Counterfeiters may not be the most innovative of people, but they sometimes have a level of ingenuity that goes beyond simply copying a product.
Take the example of a cigarette counterfeiter our company investigated several years back. A small tobacco company had successfully copied the look of the cigarettes of a popular brand, but was having difficulty replicating the genuine packaging and wrappings.
After months of effort, the differences between the genuine and counterfeit were still enough to alert all but the least-attentive consumer. Instead of giving up, however, the counterfeiters figured out an easier and better option.
The counterfeiters located the authorized printer for the real products and simply paid them to print hundreds of thousands of additional cigarette boxes, complete with the corresponding tax stamps.
Think of the problem faced by the brand holder as counterfeit cigarettes flooded the market in genuine packaging. The company saw an immediate drop in sales despite the continuing popularity of their brand.
Even after the operation was uncovered, the brand had no easy way of determining which cigarettes were genuine and which were counterfeit without opening the packages and sending sample cigarettes to their laboratory for analysis. In the meantime, they remained responsible for all of the health and liability issues imposed on them by the counterfeit cigarettes invading the market.
By this time, there was no getting around the harm. The cigarette manufacturer shut down local operations and resumed selling in that country 18 months later, when they were relatively sure all of the counterfeit products had cleared the market. Then, the company manufactured all of their cigarettes abroad, and they imposed much stricter requirements on their new carton supplier.
But their loss of both market share and consumer confidence was huge, and the brand never recovered the level of success and acceptance they had previously enjoyed.