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Pundit’s Mailbag — Call For Counterfeiting Countermeasures

Jim Prevor’s Perishable Pundit, July 4, 2007

Our pieces Zespri Among Most Counterfeited Brands In China and Brand-Crazy Chinese, which highlighted the counterfeiting of Zespri kiwifruit and Sunkist brand citrus in China brought a letter from this knowledgeable participant on the retail side in Asia:

I would comment that the reason fruits are pirated is that established brands such as Washington Apples, Capespan SA, Zespri, USA Celery, Sunkist, Harvest Moon Carrots have stringent quality control and are trusted for their food safety. All are being pirated.

The branded fruits are trusted as safe and able to command a higher export price, their reputations have been built up at great expense and over a long period of time.

I really don’t think that fruit is a fashion item. Think about it, you would hardly expect Mrs. Housewife to be turning the orange in her fruit bowl to make the Sunkist label more visible to her guests.

It is about price and quality.

I had an instance a few weeks ago where I showed a South African exporter some "South African" apples, The fruit in question was half the price that he was quoting. He looked at the fruit and told me that there was no way that it was South African fruit. Every apple and the carton was labeled SA Fuji Apple, a similar story with Aussie carrots.

— Colin Harvey
General Manager Fresh Foods
Dairy Farm
Malaysia

We appreciate Mr. Harvey’s input. Although he is far away from Pundit headquarters, he is right on site for this particular industry problem of counterfeiting.

The issue of whether counterfeiting is motivated by “fashion” or by “food safety” is intriguing but maybe not that important.

In our piece, Pundit’s Mailbag — Sunkist’s Missed Opportunities, a former analyst for Sunkist came down on the side of style:

I think the China market will offset that to a large degree. Burgeoning Chinese middle-class housewives will clamor for Sunkist Navels, where the brand still has tremendous equity.

The bourgeois will have their day, Mao be damned.

Mr. Harvey is a substance man — pointing to stringent quality control and food safety standards.

We would say that substance and style are two peas in the same pod.

Counterfeiters counterfeit in order to make money. So they need products that can be sold.

Products with excellent quality and a high degree of trust on food safety are likely to also become the more accepted brands among affluent people.

Although a consumer may not, as Mr. Harvey rightly explains, arrange the fruit bowl to show off the labels, certainly a consumer will look to gain approval of peers through the selection of a shopping venue.

In the United States many a person will make a point of explaining to guests at a dinner party that they got the ingredients at Whole Foods; they might not be so quick to say they got them at Wal-Mart.

This is a very serious issue. Fancy brands such as Hermes, Louis Vuitton and Gucci have long fought counterfeiters; with food it is even more crucial.

After all, to the extent Mr. Harvey is correct, with stringent quality control and high food safety standards being the value creators, counterfeit product, which has none of these attributes, is a value destroyer.

The “brand promise” is not delivered upon and thus could lead to consumer dissatisfaction with these brands.

Which brings up another distinction between counterfeit pocket books and counterfeit produce.

In the U.S. at least, relatively few consumers are defrauded when high-end purses are counterfeited. They are buying them through unauthorized sales channels (the back of a guy’s car, a flea market, Canal Street in New York City) and they are paying a fraction of what these items sell for when they are legit. So a woman’s purse that at Saks Fifth Avenue is $3,000, they buy for $50.

This is illegal, and, possibly costs the manufacturers something — although it is highly doubtful that all these people would spend $3,000 if a $50 copy wasn’t available. But it is not defrauding consumers. They want to buy a fake.

But consumers in a store that see a Sunkist label will assume it is Sunkist fruit. They are being defrauded when they get fruit grown to a different standard with a Sunkist label slapped on it.

And, as these counterfeiters do not have food safety standards, a consumer could actually be putting his life at risk.

Clearly this is a significant problem that we need to solve.

Perhaps PMA could use its International Council, of which Danie Kieviet of South Africa is Chairman, to reach out to other major exporting countries such as South Africa, New Zealand, Australia and Chile to form the Produce Industry Alliance Against Counterfeiting.

This group could work with retailers in areas where this has been a problem to develop industry mechanisms for confirming the authenticity of product, while also pressuring governments to crack down on counterfeiting.

It shouldn’t be that difficult because all this ties into food safety and traceability. Why can’t retailers have access to a computer database and when they receive product they can scan it or enter a code and it should traceback — if it doesn’t, it would be revealed as a fraud.

PMA has been focusing on international growth, defending the integrity of produce brands and countries of origin. This is right up its alley and a perfect opportunity to work with other international produce organizations.

Many thanks to Colin Harvey for making the industry aware of the extent of this important problem.

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