An Counterfeit, Brand Protec on & Tamper Evident Solu

in associaon with

An Counterfeit, Brand Protecon & Tamper Evident Soluons A Techno-economic Market Report

Supplier Industry Structure

Companies & Technologies - Proﬁles of Leading Suppliers Strategic, taccal, compeve and technology issues

Authors: James Bevan MBA (INSEAD), MIMechE, BSc Jeremy Plimmer MCIM, Dip.M. MinstP (Elec)

Vandagraf Internaonal Limited Croﬀta House, Groes Faen, Mid-Glamorgan CF72 8NE, United Kingdom

Tel: +44 (0)1443 231 441 Mob: +44 (0)77 11 946 447 Fax: +44 (0)1443 223 876 [email protected] www.vandagraf.com AntiCounterfeit,BrandProtection&TamperEvidentSolutionsͲCompanies&Technologies

AntiCounterfeit,BrandProtection&TamperEvident Solutions SupplierIndustryStructure Companies&TechnologiesͲProfilesofLeadingSuppliers Strategic,tactical,competitiveandtechnologyissues PublicationDate: November2013 Authors: JamesBevanͲMIMechE,BSc,MBAINSEAD JeremyPlimmerͲMCIM,Dip.M.MinstP(Elec)

VandagrafInternationalLimited CrofftaHouse,GroesFaen,MidͲGlamorganCF728NE,UnitedKingdom Tel+44(0)1443231441.Mobile+447711946447.Fax+44(0)1443223876 www.vandagraf.com - [email protected] ©VandagrafInternational–2013 1/222 AntiCounterfeit,BrandProtection&TamperEvidentSolutionsͲCompanies&Technologies

ReportStructure Thecompletereportcomprisesthefollowing: VolumeIͲPARTA EXECUTIVESUMMARY INDUSTRYANALYSIS VolumeIIͲPARTB SUPPLIERPROFILES 250companiesprofiled

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TABLEOFCONTENTS VolumeIͲPARTA INDUSTRYANALYSIS EXECUTIVESUMMARY

1. INTRODUCTION...... 11

1.1 ProductRelatedCrime...... 11 1.2.1 DrivingForcesͲChina&theInternet...... 11 1.2.2 ProductCrimeisanAttractivePropositionforCriminals...... 12 1.2.3 RegionalFactors...... 13 1.2.3.1 StructuralShiftsintheWorldManufacturingIndustry...... 13 1.2.3.2 StrategicImplicationsforGlobalOEMs...... 14 1.2.3.3 TheNext10Years–TrendsinGlobalManufacturing...... 14 1.2.4 ComplicitConsumerBehaviour...... 15

1.3 FightingCounterfeitingHolistically...... 16 1.3.1 TrendtowardsIntegratedSolutions...... 16 1.3.2 AncillaryServices&Enforcement...... 16 1.3.3 ConsumerEnabledBrandProtectionwithSmartPhones...... 17 1.3.4 OnlineBrandMonitoring...... 18 1.3.5 InterfacePublicMembers(IPM)–WCO/GS1...... 18 1.3.6 WCOOperations–Raids&Seizures...... 20

1.4 DigitalPrinting–ADoubleEdgedSword...... 22 1.4.1 DigitalPrinting–ThePlusSide...... 22 1.4.2 DigitalPrinting–TheMinusSide...... 24 1.4.2.1 DigitalFakesͲNewGenerationCounterfeits...... 24 1.4.2.2 CaseStudy–ReverseEngineeringofWatcheswithDigitalTechnology...... 25

1.5 ConflictsofInterests–ControllingCounterfeiting/FacilitatingFreeTrade...... 26 1.5.1 BackgroundtotheAnticounterfeitingTradeAgreement(ACTA)...... 26

1.6 OpportunitiesforSolutionsProviders...... 28 1.6.1 MarketingofBrandProtectionSolutionsisChallenging...... 28 1.6.2 MarketforSolutionsStillAddsUpToLessthan1%ofFinancialLosses...... 28 1.6.3 Inertia–ResistancetoChange...... 29

2. MARKETSIZING&FORECASTS...... 30

2.1 TheWorldEconomy–AnOverview...... 30 2.1.1 EvolutionofWorldRealGDP–1960to2012...... 30 2.1.2 EvolutionofRealGDPbyRegion–1960to2012...... 32

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2.2 GlobalFinancialLossesduetoProductRelatedCrime...... 33 2.2.1 BreakdownofLossesbyTypesofCounterfeitProductsbyValue...... 34 2.2.2 BreakdownofLossestoCounterfeitProductsbyCountry...... 35

2.3 TheBrandProtectionSolutionsMarket...... 36 2.3.1 Breakdown&EvolutionbyTypeofBrandProtectionSolution...... 36 2.3.2 BrandProtectionSolutions&ValueAddedProcesses...... 37 2.3.3 ValueAdded–Label/PackagingConverters&SecurityPrinters...... 38 2.3.4 MarketBreakdownbyTypeofBrandProtectionTechnology...... 40 2.3.5 ForecastAnnualGrowthRatesforLeadingSecurityTechnologies...... 42

2.4 GrowthofDigitalPrinting...... 43

2.5 TheValueChainandPricingIssues...... 44

3. EVOLUTIONINTHECOMPETITIVEENVIRONMENT...... 45

3.1 SolutionProvidersandPositioning...... 45 3.1.1 DistinctClassesofProvidersofBrandProtectionSolutions...... 45 3.1.2 LeadingPioneerInnovatorsofTechnologyinBrandProtection...... 45 3.1.3 LeadingIntegrators–BrandProtectionSolutions...... 48 3.1.4 CompanieswithLongHeritage...... 50

3.2 TrendsͲSolutionsRatherthanSingleTechnologyOfferings...... 52

4. BUILDINGBLOCKSͲINTEGRATEDSOLUTIONSPROVIDERS...... 53

4.1 ThePathtoBecomingaProviderofIntegratedSolutions...... 53

4.2 CombiningBrandprotectionTechnologiesforHolisticSolutions...... 53 4.2.1 LevelsofDefence–1st,2nd&3rd...... 53 4.2.2 ThreeascendingLevelsofDefence...... 54 4.2.3 ALayeredApproach...... 55 4.2.4 RequirementsforaFullyIntegratedEndͲtoͲEndBrandProtectionSolution...... 56

4.3 AncillaryandSupportServicesforBrandProtectionProgrammes...... 57 4.3.1 LeadingProvidersͲAncillaryandSupportServices...... 57 4.3.2 OverviewͲAncillaryandSupportServices...... 57 4.3.2.1 InspectionServices...... 58 4.3.2.2 InvestigativeServices...... 58 4.3.2.3 Enforcement...... 59 4.3.2.4 LegalSupport...... 59 4.3.2.5 IntroducingaMethodofAuthentication&ValidationforCustomsInspection...... 59 4.3.2.6 OfferinganInspectionToolThatCanSupportLegalSeizures...... 60 4.3.2.7 RiskManagementAssessment...... 60 4.3.2.8 SecurityTrainingServices....... 60

4.4 BrandsOnline–Threats&BrandProtection...... 61 4.4.1 LeadingCompanies–OnlineBrandProtection/Monitoring...... 61 4.4.2 BrandsOnline–Threats&Crimes...... 62 4.4.3 AttractionsoftheInternetforCounterfeiters...... 63

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4.4.4 MajortypesofOnͲlinebrandedproductrelatedcrime...... 64 4.4.5 BrandsOnline–BrandProtection...... 65 4.4.6 ProliferationofgTLDs–ANewOnlineThreatforBrandOwners...... 66 4.4.7 Trends–OnlineBrandProtection...... 68 4.4.7.1 TraditionalBrandProtectionisForgingLinkswithOnlineSpecialists...... 69

4.5 ConsumerEnabledBrandProtectionwithSmartPhones...... 70 4.5.1 LeadingCompanies–SmartPhoneEnabledBrandProtection...... 70 4.5.2 RelativeGrowthRates–SmartPhones/PackagingIndustry...... 72 4.5.3 ConvergingTechnologies...... 74 4.5.4 KeyBenefitsofSmartPhoneEnabledProductAuthentication...... 74 4.5.5 Opportunities&ThreatsͲSmartPhoneEnabledProductAuthentication...... 75 4.5.5.1 BrandOwners...... 75 4.5.5.2 Retailers...... 75 4.5.5.3 Consumers...... 75 4.5.6 TwoͲWayDataTrafficissettoTransformProductAuthentication...... 75 4.5.7 TheEnlightenedPackagingConverter/Printer...... 76 4.5.8 WhatcanbedoneinPractice...... 77

5. PACKAGING/LABELSCONVERTERS&SECURITYPRINTING...... 78

5.1 LeadingCompanies...... 78 5.1.1 LeadingCompaniesͲPackaging/LabelConverters...... 78 5.1.2 LeadingCompaniesͲSecurityPrinters...... 83 5.1.3 LeadingCompaniesͲMaterialsforPackaging/Labels...... 84

5.2 Overview–Packaging/LabelsConverters&SecurityPrinting...... 87 5.2.1 FormFactors,Devices&Materials...... 87 5.2.1.1 Labels&HangTags...... 87 5.2.1.2 SecurityPackaging&Closures...... 87 5.2.1.3 SecurityMaterialsforPackaging/Labels...... 88 5.2.1.4 TearTapes...... 88 5.2.1.5 TextileLabels&RawMaterials...... 89 5.2.1.6 SecurityPrinting...... 90 5.2.1.7 BrandProtectionTechnologies–ViabilityofPackagingFormats...... 92 5.2.2 SecuringOperationsforBrandProtection...... 93 5.2.2.1 SecuringtheProductionSiteͲPackaging/LabelsConverters...... 93 5.2.2.2 SubͲcontractors&CoͲpackers...... 94 5.2.2.3 SecuringtheSupplyChainͲChainofCustodyRequirements...... 94

5.3 TrendsͲPackaging/LabelConvertersandSecurityPrinting...... 96 5.3.1 DigitalPrintingwillChangetheBrandProtectionLandscape...... 96 5.3.2 ASteadyStreamofNewMaterials&TechnologieswithSecurityFeatures...... 96 5.3.3 CentralRoleforPackaging/LabelConvertersinCreatingIntegratedSolutions...... 97

6. MAJORSECURITYTECHNOLOGYGROUPS&MATERIALS...... 98

6.1 ForensicMarkers/NanoͲtaggants...... 98 6.1.1 LeadingCompaniesͲForensicMarkers/NanoͲtaggants...... 98 6.1.2 OverviewͲForensicMarkers/NanoͲtaggants...... 101 6.1.2.1 DNASolutions–Biological/Synthetic...... 104

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6.1.2.2 Organic/BiologicalDNAMolecularMarkerTaggants...... 105 6.1.2.3 Inorganic/SyntheticMolecularMarkers–DNA/RareEarth/Radioactive...... 106 6.1.2.4 MiniatureBarcodes/NanoͲscaleNameplates/Microdots...... 108 6.1.2.5 ColourChange/Fluorescents/UpConvertingPhosphors(QuantumDots)...... 109 6.1.2.6 SurfaceEnhancedRamanScattering(SERS)...... 110 6.1.2.9 AttributesofForensicMarkers/NanoTaggantsbyTypeͲCompared...... 112 6.1.3 TrendsͲForensicMarkers/NanoͲtaggants...... 113 6.1.3.1 EvolutionofEndUserMarkets–ForensicMarkers...... 114 6.1.3.2 DNA–Synthetic&Biological...... 115 6.1.3.3 NanoTaggantscombinedwithotherAnticounterfeitTechnologies...... 115 6.1.3.4 TaggantͲinfusedTextiles...... 115 6.1.3.5 TaggantsInfusedinLiquids/Granules/Powders...... 116 6.1.3.6 TaggantsAlsoProtectagainstDilution&Refilling...... 116 6.1.3.7 AuthenticationofPrinterConsumables+PrintedData...... 116 6.1.3.8 CoatingsͲSprayCoatingLargeitemswithForensicMarkers...... 117 6.1.3.9 Taggantsthatprovidediscreteandinstantauthenticationwithhandhelddevices...... 117

6.2 SecurityOptical/HolographicDevices&MaterialsProducersͲOVIDS/DOVIDS...... 118 6.2.1 LeadingCompanies–SecurityOptical/HolographicDevices&MaterialsProducers...... 118 6.2.2 Overview–SecurityOptical/HolographicDevices&MaterialsProducers...... 121 6.2.2.1 SecurityHologramClassifications...... 121 6.2.2.2 Protectionfor1st,2nd&3rdlevelsofdefencewithholographicdevices...... 121 6.2.2.3 SecurityHologramsͲFeatureOptions...... 121 6.2.2.4 AMoveBacktoReflectionHolography...... 125 6.2.2.5 PackagingMaterialsCanCarryHolographicImages...... 126 6.2.2.6 LowCostNonHolographicSecurityfoilAuthenticationSolution...... 127 6.2.3 Trends–SecurityOptical/HolographicDevices&MaterialsProducers...... 127 6.2.3.1 EvolutionofSecurityHologramTechnologies...... 127 6.2.3.2 EmbossedHologramsVulnerabletoCloning...... 128 6.2.3.3 ATechnologyoftheFuture–ReflectionHolography...... 128 6.2.3.5 DigitalSignatureStorageinHolograms...... 128 6.2.3.6 CombiningHolographicFeatureswithOtherSecurityDevices...... 129 6.3.2.7 HolographicThreadsandTamperEvidenceͲLabels...... 129 6.3.2.8 TheNeedforContinuousEnhancementsinSecurityFeatures...... 130

6.3 SecurityInks,Coatings,Pigments&DyesforBrandProtection...... 133 6.3.1 LeadingCompaniesͲSecurityInks,Coatings,Pigments&Dyes...... 133 6.3.2 OverviewͲSecurityInks,Coatings,Pigments&Dyes...... 135 6.3.2.1 ThermochromicInks/TemperatureActivated...... 135 6.3.2.2 PhotochromicInks...... 136 6.3.2.3 PhotonicColour...... 137 6.3.2.4 HybridThermochromic/PhotochromicInks...... 137 6.3.2.5 OpticallyVariableColourChangeInks(OVIs)...... 137 6.3.2.6 UltraViolet(UV)Inks...... 138 6.3.2.7 MetamericInks...... 139 6.3.2.8 LaserActivatedColourChangeInks...... 140 6.3.2.9 RubReactive/CoinReactive/TouchSensitive/ScratchOffInks...... 140 6.3.2.10 MagneticInks...... 141 6.3.2.11 ConductiveInks...... 142 6.3.3 TrendsͲSecurityInks,Coatings,Pigments&Dyes...... 144 6.3.3.1 TheTraditionalSecurityInkMarkethasalreadyReachedMaturity...... 144 6.3.3.2 MostInksareVisible/Overt–ThisisaLimitation...... 144 6.3.3.3 TaggantsInfusedinInkshaveSignificantPotential...... 144 ©VandagrafInternational–2013 6/222 AntiCounterfeit,BrandProtection&TamperEvidentSolutionsͲCompanies&Technologies

6.3.3.4 NicheGrowthOpportunitiesinSecurityInks...... 145 6.3.3.5 CombiningSecurityInkswithOtherTypesofSecurityFeature...... 146

6.4 OverlayTechnologies...... 147 6.4.1 LeadingCompanies–OverlayTechnologies...... 147 6.4.2 OverviewͲOverlayTechnologies...... 148 6.4.3 TrendsͲOverlayTechnologies...... 149

6.5 DigitalWatermarkingEmbeddedinPrint...... 151 6.5.1 LeadingCompaniesͲDigitalWatermarking...... 151 6.5.2 OverviewͲDigitalWatermarking...... 152 6.5.3 TrendsͲDigitalWatermarking...... 154

6.6 SurfaceFeatureAuthentication...... 155 6.6.1 LeadingCompaniesͲSurfaceFeatureAuthentication...... 155 6.6.2 OverviewͲSurfaceFeatureAuthentication...... 156 6.6.3 TrendsͲSurfaceFeatureAuthentication...... 158

6.7NonͲHolographic3DMovingImageDevices...... 159 6.7.1LeadingCompaniesͲNonͲHolographic3DMovingImageDevices...... 159 6.7.2OverviewͲNonͲHolographic3DMovingImageDevices...... 159 6.7.3TrendsͲNonͲHolographic3DMovingImageDevices...... 160

6.8SmartphoneSystemswithOvert&CovertPrintedCodes...... 161 6.8.1LeadingCompanies–SmartphoneSystemswithOvert&CovertPrintedCodes...... 161 6.8.2OverviewͲSmartphoneSystemswithOvert&CovertPrintedCodes...... 162 6.8.3TrendsͲSmartphoneSystemswithOvert&CovertPrintedCodes...... 163

6.9SelfAuthenticatingSystems...... 164 6.9.1LeadingCompanies–SelfAuthenticatingSystems...... 164 6.9.2OverviewͲSelfAuthenticatingSystems...... 164 6.9.3TrendsͲSelfAuthenticatingSystems...... 165

6.10 UnitsCostsComparisons–SecurityTechnologies...... 166

7. TRACK&TRACE/MASSSERIALISATION/AUTHENTICATION...... 170

7.1 LeadingCompanies–Track&Trace/Massserialisation/Authentictaion...... 170

7.2 Overview–Track&Trace/Massserialisation...... 173 7.2.1 MethodsofReadingSerialisationNumbers...... 173 7.2.2 SerialisationversusRandomisation...... 174 7.2.3 Encryption...... 175 7.2.4 RandomEncryptedNumbers–NoDatabaseRequired...... 175 7.2.5 2DBarcodeSerialisationSystems...... 176 7.2.6 ‘RealEstate’Limitations...... 176 7.2.7 InvisibleBarcodes...... 177 7.2.8 MultiplePointsofEntrytotheSupplyChains...... 177 7.2.9 ConsumerEnabledProductAuthenticationwithSmartPhone...... 178 7.2.10 MultipleReadingsofaSingleCode...... 179

7.3 Trends–Track&Trace/Massserialisation...... 180 ©VandagrafInternational–2013 7/222 AntiCounterfeit,BrandProtection&TamperEvidentSolutionsͲCompanies&Technologies

7.3.1 DigitalPrintingissettoTransformMassSerialisation...... 180 7.3.2 ConsumerEnabledProductAuthentication–MassSerialisation...... 180 7.3.3 Track,Trace&Authenticate–AnEmergingTrend...... 181

7.4 AnalysisofTrack&TraceProductsUsedforAuthenticationandIdentification...... 182

8. ACCESSINGADDITIONALONLINECONTENT&THEMOBILEWORLD...... 183

8.1 Background...... 183

8.2 AccessingAdditionalContentOnline...... 184 8.2.1 TypesofMobileActionCodes...... 184 8.2.2 TypesofInteractiveExperience...... 185 8.2.3 TypesofAdditionalContent...... 185

8.3 MobileActionCodesͲ2D/QRCodesorNFC...... 186 8.3.1 CaseStudyͲNFCTagsorQRCodes...... 186

9. TAMPEREVIDENTSOLUTIONS...... 188

9.1 TypesofTamperEvidentSolutions...... 188 9.1.1 TamperEvidentLabels...... 188 9.1.2 SecurityLabelSubstrates...... 189 9.1.3 SecurityTearTapes/TearStrips...... 190 9.1.4 InjectionMouldedTamperEvident&NonͲRefillableClosures...... 191 9.1.6 ShrinkSleeves...... 192 9.1.7 OtherTamperEvidentPackaging&LabelFormats...... 194

9.2 TrendsinTamperEvidence...... 197

10. HARDTOREPLICATEPACKAGING&PRINT–ANOTHERBARRIER...... 198

10.1 MakingitHarderfortheCounterfeiterwithPackagingDesigns&Finishes...... 198 10.1.1 GlassBottles...... 198 10.1.2 HotFoilStamping,ColdFoiling,HolographicEffects...... 200 10.1.3 CartonboardPackaging,FlexibleFilms,FoilsandLabels...... 202

10.2 EconomicFactorsinPackagingManufacture...... 204

10.3 IntelligentUseofInksCanHelp...... 206 10.3.1 DigitalColourMatching–AnotherBarrier...... 206 10.3.1 ThermochromicInksintheDrinksIndustry...... 208

APPENDIXIͲDrivingForcesͲExtentoftheproblem/Levelofresponse...... 209

APPENDIXII–NotesonTypesofProductCrime...... 211 CounterfeitingandPiracy...... 211 CounterfeitingandPiracyͲForgery/AlterationFraud...... 211 CounterfeitingandPiracyͲCopyandLookͲalikeProducts...... 212 CounterfeitingandPiracyͲParallelTrading,GreyMarketsandDiversion...... 212 CounterfeitingandPiracyͲUnauthorisedDistribution,BackDoorTradingandOverͲruns...... 213 ©VandagrafInternational–2013 8/222 AntiCounterfeit,BrandProtection&TamperEvidentSolutionsͲCompanies&Technologies

CounterfeitingandPiracy–Dilution,Substitutionrefillingandremarking...... 213 Tampering,Retail/SupplyChainTheft,ReturnsFraud...... 214 Tampering...... 214 RetailandSupplyChainTheft...... 215 ReturnsFraud...... 215

APPENDIXIII WCO’sVerticalEndUserMarketsMostTargeted...... 216

ABOUTVANDAGRAFINTERNATIONALLIMITED...... 217

OTHERVANDAGRAFREPORTS...... 218

AUTHORPROFILES...... 220 VolumeIIͲPARTBSUPPLIERPROFILES (250companiesprofiled–300+pages).