabilities could be useful to other AV Group subsidiaries.
  - Having stronger in-house capacity will allow rfxcel to better negotiate with other software development companies for any excess work.
  - The deal prevents rfxcel’s competitors from acquiring the company and its know-how.

AV Group was assisted in the acquisition by Gandhi & Associates as legal consultants and Prakash Kotak for financial due diligence.

For more information, contact rfxcel Senior Communications and Content Manager Garrison Spik at garrison@rfxcel.com.

ABOUT ANTARES VISION GROUP
Antares Vision Group is an outstanding technology partner in digitalization and innovation for companies and institutions, guaranteeing the safety of products and people, business competitiveness and environmental protection. The Group provides a unique and comprehensive ecosystem of technologies to guarantee product quality (inspection systems and equipment) and end-to-end product traceability (from raw materials to production, from distribution to the consumer) through integrated data management, applying artificial intelligence and blockchain technology. Antares Vision Group is active in life science (pharmaceutical, biomedical devices and hospitals) and Fast-Moving Consumer Goods (FMCG), including food, beverage, cosmetics, and glass and metal containers. As a world leader in track and trace solutions for pharmaceutical products, the Group provides major global manufacturers (over 50% of the top 20 multinationals) and numerous government authorities with solutions, monitoring their supply chains and validating product authenticity. Listed since April 2019 on the Italian Stock Exchange in the Alternative Investment Market (AIM) segment and from 14 May 2021 in the STAR segment of Euronext; furthermore, from July 2022 included in the Euronext Tech Leaders index, dedicated to leading tech companies with high growth potential. In 2022, Antares Vision Group recorded a turnover of €223 million, operates in 60 countries, employs more than 1.180 people, and has a consolidated network of over 40 international partners. To learn more, please visit www.antaresvisiongroup.com.

Why Cosmetics Supply Chain Sustainability Is the Industry’s Hottest Topic

Posted on August 30, 2022May 12, 2023 by rfxadmin

The health and beauty industry is under increasing pressure from regulatory bodies and consumers to maintain and demonstrate due diligence in their supply chains. Forward-thinking companies are responding by making cosmetics supply chain sustainability an integral part of their mission statements and consumer engagement activities.

For example, “The Big 3” are prioritizing cosmetics supply chain sustainability. L’Oréal puts environmental and social performance at the heart of its business to drive value. Estée Lauder’s mission is “to bring the best to everyone we touch and to support the environment in which we live.” And Unilever reports thoroughly on environmental and ethical statistics, including water, energy, greenhouse gases, waste and plastic packaging, sustainable sourcing, and community investment.

So let’s take a look at sustainability in the cosmetics supply chain. The industry faces a slew of challenges with sustainability, such as environmental and human rights issues, counterfeiting, an evolving regulatory landscape, changes in consumer behavior, and utilizing new technologies, and all affect their decisions and processes.

What is “sustainability”?

Before we get into cosmetics supply chain sustainability, let’s take a step back for a moment and talk about sustainability generally.

Sustainability might seem to be a relatively new concept, but it has been around since the 19th century, when some industries sought to improve working environments and create less pollution. In the 1960s, new laws and organizational bodies were introduced to address pollution in the United States and Europe.

The U.S. Food and Drug Administration (FDA) “is required under the National Environmental Policy Act of 1969 (NEPA) to evaluate all major agency actions to determine if they will have a significant impact on the human environment.” Federal agencies implement NEPA and evaluate the possibility for environmental impacts by condcuting categorical exclusions, environmental assessments, and environmental impact statements.

The European Commission says it “aims to ensure coherence between industrial, environmental, climate and energy policy to create an optimal business environment for sustainable growth, job creation and innovation.”

In 2015, the Association of Southeast Asian Nations (ASEAN) adopted the ASEAN Socio-Cultural Community Blueprint 2025, which “promotes and ensures balanced social development and sustainable environment that meet the needs of the peoples at all times.”

If you read our Global Cosmetics Market white paper, you’ll know why we used the United States, Europe, and Asia as examples: They’re the world’s top cosmetics markets — and their regulators are concerned about sustainability.

What is cosmetics supply chain sustainability?

Cosmetics supply chain sustainability addresses the environmental and human impact of products, from the sourcing and production of raw materials, through to manufacturing, packaging, distribution to the final customer, and post-consumer activities.

Increasingly, there are calls for cosmetics supply chain sustainability standards to be made mandatory. The European Parliament in March passed a resolution to tackle environmental and human rights in EU supply chains. This new Supply Chain Act will require organizations to integrate sustainability into corporate governance and management systems, and frame business decisions in terms of human rights, climate, and environmental impact.

The United States is yet to follow suit, but consumer groups are letting the government know they want tighter standards for the raw materials used in cosmetics.

Even without government mandates, organizations that want to burnish their environmental credentials would do well start with their supply chains. In a January 2021 report called Net Zero Challenge: The Supply Chain Opportunity, the World Economic Forum states that companies wanting to improve their environmental and social performance can look to their supply chains to make cost-effective improvements.

Environmentally responsible production: the rise of “Clean Beauty”

Much of the drive toward sustainability is coming from consumers, who want to know that ingredients are pure (or at the very least safe) and have been ethically sourced. For example, 62 percent of Generation Z consumers (born in the late 1990s) prefer to buy from sustainable brands, and 73 percent will pay more for sustainable products.

In the United States, where the Food and Drug Administration (FDA) from being used in cosmetics, there is mounting pressure for stricter regulations. For example, environmental and consumer advocate groups such as the Environmental Working Group (EWG) believe more chemicals should banned, like in the EU, where 1,300+ substances are prohibited from being used in cosmetics.

This is part of larger “Clean Beauty” movement that advocates for safe, clean ingredients and transparency in product labeling. According to a

Clean Beauty is also concerned with ethical sourcing of ingredients. Consumers want reassurance that their cosmetics are not linked to issues such as deforestation, pollution, and animal or child cruelty. The primary problem here is that a wide variety of cosmetic products use a few “core” ingredients, many of which pose unique challenges for achieving sustainability in the cosmetics supply chain. They are difficult to obtain sustainably and ethically, and child labor, poor working conditions, and illegal mining are common.

For example, a 2016 report from the Amsterdam-based nonprofit Centre for Research on Multinational Corporations (SOMO) found that more than 20,000 children are forced to work in mica mines while their families live in severe poverty. Similarly, palm oil, the global market for which is expected to reach $57.2 billion by 2026, has a history of human rights problems. Palm oil is used for moisturizing or texture effects.

As more companies stake their reputations on being sustainable and consumers become more aware and demanding, it’s certain that the call for cosmetics supply chain sustainability will only get stronger.

How can we achieve cosmetics supply chain sustainability?

As we’ve seen, cosmetics companies operate in a challenging environment where many groups — including consumers, perhaps their most important audience — are calling for them to achieve sustainability in their supply chains.

To be successful, they must be able to adapt to changes in the market as technology, product development, and consumer sentiment shape the industry. Whether it’s faster production methods, demand for new products, or desire for ethical and sustainable options, companies must be able to change with the market if they want to survive and succeed.

The key takeaway is that cosmetics supply chain sustainability is not a pipe dream. Technology and solutions exist right now to help companies evaluate their operations and identify strengths, weaknesses, and pain points and take corrective action. These include supply chain digitalization, cloud-based data systems, and real-time monitoring. For instance, a 2021 report by Gartner said that digitalization is a key enabler of agility because it supports a more transparent, automated, intelligent, and orchestrated end-to-end supply chain.

Final thoughts

Sustainability. Consumers want it. More and more regulators are demanding it. It’s good for the planet. It’s good for people. It’s a business best practice.

Is it difficult to attain sustainability? Yes and no. It is a process. It has a lot of moving parts that may require tough decisions. But if a company has the will to be sustainable, it can develop strategies, chart a course, and get to work … and reap the benefits.

Technology is essential for sustainability. rfxcel and Antares Vision Group are committed to helping companies meet their sustainability goals and empowering them to protect product, profit, people, and planet.

Our Traceability System enables you to see and follow everything in your supply chain in real time from virtually anywhere in the world. It makes every product a “digital asset” with a certified, sharable provenance that proves to consumers and regulators that your sustainability initiatives are real and working as intended. Its intuitive, scalable solutions can be used individually or as a complete platform to shepherd sustainability initiatives to completion and create end-to-end traceability, transparency, and visibility.

Contact us today to see how it works. And be sure to check out our other resources about the cosmetics industry, sustainability, and traceability:

Cosmetics Supply Chain Transparency for Business Value and Opportunity

Posted on August 29, 2022May 12, 2023 by rfxadmin

Today, we’re looking at what cosmetics supply chain transparency means, why it matters, and how cosmetic companies can achieve it through the use of technology and gain much more than just a healthier bottom line.

Cosmetics supply chain transparency vs. traceability

Cosmetics supply chain transparency means the whole supply chain is visible, from raw materials, production, and packaging to delivery to retailers and, ultimately, consumers. A lack of transparency in complex supply chains that move billions of products can cause significant risks to both consumer and product owner.

Transparency results from creating a full, shareable, fact-based profile of every aspect of the supply chain. It is a means for companies to support its claims (e.g., product provenance, sustainability, ethical sourcing) and tell the world, “We are what we say we are.” In this way, transparency is a strategic concept — one more and more cosmetic companies are adopting because of its significant benefits for operational efficiency, consumer engagement, brand protection, and profitability.

Traceability most often concerns individual products and aggregations (e.g., boxes, cartons, pallets) and observing/monitoring them as they make their way through the supply chain. It is a means to identify, follow, and verify what’s in your supply chain, as well as comply with regulations that mandate traceability through serialization and digitalization.

Cosmetics supply chain transparency for business value

It’s the global cosmetics market will grow from $287.94 billion in 2021 to $415.29 billion in 2028. Indeed, there are signs the market is booming. For example, L’Oréal, the world’s largest beauty brand, reported record profits last year, with CEO Nicolas Hieronimus, recently commenting, “2021 was a historic year for L’Oréal … Over two years, the Group achieved growth of +11.3 percent like-for-like, spectacularly outperforming a market that had returned almost to 2019 levels.”

The other leading cosmetics brands also did well in 2021. Unilever reported just over $24 billion in beauty and personal care sales, and Estée Lauder had $16.2 billion in sales, an increase of 13 percent over last year.

The “Big 3” of the cosmetics industry have something in common other than strong market performance: Each is committed to transparency and puts it front and center in their business strategy and mission. For example, L’Oréal held a virtual “Transparency Summit” last year, Unilever equates transparency with “integrity,” and Estée Lauder has a dedicated supply chain transparency page on its website.

Transparency and risk management

Despite the opportunity for growth, however, global supply chain challenges can threaten a company’s ability to satisfy growing consumer demand. We all know about the supply chain weaknesses revealed during the pandemic, including overreliance on manufacturing hubs and shipping bottlenecks, not to mention changes in consumer expectations and the way they want to buy and interact with cosmetics.

In a rapidly evolving landscape of tougher regulations, ongoing supply chain uncertainty, increased consumer expectations, and brand risk, transparency has become foundational for success.

Regulatory compliance. Cosmetics regulations vary around the world. For instance, laws in the EU are much broader than in the United States. Generally, however, companies are responsible for making sure their cosmetics are safe, properly labeled, and comply with the regulations that apply to them.

Furthermore, more and more regulatory bodies are calling for modernization via the adoption of digital technologies to ensure products are safe and that companies are able to remain compliant as regulations evolve. Cosmetics supply chain transparency (and traceability) is crucial to compliance. Read our “Global Cosmetics Market” white paper to learn more about regulations in key markets and how technology is driving the industry.

Counterfeits and fakes. And as we’ve written before, counterfeiting is a big problem for the cosmetics industry. Fake products endanger consumers’ health. They can contain toxic substances such bacteria, animal waste, and carcinogenic substances (e.g., lead).

Counterfeits and fakes also damage profits. In “Global Trade in Fakes: A Worrying Threat” (June 2021), the Organisation for Economic Co-operation and Development (OECD) reported that the global value of counterfeits and pirated goods amounted to as much as $464 billion in 2019, or 2.5 percent of world trade.

Brand reputations are also jeopardized by counterfeits. One bad (or very bad) experience can send customers to your competitors and tarnish your image, especially as consumers broadcast their opinions online. Our brand protection series talks more about counterfeits. It’s a real problem that every industry must contend with.

Diversion, theft, and gray markets. The complexity of global supply chains makes it possible for products to end up in markets where they shouldn’t be. Unauthorized or unofficial distribution channels shepherd expired, damaged, or otherwise compromised goods to unauthorized third-party sellers that consumers may think are legitimate. A product bound for Asia winds up in the United Kingdom.

Transparency is not a singular solution for these problems, but it is an indispensable facet of a coordinated, integrated supply chain management strategy to mitigate risk and create real business value.

Mainstreaming sustainability and ESG reporting

As we’ve noted, consumers are demanding more information about the products they purchase; they want to know that ingredients have been ethically sourced and are safe. They want a trust-based relationship with their brands — and if they don’t get it, they’ll happily take their business elsewhere.

This means cosmetics companies must be vigilant and forthcoming about everything in their operations, from their labor standards and how they source raw materials to packaging and other fundamentals of their supply chains. In response, environmental, social, and governance (ESG) reporting has become more prevalent.

ESG reporting measures a company’s social and environmental performance through its supply chain and operations. Cosmetics companies are under pressure, not least from consumers, to reduce their environmental and social impact, set up monitoring systems, use sustainable materials, and publish their social credentials. In this way, ESG reporting is part of cosmetics supply chain transparency.

Or, more accurately, cosmetics supply chain transparency enables effective, accurate ESG reporting.

Leading cosmetics companies are now using ESG reporting, or some form of it, as a strategic tool to monitor their success in sustainability. For example, in 2021, L’Oréal implemented “L’Oréal for the Future,” its sustainability program for 2030. Without mincing words, it prioritizes transparency in product manufacturing, transport, the sourcing and quality of ingredients, sustainability, and more:

“Our commitments towards 2030 mark the beginning of a more radical transformation and embody our view as to what a company’s vision, purpose and responsibilities should be to meet the challenges facing the world.”

Ironically, ESG has enabled some bad players to essentially fake their declarations of transparency and sustainability. It’s called “greenwashing,” when “a company purports to be environmentally conscious for marketing purposes but actually isn’t making any notable sustainability efforts.” Greenwashing is the antithesis of transparency. It’s unethical, and companies that engage in it never intend to meet or quantify their stated transparency, sustainability, and ESG claims.

We’ll be talking more about cosmetics supply chain sustainability tomorrow. Be sure to visit our blog for that.

Final thoughts

Cosmetics supply chain transparency benefits consumers and brand owners alike. For consumers, it means products are safe and legitimate, comply with regulations, and demonstrably rise to the company’s sustainability and ESG goals. For brand owners, transparency offers greater operational efficiencies, mitigates common supply chain risks, and creates opportunities to burnish their reputations, engage with consumers, and tell them with certainty that your products and processes are what you say they are.

Is it difficult to attain transparency? No. Our Traceability System enables companies to follow everything in their supply chains in real time from virtually anywhere in the world. It makes every product a “digital asset” with a certified, provable, and sharable provenance. Its intuitive, scalable solutions can be used individually or as a complete platform to create transparency and end-to-end supply chain traceability and visibility. rfxcel and Antares Vision Group are committed to bringing transparency to all supply chains. We can show you how we do it in about 15 minutes, so contact us to schedule a demo.

And if you’re interested in a transparency case study of sorts, read our global seafood “Transparency Trilogy.” What’s true for seafood is true for cosmetics: Its supply chain reaches into remote areas and involves vulnerable populations and threatened resources.

Antares Vision Group Will Be at GS1 Connect 2022 in San Diego Next Month!

Posted on May 23, 2022May 23, 2022 by rfxadmin

We’re getting excited for GS1 Connect, June 7-9 at the Marriott Marquis San Diego Marina! Not only are we a Premier Sponsor — we’ll be speaking about supply chain traceability and smart hospital systems.

We’ll also be at Booth 115 with our award-winning Traceability System, demonstrating solutions for the food and beverage, pharmaceuticals, and cosmetics industries.

So take 20 seconds (really) to sign up to meet us. We have a limited number of discount codes for 10 percent off your registration fee. And while you’re at Booth 115, take our short survey and you could win a $500 DoorDash gift card.

More about GS1 Connect and our speakers

The theme of this year’s conference is “Adapt.” The focus is on how businesses have used GS1 Standards to overcome challenges to thrive in uncertain times. There will be 40+ live sessions (including ours!), 50+ exhibitors (including us!), trading partner roundtables, and other events centered on user stories and leadership insights for supply chain optimization.

As GS1 says, the event is a place to “network with the greatest supply chain minds and learn how to leverage GS1 Standards to optimize your business.” Indeed.

In “Supply Chain Traceability: Can Your Business Survive Without It?” Herb Wong, our vice president of product and strategy, will discuss why traceability is foundational to business success in a rapidly evolving landscape of digitalization, ever-changing consumer expectations and power dynamics, tougher regulations, and supply chain uncertainty. He’ll be speaking on Thursday, June 9, at 1:45 p.m.

In on-demand session 509, “Smarter and Safer Hospitals: When Innovative Technologies Meet Patient Safety,” our Digital Healthcare Department Director Adriano Fusco and Dr. Alberto Sanna, director of the Research Center for Advanced Technologies for Health and Well-Being of the IRCCS San Raffaele Hospital in Milan, Italy, will discuss how traceability and GS1 Standards enable end-to-end visibility of medications from arrival at the hospital to dispensation and optimized resources to focus on patient safety.

Final thoughts

We’ve always valued GS1 Standards, and we’ve always ensured our customers can adhere to them and take full advantage of them to maximize efficiency and create value across their operations everywhere they do business.

And who took the time to note the 50th anniversary of the venerable Global Trade Item Number (GTIN)? We did, with a blog post devoted to GS1 barcodes.

As we said in that article, “Where would we be without standards?” We’d love to see you at GS1 Connect and talk about those standards and how they fuel traceability. We hope you’ll take those few seconds to sign up to meet us at Booth 115, get 10 percent off your registration, and enter to win a nice prize when you take our survey.

In the meantime, drop us a line if you have any questions or want to know more about our traceability solutions for pharma, food and beverage, cosmetics, and other industries. We never pass on an opportunity to talk about what makes us your best partner for end-to-end supply chain solutions, from L1 all the way to L5!

See you in San Diego June 7-9!

Wine Brand Protection and the Fight Against Counterfeits

Posted on January 27, 2022January 31, 2022 by rfxadmin

Today we’re talking about wine brand protection. Why it’s important for the industry and how to use your supply chain to make it as strong as it can be. Specifically, we’re focusing on counterfeits, an evergreen problem for the industry.

Talking about brand protection is a fitting conclusion to our series of articles about wine and a great way to mark the last day of the Unified Wine and Grape Symposium. Speaking of which, stop by Booth 807 to meet us and our other Antares Vision Group team members, FT System and Applied Vision. We’d love to see you before everybody heads home.

Now on to wine brand protection and the fight against counterfeits.

Why is wine brand protection important?

In the wine industry, your brand is critical to success. Whether you’re a multi-generational operation or the new kid on the block trying to make your mark, it’s one of your most valuable assets.

Your brand tells the story of your wine, from the soil and the vines to the bottle to your customers’ tables. It connects you to your partners and consumers. It sets you apart from your competition. It’s your identity out there in the world.

Alas, wine — and spirts — are under a constant barrage of brand protection threats and challenges. The circumstances range from bad actors trying to rip you off to the ebb and flow of the market and the trends that are defining it as we’ve made our way into the 2020s. Today, we’re focusing on the bad actors. Let us know if you’d like us to write more about factors or have anything to add to our discussion.

Counterfeits and fakes

Counterfeits and fakes are the undisputed champion of threats to wine brand protection. It’s an age-old problem, though industry observers rightly note that the pandemic has created more opportunities for fraud. The increase in online sales, including auctions, and less in-person due diligence because of travel restrictions are two examples.

How is wine counterfeited? Let us count the ways. There can be theft at production and storage sites. Theft and diversion also happen as wine is being delivered across the supply chain.

Counterfeiters also like to misrepresent a wine’s origin, vintage, variety, blend — really anything that distinguishes a brand and increases their chances of making a profit.

“Damaged wines” also manage to get into the marketplace. These might have been stored at the wrong temperature or have torn labels and bad corks. Adulterated or cheap wine is bottled in a prestige package.

In Part 1 of our wine traceability series, we mentioned the notorious Rudy Kurniawan. But the daily reality of counterfeit wine (and spirts) is much less dramatic. Consider these news items:

In 2011, hundreds of bottles of fake Jacob’s Creek wine were seized in the UK. More recently, a shopkeeper in England was fined more than $5,000 for having 142 bottles of fake Yellow Tail on his shelves. He said he bought the wine from a man who popped by his shop in an unmarked van; authorities say he could have profited in excess of $600 by selling the plonk. He didn’t get a receipt or an invoice, and the man in the van has not been found. Interestingly, analysis showed that the bogus Yellow Tail was less than 12 percent alcohol. Real Yellowtail is 13.5 percent. This is another example of how counterfeit wine is adulterated.

In 2020, 4,200 counterfeit bottles of Bolgheri Sassicaia, a prestigious (and very expensive) wine, were seized in operation “Bad Tuscan.” Revealing the international nature of counterfeiting, investigators said the fake wine originated in Sicily, the bottles came from Turkey, and the labels and wooden boxes came from Bulgaria. Furthermore, “The 2010 and 2015 vintages, celebrated by Italian and international critics, were the most prevalent among the fakes.”

As for the spirts industry, fake bourbon is hot right now and authorities nabbed 400+ liters of counterfeit vodka this month in Scotland.

To illustrate the problem more broadly, about 1.7 million liters of counterfeit alcohol was seized in Europe between December 2020 and June 2021. That haul was part of a joint INTERPOL-Europol operation called OPSON X, which netted almost 15,500 tons of illegal products with an estimated street value of nearly $60 million. Upwards of 68,000 checks were carried out by 72 participating countries, resulting in more than 1,000 criminal cases.

The upshot is that up to 20 percent of wine sold worldwide is fake and counterfeits cost the industry as much as $3 billion every year.

What can we do about it?

Counterfeiters and fraudsters exploit weaknesses. This is what gives them openings to assault your brand. The good news is that you can mitigate these weaknesses and gather real-time intelligence for effective brand protection strategies using your supply chain.

Your supply chain mirrors your brand. It’s the embodiment of your business. If it’s not healthy, your brand can’t be healthy. You need to be able to continuously scan it, diagnose it, and take immediate action should a threat arise.

Four supply chain solutions in particular are vital for wine brand protection: serialization, real-time monitoring, end-to-end traceability, and mobile traceability.

We talk about these in Part 2 of our brand protection series, “Brand Protection Strategies and Your Supply Chain.” Part 1 talks about top supply chain threats and your brand protection strategy. We encourage you to read these articles, as well as our consumer engagement series.

Final thoughts

Your success and reputation depend on how seriously you take brand protection. This means being able to authenticate every ingredient and every bottle. You have to monitor and prove storage conditions and provenance. You have to have deep, real-time insight into what you’re doing and where your products were, are, and will be. And you have to have the granular data to back up every claim and demonstrate to your customers that your wine is exactly what you say it is.

If you read our “Wine Consumer Engagement: Ten Things to Know for 2022” post from the other day, you saw that our mantra for wine consumer engagement is “A message in every bottle.” For wine brand protection, we like to say that you should tap into the “Brut” force of your supply chain. The short list of benefits includes:

- Fortify with supply chain data and protect with unique digital IDs
- Create an indelible provenance and create your product story
- Monitor in real time 24/7
- Inspire consumer trust and crowdsource brand protection
- Leverage IoT to eliminate blind spots
- Maintain chain of ownership
- Protect trading partners and consumers

And, of course, combat counterfeits and theft. Contact us today to learn more about pairing your brand with the finest supply chain solution for wine brand protection. Also be sure to read our other articles about the wine supply chain and why your supply chain is vital for effective brand protection and consumer engagement:

Wine Consumer Engagement: Ten Things to Know for 2022

Posted on January 25, 2022January 31, 2022 by rfxadmin

Virtual tastings are so 2020. Don’t get us wrong: They’re still a thing. But to do wine consumer engagement right in 2022, winemakers have to do a lot more than ask people to hop on a Zoom call. That’s why today we’re talking about 10 things that are vital to successful wine consumer engagement.

Also, don’t forget that the Unified Wine and Grape Symposium starts today! We’ll be exhibiting with our fellow Antares Vision Group member companies FT System and Applied Vision, so sign up today and visit us at Booth 807.

Ten things to know about wine consumer engagement in 2022

Like our recent “Five Wine Supply Chain Trends for 2022” and “Trends for the Digital Wine Supply Chain” blog posts, we’re not ranking these aspects of wine consumer engagement. They’re all important. Winemakers should consider each carefully when crafting their engagement strategies.

1. Nail your story

Your brand’s story is vital to wine consumer engagement. (All consumer engagement, actually.) It’s the foundation of “the face” and the heart of the personality you’re going to project to your customers and potential customers. What do you want people to know about you? Where is your brand “coming from”? What sets you apart from other brands?

Many of the other aspects of wine consumer engagement we’re discussing today stem from and overlap with the decisions you make about your story. To get this right, expect to do some soul-searching and ask yourself some tough questions about who and what your brand is.

2. Know your customers

It’s Marketing 101, right? If you don’t know who’s buying your products, you’re missing opportunities and wasting money. Today, however, knowing your customers requires elbow grease. You have to devote time and resources to gather information (i.e., data) and develop profiles to inform your wine consumer engagement.

Here’s a handy tool: ALE. It’s an appropriately wine-and-spirits-flavored abbreviation for ask, listen, and engage. Ask consumers questions. Listen — really listen — to their answers, feedback, suggestions, opinions, etc. Importantly, what they say might not jibe with your own vision of your brand, so be willing to adapt and pivot and do the extra work to give people what they want, not what you want them to want.

To engage, pull out all the stops. Social media, of course. But you can also get out into the real world. Talk with sommeliers to see what’s trending with wine lovers. Talk with retailers to learn what people are thinking and buying. For instance, is there a cheaper brand that people are being drawn to? What brands have buzz?

We all know that wine can be a very personal experience. It’s part of its appeal. It’s why people get excited about wine and anticipate the purchase as much as the uncorking. Take advantage of that. Ask, listen, and engage.

3. Customer first, brand second

So, you’ve done the research and know who your customers are. Time to let them know all about your brand, right?

Not really.

Always remember that wine consumer engagement is about the consumer. They are the hero, not you. It can be a difficult lesson to learn, but your job is to guide people toward what they want and demonstrate the value your brand brings. Don’t make it all about you, because it’s not. Give people what they want to see and share, not what you want to show them.

4. Accept that you might not be that special

This might sting. You have to be self-aware. You have to know your strengths and weaknesses. You have look in the mirror and do an honest self-assessment.

What, if anything, makes you unique? Remember, unique means unlike anything else. One of a kind. Are your competitors saying they’re unique while making the same claims you’re making?

Industry observers are noting that wineries are saying the same thing. “Estate-grown,” “multi-generational,” “visionary winemaker,” and “terroir” are on their short list of traits and lingo that are decidedly not unique in the market. You can talk about these things, but don’t pin your identity on them.

Knowing your customers is what will make your brand stand out. What do they like (and dislike) about your wines? Where do they drink your wines? How do they “use” your wines? Are they talking about and sharing your wines on social media? What do they expect from you? Meeting their demands is what will make your brand special.

5. Be yourself

All this said, it is critical to be yourself. Don’t put on airs. Don’t pretend to be something you’re not. Don’t be a bore. Today’s consumers have a nose for you-know-what. If they get even a whiff of phoniness, watch out. So, you have to be authentic. Keep it real.

6. Focus on sharing

Think of wine consumer engagement as a self-perpetuating chain in which the links are interactions, including sharing between and among your customers. For this to happen, you have to create content that people want to see, experience, and share. The possibilities are virtually limitless — videos, contests, loyalty programs, giveaways, prizes … . Just remember to focus on your consumers, not yourself.

7. Always bring value to consumers

Ask yourself this question every day: What have you done for them lately?

You must always bring value to your customers. “ABV” — another industry-appropriate abbreviation. This means different things to different people, of course. For some, it might mean proving the provenance of your wines and demonstrating that you’re focused on transparency and sustainability. For others, it could mean sharing a picture of your team out in the vineyard or a fun promotion, such as winning a prize for sharing a video. If you’re not always bringing value to your customers, who are the heroes of your wine consumer engagement, you’re going to push them away.

8. Devote resources

Wine consumer engagement isn’t a “set it and forget it” proposition. It shouldn’t be an afterthought delegated to whoever might happen to have some spare time.

You need a person or a team to conceptualize and create content, push it out across all your channels, monitor and analyze reactions, make changes, and respond to what people are saying and asking. You also need to pay attention to what your competitors are doing and saying.

In other words, you have to be fully engaged in your consumer engagement.

9. Business as usual probably won’t cut it

It’s a cliché because it’s true: You have to think outside the box. Running an email campaign* or posting a video on Facebook then kicking back with a nice Pinot to watch your sales boom isn’t how wine consumer engagement works. It’s called consumer engagement for a reason: You want to get a response. You want to build that self-perpetuating chain of interactions. Creativity is key. It’s another reason to devote resources to make sure you’re doing it right.

*A note about email and marketing: Some people say it’s dead; others say it’s alive and well. Only you can decide if it works for your brand and if it should be part of your consumer engagement strategy.

10. Leverage supply chain data

We’ll let you in on our secret: The key to effective wine consumer engagement is your supply chain, which is a goldmine of actionable data.

The basic building block is serialization, which turns every product into what we call a “digital asset.” Each digital asset has a unique digital identity that can be monitored from production all the way to the person who buys it. With rich, traceable data about every item in your supply chain at your fingertips, you can establish and maintain connections with consumers before, during, and after the sale. For example:

- Link every product to unique content and brand interactions
- Give consumers the information they demand (e.g., provenance, transparency, sustainability)
- Hyper-personalize and hyper-target every engagement based on location, time, or purchasing data
- Empower consumers to reject counterfeits, alert for diversions/gray markets, authenticate products, help with recalls
- Gain valuable insight into your customers

Final thoughts

“A message in every bottle.” This is rfxcel’s mantra for using your supply chain for wine consumer engagement. Our Traceability System provides granular data from the vineyard all the way into your customers’ daily lives. You can use it to define and tell your story, know your customers and bring them value, and inspire your brand to think outside the box.

If you’re at the Unified Wine and Grape Symposium this week, stop by Booth 807 to see our solutions in action and learn more about how we can help your brand stand out in a very crowded market. If you aren’t there, contact us today to schedule a short demo with one of our digital supply chain experts.

And be sure to read our other articles about the wine supply chain and why your supply chain is vital for effective consumer engagement and brand protection:

Trends for the Digital Wine Supply Chain

Posted on January 19, 2022January 31, 2022 by rfxadmin

As we said in our post about wine supply chain trends, it’s definitely not a Dry January in our blog. Today’s topic: the digital wine supply chain.

First, though, we’re excited about exhibiting at the Unified Wine and Grape Symposium next week. Head over to our sign-up page. We have some complimentary passes available (on a first-come basis) and we’ll be giving away a few bottles of fine Italian wine at Booth 807! Sign up and visit us at the show!

Now, on to the digital wine supply chain.

What are the benefits of a digital wine supply chain?

If you follow our blog (and we know you do), you know we’ve been talking about the digital supply chain for years. For us, digitization isn’t a fad or a trend; it is the No. 1 most important “thing” you can do for your business.

In broad terms, the benefits of building a digital wine supply chain are visibility, traceability, and transparency; sustainability; optimized efficiency and productivity; and creating value and enabling new business models.

It’s important to note that visibility, traceability, and transparency make all the other benefits possible. This “trifecta” in a digital wine supply chain enables longevity, brand strength, innovation, and compliance.

Digital wine supply chain trends

We’re not ranking these digital wine supply chain trends, just noting some of the most important and prominent technologies that are driving the industry. This is also a very high-level summary, as getting into granular details is far beyond the scope of our blog. If you have any questions or want more information, contact us!

Furthermore, these technologies are important in every supply chain. It doesn’t matter what your business is: a digital supply chain is your most important strategic asset.

Blockchain

If you had to describe blockchain in one word, it would probably be “security.” Specifically, it’s about forwarding (i.e., sharing, utilizing) encrypted data that’s virtually impossible to corrupt, alter, or otherwise modify. For details about what it is and how it works, download our “Blockchain-Based Supply Chain Traceability” white paper.

For the digital wine supply chain, blockchain’s primary appeal — as you might have guessed — concerns visibility, traceability, and transparency. Put simply, it’s a powerful tool to verify everything in your supply chain, from the vineyard to distribution to final sale to the person who will be pouring your wine into a glass. It makes traceability accessible and verifiable for everyone in the chain (e.g., your trading partners).

Blockchain has other applications, such automatically verifying, validating, and enforcing contracts. These “smart contracts” can be implemented throughout the digital wine supply chain, to set up and confirm deliveries and pay suppliers, for example. There’s even been some buzz about non-fungible tokens (NFTs) in the wine industry.

Adoption of blockchain is far, far from universal. People still don’t fully understand what it is, how it works, and the value it can bring. However, the consensus seems to be that it will blossom and proliferate during the 2020s. Nowadays, data is king; blockchain safeguards data, so keep it on your radar.

Internet of Things (IoT)

IoT technology puts you everywhere your supply chain goes. It’s the heart of real-time data collection, monitoring, adjusting, risk mitigation, and brand empowerment.

For the wine industry, this means using sensors to cultivate “smart vineyards” and build a supply chain with end-to-end visibility, traceability, and transparency. (Are you detecting a theme?) For example, IoT-enabled sensors can be buried in soil, embedded in vines, or hung in leaves to monitor environmental conditions, collect data, forecast weather conditions, reduce risks during harvesting, and improve productivity.

IoT also promotes sustainability, including water and soil conservation and lowering/eliminating pesticides; combined with satellite imaging, these capabilities safeguard vineyards and promote sustainability.

IoT has applications in every facet of the wine the supply chain. The upshot is data. Lots and lots of data. Collected and transmitted in real time, the data tells you exactly what’s happening in every part of your operations on land, air, and sea.

E-labels and e-certificates

Electronic labels, or e-labels, make life easier for everyone: You, your employees, your trading partners, regulators, packaging designers, graphic designers, and your customers. They are foundational to the digital wine supply chain. And because they replace multiple paper labels, e-labels are better for the environment and promote sustainability.

DataMatrix codes and QR codes are examples of e-labels. Essentially, they can be “loaded” with information about ingredients, product provenance, traceability data, compliance data — virtually anything. They can also link to social media, websites, apps, rewards programs, and special content such as videos. E-labels are an all-in-one solution for every member of the digital wine supply chain.

Importantly, e-labels are powerful tools to fight fraud and counterfeits, problems that have a huge negative impact on the wine industry. Full traceability data, accessible with a single scan by a supply chain partner or a consumer in a store, proves a that a bottle of wine is genuine. E-labels are critical to our trifecta of traceability, transparency, and visibility.

A good case study is the EU’s “U-label” digital platform, which allows wine and spirts producers to easily create e-labels (in this case QR codes) and give consumers product information in their native language. It’s a collaborative effort of the Comité Européen des Entreprises Vins (CEEV), the association representing the European wine industry, and SpiritsEUROPE, whose mission is to “represent, defend and promote the European spirits sector and help members achieve sustainable business growth.”

For a deep dive on QR codes, DataMatrix codes, and other barcodes, read our “Understanding GS1 Barcodes in the Global Supply Chain” blog post.

Electronic certificates are similar to e-labels. They too are “loaded” with data that prove a product meets certain requirements and certifies key information such as origin, import-export status, tax status, and sanitary/phytosanitary compliance.

In the wine industry, common certificates include certificates of origin, free sale certificates, quality certificates, organic certificates, and environmental certificates/certifications. However, the industry has not established standards for e-certificates and to a large degree still relies on a paper-based system.

With the push for a digital wine supply chain, standard-making bodies for e-certificates should consider what certifications to include (e.g., origin, export, quality, sanitary), relevant categories of information (e.g., producer, brand, batch, Harmonized System code), and how the information will be exchanged (e.g., through central hubs).

Other things to watch in the digital wine supply chain

We’ve run out of space for now, but here are few other things to keep an eye on as the digital wine supply chain evolves.

- Artificial intelligence to manage and process data, monitor crops, make decisions about watering and fertilizing, predictive maintenance on lines, warehouse management, and distribution
- Robotics in planting, fertilizing, pruning, harvesting, and warehousing
- Geographical Information Systems (GIS) and satellite imaging for “digital cartography” to monitor land use, study the effects of climate change, conduct surveys, track diseases, generate thermal and infrared imaging
- Creating “digital assets” to leverage in brand protection and consumer engagement strategies. Note: Our upcoming articles will discuss this in detail.

Final thoughts

The wine industry has always maintained a balance between tradition and innovation. Winemakers, grapegrowers, and other stakeholders want to preserve the past while embracing current and developing technologies.

The digital wine supply chain brings the industry the best of both worlds: Technology ensures traditions endure. But technology also creates new traditions for traceability, transparency, visibility, and sustainability — the very things that, as we said at the outset, enable longevity, brand strength, innovation, and compliance.

Contact us today to learn more. And be sure to read our other articles about the wine supply chain and why your supply chain is vital for effective consumer engagement and brand protection:

Who Investigates Counterfeit Cosmetics Products?

Posted on December 20, 2021November 11, 2022 by rfxadmin

In our last blog post, we talked about the global problem of counterfeit cosmetics. Today, we’re talking about who investigates counterfeit cosmetics products, starting with how cosmetics are regulated in the United States and the EU.

Regulation of cosmetics products varies greatly from country to country, so our discussion today should not be taken as an overview of what to expect everywhere cosmetics are sold. Enforcement of laws and the actions authorities take to target counterfeits also vary.

What is universal, however, is that the cosmetics industry faces unique challenges with consumer safety, increased consumer demand for transparency, and being targeted by counterfeiters. It’s good to know who investigates counterfeit cosmetics products and what measures you can take to be part of the solution.

Who investigates counterfeit cosmetics products: USA and EU

Counterfeit cosmetics are dangerous because the criminals who make them don’t follow regulations or standards for production. Fakes are often contaminated with “stuff” you really don’t want to think about, let alone put on your face, such as bacteria, animal and human feces, arsenic, and mercury. So, regulators keep an eye on cosmetics.

United States

In the United States, the Food and Drug Administration (FDA) is the governing body for cosmetic regulations. Cosmetics products do not require FDA approval — but they are regulated. The Federal Food, Drug, and Cosmetic Act (FD&C Act) and the Fair Packaging and Labeling Act (FPLA) explain the FDA’s requirements, restrictions, and disciplinary actions regarding cosmetics.

The FDA focuses on preventing adulteration and misbranding, mislabeling, and harmful ingredients or drugs. Adulteration refers to products or product ingredients that are not in line with FDA regulations or that have been contaminated. A misbranded product is “improperly labelled or deceptively packaged,” which could include counterfeit cosmetics products. The FDA prohibits 11 chemicals from being used in cosmetics products.

Additionally, the FDA reserves the authority to request recalls and work with the Department of Justice, Federal Bureau of Investigation (FBI), and Border Customs if any violations are found. It maintains a “Cosmetics Recalls & Alerts” page and has a searchable “Enforcement Report” database of recalled products.

The European Union

Cosmetics products manufactured in and imported to Europe are regulated under the EU Cosmetic Regulation. Like the FDA, the EU regulates ingredients and labeling; generally, however, the regulations are broader and more precisely defined.

For example, more than 1,300 substances (e.g., chemicals, colorants, and preservatives) are banned from cosmetic use, and hundreds more are permitted only under certain conditions. The regulations also mandate Good Manufacturing Practices (GMP), whereas the FDA only suggests GMP as “guidelines for effective self-inspection.”

Furthermore, the EU requires significant product documentation. Every cosmetics company must have a “responsible person” for every product they make. This person is responsible for ensuring products are safe and comply with regulations, and must submit a cosmetics product notification through an online portal before a product can be sold.

The responsible person must also create a product information file that includes the name, description, and nature of the product; description of the manufacturing methods; statement of compliance with regulations and GMP; a product safety report; and data about animal testing, if any. They must also assemble a product safety report that contains product safety information and a product safety assessment.

Do consumers have a role?

Yes, and it begins with vigilance with prices, packaging, and product quality:

- - Prices: If the price is too good to be true or just noticeably cheaper than the last time you bought it, there’s a good chance it’s a fake.
  - Packaging: The printing might look shoddy or the colors might seem off. There might not be a barcode. There might not be packaging at all, and the products might be offered in bulk.
  - Product: If the consistency or texture seem different, it’s likely a fake

In the United States, consumers can “report suspicions concerning the manufacture or sale of counterfeit or pirated goods” to the FBI. For suspected counterfeit cosmetics products seen online, consumers can contact the FBI Internet Fraud Complaint Center. The FBI has also partnered with the National Intellectual Property Rights Coordination Center to create a tip line where consumers can report products they suspect to be fake.

In the EU, consumers are encouraged to contact their local authorities about counterfeit cosmetics products. Depending on the nature of the situation, the authorities might investigate themselves or contact the appropriate investigative body, which could include Europol. The United Kingdom has Action Fraud, an online reporting tool for fraud and cybercrime.

Consumers should also be aware of what brands are doing to combat counterfeits and consumer engagement programs that encourage people to report suspicious products.

Final thoughts

If you really want to drill down into the U.S. and EU regulations, download our “Global Cosmetics Market” white paper today. It also has a section about regulations in Singapore, plus more information about counterfeit cosmetics products.

In “Top Supply Chain Trends of 2021,” we posed some important questions companies should ask themselves as we move toward what is likely to be another challenging year for supply chains. Many of those questions, listed below, fit perfectly with what we talked about today — regulations, counterfeits, brand protection, consumer engagement.

Your supply chain is where all of these concerns converge. Which is why you should schedule a short demo of our solutions. In about 15 minutes, we can show you the basics of our Traceability System and how it transforms your supply chain into a strategic asset that will improve and protect every facet of your business.

Are you keeping up with supply chain trends?
Are there gaps and blind spots in your supply chain?
Are counterfeits a problem in your industry?
Are you doing everything you can to protect your brand?
Are you actively reaching out to your customers to bring them closer to your brand?
Are there compliance deadlines on the horizon?
Are you certain your current supply chain solutions are truly optimal?
Are you using your supply chain as a strategic asset?

Why We Should Worry About Counterfeit Cosmetics

Posted on December 20, 2021November 11, 2022 by rfxadmin

Counterfeit cosmetics have boomed during the pandemic. Not that they’ve ever not been in fashion among the criminal set. But recent research shows a renaissance, a proliferation of often dangerous fakes readily available to more people and through newer channels.

We just published a white paper about the global cosmetics market. It has a section about counterfeit cosmetics, and now we want to keep the conversation going with more information about this global problem. Here we go.

The statistics reveal “a worrying threat”

In “Global Trade in Fakes: A Worrying Threat” (June 2021), the Organisation for Economic Co-operation and Development (OECD) reported that the global value of counterfeits and pirated goods amounted to as much as $464 billion in 2019, or 2.5 percent of world trade.

Worldwide, there were “consistently” more than 130,000 customs seizures of counterfeit and pirated goods annually in 2017, 2018, and 2019. “Overall,” the report continues, “the unified database on customs seizures of IP-infringing goods includes almost half [a] million observations.”

In 2017 and 2018, counterfeit cosmetics and perfumery products accounted for about 4 percent of all customs seizures. That rose to just under 10 percent in 2019 — a considerable jump in a very short time. Furthermore, cosmetics and perfumery products were among the Top 5 products “targeted by counterfeiters” every year from 2011 to 2019. (The others were articles of leather, clothing, footwear, and watches.)

What toll do counterfeit cosmetics take on the industry’s fiscal health? One report shows that annual sales losses from counterfeiting in cosmetics and personal care products sector amounted to 4.7 billion euros, or about $5.3 billion.

Our brand protection series talks more about counterfeits. It’s a real problem that every industry, some more than others, must contend with.

Counterfeit cosmetics in a huge global market

According to a Fortune Business Insights report published in September, the cosmetics market was worth $277.67 billion in 2020. Despite an overall decline in sales during the pandemic, the market is projected to grow to $415.29 billion by 2028.

The market has responded to consumer demand for a wider variety of products, and online shopping has added an ease of access. Online shopping will drive the market and, according to industry watchers, could account for nearly 30 percent of global beauty sales by 2026.

However, the dramatic shift from in-person to online purchasing during the pandemic has emboldened criminals to churn out more and more counterfeit cosmetic products. As OECD put in its “Global Trade in Fakes” report, “Under confinement, consumers turn to online markets to [fulfill] their needs, driving significant growth in the online supply of a wide range of counterfeits.”

Research from the U.S. Department of Homeland Security supports this finding. Its “Combating Trafficking in Counterfeit and Pirated Goods” report (January 2020) noted that “Selling counterfeit and pirated goods through e-commerce platforms and related online third-party marketplaces is a highly profitable venture.”

The threat to businesses and consumers

Counterfeit cosmetic products are a real threat to manufacturers and consumers. The bogus goods mimic the original, undercutting company sales. They bypass quality control processes and regulatory oversight, which means they can contain harmful “ingredients.”

For example, in 2018 authorities in the United Kingdom recovered counterfeit cosmetics that were found to contain mercury and high levels of hydroquinone, a skin-whitening agent. UK Police have also warned consumers about fake products containing “rat droppings, human urine, and arsenic.” Police in Los Angeles found counterfeits with bacteria and animal waste.

With the surge in online orders, shipping has become important to the counterfeit industry. The OECD reported that between 2017 and 2019, 64 percent of global seizures were postal shipments and 13 percent involved express couriers. In the same period, 77 percent of all counterfeits seized by authorities were discovered during the shipping period.

Final thoughts

Counterfeit cosmetics — counterfeit anything — threaten consumer safety and brand reputations.

Your supply chain is your first line of defense. With the right solution for end-to-end traceability, like our rfxcel Traceability System, you can leverage data and lock down your supply chain guard to against counterfeits and help mitigate other risks.

You’ll also be able to meet consumer demand for transparency. You can tell them with certainty that your products are what you say they are. You’ll ensure product safety and protect your brand.

If you have questions, we can help. Take a look at our solutions for brand protection and download our white paper about the global cosmetics market. And contact us today to arrange a short demo of our Traceability System. In about 15 minutes, our supply chain experts can show how our solutions will turn your supply chain into your most valuable strategic asset.