Endangered Species May 2018 Briefing

TRUFFLES AND OTHER STORIES.

April showers and sunshine, four seasons in one day, and a trip to Slovenia. I had never been to Slovenia I reckoned, but in fact, I had, when the country was a part of the former Socialist Federal Republic of Yugoslavia, and I was an eighteen-year-old Irish boy on his way to the Greek Islands on his first Inter-rail adventure. That journey was on a train passing through, not a plane, a brief stop in Ljubljana, and swiftly onwards to the sunny Ionian Isles. This time around it was to be three days, work and culture trip with a speaking part in the SOF, the Slovene Advertising Festival. And can I say this was as well an organised festival as I have ever been to, so thank you to my friends at Agency 101 for their invitation. Here is a link to a short interview I did in the sunshine on the Friday morning before I left.

On arrival at my hotel in Portoroz, an hour from the city, and a seaside resort town on the Adriatic, much favoured by the aristo families of the Austro-Hungarian Empire, I fancied a spot of room service to ease me to sleep. As I find pasta a soporific food drug, I spotted a pasta and local black truffle dish on the menu for €18 and reckoned that was good value for a 5-star pasta dish even if the truffle was just an oil splashed on top to add the distinctive fragrance. But when it arrived I was astounded, it looked like they had shaved a few grams of the stuff on the pasta and crammed it into a creamy sauce to boot. As they say, if it looks like a duck and quacks like a duck, it’s a duck. This was the real deal, Isterian Peninsula truffle (not a fake from China), and more than a few shocking grams of it, pungent, punchy, paunch giving. For fiscal reference, in the latest series of the TV series ‘Billions’, running on Sky Atlantic (love this dark drama), a New York belle has 20g of truffle shaved on her pasta at $14 a gram by a leering maître to the squeaky discomfort of her alpha fiancé who has just lost his fortune. 

Leading me nicely on to one of my favourite subjects, food! The last week or two have seen the re-emergence of two ex-River Café (not the greasy spoon) Alumni, Hugh Fearnley-Whittingstall and Jamie Oliver, both campaigning  for action on obesity and the causes of obesity. Tellingly they both are asking for more explicit labelling, whether a traffic light system for cereals from Hugh or any improved labelling so people know what they are buying from Jamie. Is it time for us Creative Agencies, Brand Owners, and Packaging Manufactures to take that baton, or shall we leave it to the legislators in Government to hoist the Jolly Roger and plaster it on everything?

At the end of April we celebrated World Intellectual Property Day, and the role that IP rights play in encouraging innovation and creativity. With this in mind, our editorial this month looks at the global explosion in counterfeit goods, making the point that intellectual property crimes are far from victimless, as many of you will be only too aware.

Best for now,
Ron

Photo credit: Ziga Intihar

Photo credit: Ziga Intihar


THE REAL AND PRESENT DANGERS BEHIND THE GLOBAL EXPLOSION IN COUNTERFEIT GOODS.

We’ve all been there. From Barcelona to Bangkok, Milan to Marseille, New York’s Canal St to any street market in London, the temptations of counterfeit or “fake goods” are everywhere. Sometimes it can appear just too good a deal to pass up the opportunity – no matter what we know it is wrong; that we are otherwise so utterly law-abiding that we wouldn’t even jaywalk across the street to buy fakes. It is strangely guilt-free intellectual property theft, dressed up in our otherwise honest, “honourable” minds as simply “getting a bargain”. But, at what cost, and to whom?

The global counterfeit market is already worth just under $2 trillion a year and is expected to reach an astonishing $2.3 trillion by 2025. A report last year by Frontier Economics estimated that the broader costs, taking into account law enforcement and investment, could be as high as $4.2 trillion. Translating into as many as 5.4 million “legitimate jobs” placed at risk. 

The pace at which counterfeits are spreading around the globe is growing fast. As some 80% of the world’s fake goods are produced in China and Hong Kong, then it is evident that the speed at which China has industrialised, opened trading links and grown economically, has enabled an astonishing boom in the volume of fake goods flooding the global market.

Beyond the obvious economic cost, it is difficult to say with absolute certainty what the health and safety threats inherent in the ubiquitous nature of “fake”-ness are. But it is clear that from counterfeit pharmaceuticals flooding Africa (in which India is the chief production culprit) to the fake food, electronics and cosmetics sweeping Europe there is no guarantee of safety in so much of what we are buying.

The significant technology-led change in recent years is the rise of mail and courier services as a means of distribution via hubs such as the UAE, Hong Kong and Singapore. Free trade zones make it even harder for customs authorities to fight back, while the internet has made it easier to avoid detection. So much so, that the Chinese online commerce giant Alibaba was placed on a watch list at the end of 2016. Last year, the U.N. Office on Drugs and Crime said: “counterfeit goods and fraudulent medicines pose a serious risk to public health and safety”. So what can be done?

As long as there are Louis Vuitton and Prada logos in the world there will be a trade in their counterfeits, so it is not a surprise then that those two brands – alongside the likes of Adidas are at the forefront of brands’ attempts to cajole a complacent European Union for one into stricter, more proactive and tangible action, requiring websites, in particular, to act against counterfeits rather than the current voluntary code.

As the data breach scandal affecting Facebook has revealed in case, we had any doubts, the law, and law enforcement officers, are running to catch up with seemingly inexorable technical innovations. In the sphere of counterfeits, this means the type of transformation that enables the logistics of transportation to be made much more underground.

In manufacturing, the astonishing quality of mimicry inherent in forgery standards is a huge challenge. There is no logo, packaging design or product that a Chinese or Thai forger cannot approximate. The sophistication is such that holograms, watermarks and other devices used on everything from passports to expensive electronics and bottles of wine are no longer an absolute guarantee of authenticity. Jeremy Oliver, an Australian wine critic, estimates that 50% of wines retailing for $35 or more in China are bogus — either through a fake label, a refilled bottle or a copycat brand — with the average bottle of Champagne there filled seven times.

To see why it matters, take just one sector. Does your fake Burberry scarf, Louis Vuitton luggage or Prada sneakers cause that much harm – at least when contrasted with the obvious inherent dangers of the glut of counterfeit Viagra on the world market or fake cosmetics, vehicle parts, booze and cigarettes? The answer is a resounding yes. Luxury alone is a $1.2 trillion global industry. Hundreds of thousands of jobs depend on us paying for the quality, reassurance and safety of genuine branded products. Microlocal economies and macro national economies need us to pay for brands.

In fact, China’s relatively near neighbours in nations such as Vietnam and Thailand are leading the fight-back against being swamped by fakes to the detriment of their burgeoning economies. Anti-counterfeit packaging is a fast-growing industry in its own right - set to be worth $126 billion in 2019. Programmable particles and DNA tagging are much more effective than digital coding alone in ensuring the authentication and tracking of legitimate goods. 

But in the end, there is only so much that governments, police, customs and the global security industry can do in the fight against the fake.  The consumer, as ever, is the driver. If we cannot be persuaded to care enough about quality and safety standards and allow cheaper price points to be the principal driver of purchasing decisions, then the counterfeit explosion will only continue to grow exponentially. In a world where we no longer value “real” enough, we are increasingly prepared to ascribe imagined value to what is counterfeit: from leather goods to news and politicians. We should all be careful of what we wish for.


FURTHER READING.

Business Day (South Africa), 03 April 2018: Alcohol adverts ban ‘will not banish thirst for booze’

The Mirror, 05 April 2018: Health experts want fizzy drinks to carry warning images of rotting teeth to curb kids sugar intake

BreakingNews.ie, 11 April 2018: Irish alcohol label reforms will create cross-border barriers, industry warns

Food Matters Live, 12 April 2018: The sugar tax: what you need to know

The Grocer, 13 April 2018: Red Bull flies high as Lucozade Energy has wings clipped (£) 

Climate Depot, 15 April 2018: Nanny State: EU To Regulate Color Of Bread, French Fries

The Wall Street Journal (USA), 16 April 2018: Coffee Brands Fight California Ruling on Cancer Warnings (£)

BBC News, 16 April 2018: Recycling hope for plastic-hungry enzyme

Drinks Industry Ireland, 17 April 2018: Packaging Legislation – the plain truth

Dobre Zgodbe (Slovenia), 19 April 2018: Ron Cregan: Brands at the Brink of Extinction (YouTube)

The Spirits Business, 20 April 2018: Plain packaging on spirits could ‘stifle innovation'

B & T (Australia), 20 April 2018: Study: Booze Brands Are Breaking Advertising Codes

The Independent, 21 April 2018: Campaign for Real Ale agrees to campaign for more than just real ale

The Guardian, 23 April 2018: Time, please: is drinking becoming as socially unacceptable as smoking?

World Trademark Review, 27 April 2018: “Keep it simple and natural” – research finds consumers are eager to buy sustainable packaging (£)

The Telegraph, 30 April 2018: Whisky shops in England braced for Scottish booze cruisers as minimum alcohol pricing hits