Fake Lipton Tea, Nescafe Leak Into EU, Hurting Unilever, Nestle

15 Jun 2007 • by Natalie Aster

Belgian customs official Chris De Buysscher intercepted a shipment of 20,000 kilograms (44,000 pounds) of fake Lipton tea from China last year. He discovered 800,000 knockoff Oral-B toothbrushes because the accompanying paperwork was vague about their final destination, reported The Bloomberg.

De Buysscher, head of the port of Antwerp's counterfeit- hunting squad, is on the front line of a new battle in the war against knockoffs: fake brand-name items including tea, shampoo and soap. Colgate-Palmolive Co. yesterday warned U.S. consumers that counterfeit toothpaste that may contain a chemical used in antifreeze was found at stores in four states.

Fraudulent products hurt sales of companies such as Nestle SA, Procter & Gamble Co. and Lipton tea owner Unilever and may pose health risks. Companies in general lose about 10 percent of sales to counterfeiting, says Guy Sebban, secretary general of the International Chamber of Commerce. That would translate to $20 billion a year for the three corporations combined.

``It's gone from being a local problem to a multinational problem,'' says Richard Heath, Unilever's global anti- counterfeiting counsel, who's based in London. ``All the investment the counterfeiters make is in the packaging and not what goes inside and that's the worrying thing.''

Heath wouldn't give a figure for Unilever, saying it's in line with international trends. Nestle spokesman Francois Perroud didn't have an estimate, while Doug Shelton at P&G said the company had no comment on the subject of counterfeiting.

In 2006, European Union customs officers seized 253 million fakes at the external borders of the bloc, up from 85 million in 2002. Seizures of personal-care products and perfume rose to 1.6 million items from 112,132 in 2002. Officers caught 1.2 million food and beverage products, up from 841,000.

The damage to companies is ``immeasurable'' because seizures represent a tiny portion of counterfeit goods and lost sales are only one part of the equation, says Bryan Roberts, an analyst at Planet Retail in London.

``Any attempt to quantify it seriously will underestimate the extent of the problem,'' he says. ``But obviously they will suffer in terms of the reputation of their brands.''

Colgate-Palmolive, the world's biggest toothpaste maker, said it's cooperating with the U.S. Food and Drug Administration to identify the makers of toothpaste falsely packaged as Colgate. It was discovered at discount stores in New York, New Jersey, Maryland and Pennsylvania and may contain the toxic chemical diethylene glycol, the New York-based company said in a statement.

The influx of bogus consumer goods began raising concerns in Europe in late 2003, says Christophe Zimmermann, anti- counterfeiting head at the World Customs Organization.