Saudi raid seizes US$1 million haul of copycat FMCG products
Unilever to sue warehouse and producer after raid on illicit trader in Jeddah.
Saudi authorities seized 90 tonnes of copycat FMCG products in a recent raid on a warehouse in Jeddah. The products, which were mainly copies of Unilever brands including Lipton tea and Signal toothpaste, had a street value of about US$1 million. Unilever Arabia is now planning to sue the importer of the products and the owner of the warehouse in KSA.
The seizure, which was co-ordinated by Saudi Arabian authorities and Unilever Arabia, is part of an increasing effort by FMCG producers and government bodies in the Middle East to tackle the problem of counterfeit and copy-cat products, which are estimated to account for up to 7% of sales globally.
Copycat products differ from counterfeits in that they are designed to resemble leading brands, rather than completely replicate them. The products typically resemble the overall appearance of a branded product through copying label colour, package shape, or brand name, with the intent of misleading the consumer into believing that the look-a-likes are the same as the genuine brand.
Although governments and the trade focus their attention on counterfeits and smuggled goods, look-a-likes can be equally damaging, and according to the experts, are on the rise. Jan Zijderveld, chairman of Unilever Middle East, said that copycat products like Special 2 and White-up, which are imitations of Signal 2 and Close-up toothpastes, are doing the same harm to the industry as counterfeit products.
“Both counterfeits and copycat products damage a brand’s hard earned reputation, and tend to copy brands of high quality,” he said.
Look-a-like products are not only damaging to the reputation and profits of leading brands; they can also be dangerous for consumers. Manufacturers of look-a-likes and counterfeits will invest in appearance, but not on ingredients, according to Unilever. Sun care products with no sunscreens and toothpaste without fluoride are just two examples of how consumers could be at risk.
“At Unilever, our consumer protection efforts range from our own efforts of auditing outlets and partnering with reputable distributors who share in the commitment to protect consumers against fraud and deception, to working with the government and municipalities, as well as with other companies engaged in consumer protection and education initiatives, ” Zijderveld said.
Nick Hart, Unilever’s brand protection group director, Asia and Africa, added that look-a-like products are a growing threat to producers in the Middle East, not least because the penalties for offenders are often too lenient. “The laws governing these products can be challenged, and if the penalties are not severe, the manufacturer of a look-a-like product can switch from manufacturing one recognised and trusted brand to another,” he said. “The objective here is to fool consumers to make the maximum profit, with the least risk.”
Hart told Retail News Middle East that even within the UAE, there are loopholes that can be exploited by counterfeiters. “The problem in the UAE is that there are completely different laws across the region, such as between Sharjah and Dubai. Even though the authorities will claim to work in a seamless manner between Dubai and Sharjah, in reality it doesn’t happen.
“What we will see is that Dubai has harsher penalties than Sharjah so the dealer will operate out of Dubai but hold his stock in Sharjah. Across the UAE they need to harmonise laws.”
This type of problem led to the recent formation of the Brand Owners’ Protection Group, which includes representatives from FMCG producers including Unilever, Kraft and GlaxoSmithKline, who are working to tackle the problem and raise awareness among the trade and governments.