Counterfeiting is big business. While estimates vary, the total value of counterfeit goods sold each year is estimated to be at least $1.7 trillion to $4.5 trillion, according to a study by the Library of Congress – making counterfeiting at least the world’s tenth largest economy. Brand owners face a constant battle to stay one step ahead of the counterfeiters and, as IP attorneys, we work closely with clients, Trading Standards, Customs, PIPCU and private investigators to achieve that aim. It’s well-known that it’s not just big brands who are affected by fake goods and the accompanying loss of sales; counterfeiting is also widely associated with a whole host of other criminal activities including drugs, people trafficking, gangs and terrorism. So there are myriad reasons to want to stamp it out.
But what is the best way to do that – and what does this all have to do with Food & Drink, you may ask? We spoke to Gavin Ger, CEO and Co-Founder of digital identity technology company Laava (and cherry supremo!) to find out more.
Q. People often associate counterfeiting and fake products with the world of fashion. Is it really a problem in the F&D sector too?
Absolutely. It's an unfortunate fact that any F&D product that has a 'premium' status in its category - especially in export markets and especially in Asia - is likely to be the subject of counterfeiting, substitution and, increasingly, grey market / product diversion.
One of Laava's first case studies is a great example of this, relating to the protection of cherries (one of the world's most precious premium foods) against counterfeiting in Asia. It also illustrates the willingness of counterfeiters to take risks, as well as their ingenuity.
In many cultures, cherries and other premium fruits are incredibly highly regarded and are given as a gift to valued business partners and loved ones. Part of what makes cherries so special is their very short growing season and their unique taste and texture when fresh. In fact, the season is often only 6 weeks long and, in places like Tasmania, they also grow slowly and in relatively small volumes, producing big, “crispy” cherries - like little apples!
Back in 2019, Laava was selected to help one of the world's leading cherry brands - Reid Fruits - protect their premium export cherries from counterfeits in China, India, Vietnam, the UK and other global markets. Reid Fruits' iconic 2kg “gold export grade” cherries are air freighted from Tasmanian tree to Shanghai table in only 3 days and they command a premium of up to US$200 per 2kg box - so they are well worth protecting!
By way of background: when China's President visited Reid Fruits in Tasmania in 2014 (an indication of how seriously China values this product) counterfeiters took note and started to sell look-alike Reid boxes, filled with inferior grade cherries. This not only deceived unsuspecting consumers, but it also robbed Reid and its official importers of millions of dollars in revenue. There were also serious concerns around health risks for consumers, as well as the resulting reputational damage for Reid.
It was at this point that Reid started a full-on war against the counterfeiters - which included major upgrades to embedded security features in packaging, labelling and, finally, the deployment of QR codes in 2018. All of these measures were copied by counterfeiters, including the QR code authentication system which was 'spoofed'. Counterfeiters copied Reid Fruit's website and 'authentication' landing pages into a similar sounding domain and then created their own QR codes to bypass the real thing and land at fake authentication landing pages. This sounds made up, but it really shows just how ingenious and determined counterfeiters can be when there's money to be made!
Q. So how did Laava become involved with Reid Fruits and what was the solution to their problem?
It was after the 'spoofed' QR codes issue in 2018 that Reid Fruits searched for a next-generation solution and Laava was selected. It was pretty special to watch Laava's computer vision technology and GPS systems tracking counterfeiters attempting to copy and sell fake boxes of Reid cherries with look-alike Laava Smart Fingerprint labels - and being shut down in real time. This was our first major pilot, but it was also Reid Fruits’ full annual production - and they were counting on our tech to work. After the previous year's issues, it was 'do or die' for Reid - and frankly for Laava as a start-up in those days!
Fortunately for us both, the Laava tech worked - and I'm delighted to say that 5 years later, we are still working together. These days, in addition to shutting down counterfeiters, we are also working with Reid and our China marketing-tech partners Roolife Group on various other authentication and traceability measures, including on-product consumer engagement, digital storytelling and promotional campaigns, with special offers, competitions and pop-up experiences - all powered by Laava's secure connected packaging technology, Smart Fingerprints and Product Cloud.
Q. We’ve seen all kinds of anti-counterfeiting measures in the past, from holograms through to unusual markings on products. How does Laava’s technology work and how is it different from other technologies?
Compared with holograms and embedded packaging features which are mostly passive, static (non-serialized) and can only be verified by professionals, Laava's technology is active, serialized and smartphone-scannable. In essence, every individual item (say, a box of cherries or a bottle of whisky) receives its own unique 'digital fingerprint' - a unique, randomized digital marking that is as unique as your own fingerprints. These can be easily and cost-effectively printed onto conventional paper labels or printed direct on to packaging. They can also be machine- or hand-applied at large or small scale, so they are incredibly flexible.
Most importantly, anyone with a smartphone can scan the digital fingerprints on the spot to verify a product's authenticity, provenance, nutritional information and so on - and subscribe securely to cellar door or farm gate programs, competitions, recipes, special offers and much more. Apart from being totally secure, therefore, Laava can also provide brand owners with sophisticated yet easy-to-use tools which can massively enhance marketing capabilities and digital user experiences.
The underlying Laava security technology leverages a combination of real-time web-based track and trace (with a 'digital twin' of every product tracked securely on the Laava Product Cloud), plus sophisticated business rules - and highly advanced computer vision and AI tech to detect and match the unique digital fingerprints ("Laava Smart FingerprintsTM") - to create one of the world’s most secure connected packaging solutions. Yet it’s as easy to add to products as a traditional over-sticker, trophy label or export label.
Q. You mentioned the ability of your technology to verify provenance. How importance is provenance to consumers these days and how do you see that evolving in the future?
Provenance is at the heart of the 'premium' in 'premium foods and beverages'. It’s closely tied to the story, mystique and romance of the product and it’s what gives a premium product its unique taste, freshness or other characteristics. Provenance often conjures up memories that we as consumers associate with visiting a special place or sampling a particular new cuisine or culture, which is why it’s key to making powerful brand-consumer psychological linkages. It's this combination of key factors that makes provenance - and the authenticity of claims to provenance - so crucial for brand owners. After all, provenance is a product or brand "claim", just like other distinguishing qualities (like being organic, fresh, certified etc.).
The further a product travels from its source to reach the end consumer, the greater the potential for bad actors - or even random events - to interfere with those claims. For instance, poor storage or transit conditions can impact product quality, freshness and taste just as much as a fake product can do. That’s why we frequently layer and integrate Laava’s technology with other trusted partners - such as IoT/RFID specialists, traceability and supply chain platforms and packaging technology specialists - to provide a complete solution to safeguard all the claims that make up the 'premium' qualities behind a particular food or drink product. This trend has already been accelerating for years, and will only grow - as increasingly affluent consumers in markets formerly regarded as 'developing' rush to embrace premium experiences and products and expand their horizons.
Q. What other applications does Laava’s technology have and how do you see the business evolving in the next 5 years?
When you boil Laava down to its core, we specialise in secure connected packaging and products. When a product can 'talk' to consumers and articulate its core features, engage consumers with immersive digital content and authenticate itself, it can be trusted, and it can engage consumers in new and trusted conversations. Beyond brand protection and consumer engagement, therefore, we are seeing great interest in leveraging our Smart Fingerprint and Product Cloud (digital twinning) technology for Digital Product Passport applications - which are already in force and growing ever more important - in many regions of the world.
These 'Digital Product Passports' are increasingly used to track the origin, ingredients, sustainability, authenticity and other characteristics of a product – meeting a real surge in demand from both consumer and government regulation. Our DPP solution has been designed to give brands a quick-to-implement, easy and cost effective way to achieve compliance today, while equipping them with the means to respond to ever-changing regulation later.
We're also seeing a rising demand for what we call 'verified recycling' ie using Laava's technology to track a product from manufacturing through to its eventual end-of-life recycling (and increasingly 'upcycling' or second-life scenarios), especially for consumer and durable goods. We are looking to continue evolving our solution suite in these areas, while simultaneously enhancing our security and consumer engagement capabilities - staying close to the needs of premium brand owners globally.
In summary
So there you have it: an innovative and patent-protected security system which is leaving counterfeiters racking their brains, but brand owners and marketeers rubbing their hands with glee. It’s clear that the desire for premium products is only going to increase, not least as consumers grow ever more sophisticated and discerning in their tastes. Brand owners will need to consider a whole range of technological, commercial and legal solutions to keep ahead of the counterfeiters - but if they can do that and enhance consumer experience at the same time, surely there can only be one winner.