The figures associated with the trade in counterfeit tobacco products are simply staggering. Recent studies estimate that 11% of global cigarette sales are for fake products. That's over 600 billion cigarettes a year worth an estimated $40 bn which is equivalent to twice the entire GDP of Paraguay - one of the major contributors to trade in illicit tobacco products.
Research conducted by the Dutch National Institute for Public Health and the Environment has shown that counterfeit cigarettes contain cadmium levels that are five times higher and lead levels that are six times higher than genuine cigarettes.
Surprise surprise, cigarettes are not good for you. We all know that. And counterfeit cigarettes are even worse for you. That's still no surprise and this knowledge it is one of the main reasons why most smokers go to extreme lengths to give them up.
Fortunately, help is at hand in the form of the much talked-about e-cigarette, these electronic devices, that resemble real cigarettes, and deliver a glycerine/nicotine based solution into the lungs through a vapour rather than smoke.
These devices are not cheap, selling upwards of $35 (for the equivalent of 40 cigarettes) but they are very attractive, to customers and counterfeiters alike, especially as brand loyalty remains strong with smokers buying e-cigarettes from their preferred tobacco brand.
Over the space of 18 months, Internet search queries for e-cigarettes have risen several hundred fold and NetNames has identified significant online activity to divert traffic away from the top tobacco brands’ websites (offering e-cigarettes) and onto other independent sites. These independent sites offer e-cigarettes from multiple brands as well as generic ‘unbranded’ e-cigarettes and refills. On sites such as these you may find:
- Visible seeding: unauthorized use of well known tobacco brand’s logos on websites to instil consumer confidence and to encourage them to purchase
- Claims of affiliation: claiming a legal or business association with the legitimate brand owner with no provable evidence to substantiate such claims
- Claims of regulatory approval: often using an official looking logo or claiming to be approved by a fictitious but plausible regulatory body
- Pricing explanations: wordy explanations about why the site can offer such aggressive pricing
- Poor site security: at best, using website site security certificates requiring only the most basic level of organizational checks…or more often no security at all.
Independent websites are only one source of the problem; another rapidly growing area is marketplace sites and online trade boards where independent e-cigarette manufacturers offer up vast quantities at rock bottom prices for businesses and enterprising individuals to buy and resell. During a recent investigation, NetNames found 35 pages of listings offering one particular brand of e-cigarette on a single online market place site. Upon interaction with the vendor, it is not unheard of for them to offer to put any branding required on the e-cigarette.
Fake or generic liquids and refills for e-cigarettes is a related market that appears to be growing even faster than that of the e-cigarette market itself, with consumers seeming to be more willing to buy unbranded or generic liquids for legitimate branded e-cigarettes.
The proliferation of counterfeit e-cigarettes and liquid refills is not only a consumer health issue which poses a similar kind of threat as black market cigarettes, but it also damages the revenues and brands of the legitimate e-cigarette manufacturers, pushing prices up.
It’s time for the e-cigarette brand owners to start taking back control and protecting their brands online.
Actions that brand owners should engage in include:
- Detecting websites offering counterfeits of their brands online, or claiming false claims of affiliation to their brand, and getting those websites closed down.
- Engage in test purchasing and help work local law enforcement
The good news is that organizations such as NetNames can turn a difficult and complex issue into a manageable one by managing brand owners’ detection, monitoring and enforcement needs.
A final, very important, action that brand owners need to take is to educate their consumers and potential consumers about the proliferation of fake e-cigarettes and the very real health risks they pose.
Written by Andy Churley, Marketing Director, NetNames
25 September 2012