In today’s world, the threat of counterfeit products infiltrating our daily lives is more pervasive than ever, spanning across industries and consumer goods. From baby formulas to luxury items, counterfeit goods pose serious risks, not only to consumer health but also to the environment. One area of particular concern is baby products, where counterfeit versions of well-known brands have led to dangerous consequences for infants.
In this interview, Padmakumar Nair, CEO and Co-Founder of Ennoventure, Inc. shares a personal story about purchasing a counterfeit body lotion for their daughter, which caused severe skin rashes. Unbeknownst to them at the time, the product they bought was a fake. This experience, unfortunately, is not isolated. Globally, counterfeit products are finding their way into trusted retail spaces, even duty-free shops, with alcohol being a prime example—where the World Health Organization (WHO) estimates that 30% of alcohol consumed worldwide is counterfeit.
The interview highlights the widespread impact of counterfeit goods on consumer safety, environmental harm, and public health. Products like cosmetics, often applied directly to the skin, have been found to contain carcinogenic substances, while the rise of fake luxury items online further complicates consumer trust. With 60% of luxury goods purchased online being counterfeit, the conversation emphasizes the growing need for awareness and vigilance in our purchasing decisions.
Ultimately, Padmakumar Nair sheds light on the broader consequences of counterfeit products and the unseen dangers they present, urging both consumers and companies to adopt advanced technologies and practices to combat this escalating issue.
TAM: How prevalent is counterfeiting when it comes to FMCG industry, and why?
Padmakumar Nair: The FMCG (Fast-Moving Consumer Goods) industry is particularly vulnerable to counterfeiting. As the name suggests, FMCG products are quickly produced and reach the market frequently—often every three months. This fast turnover makes it easy for counterfeiters to introduce fake products into the market. These goods are consumed quickly, making it harder to track or identify counterfeits.
In contrast, other industries, like the automobile sector, have products that stay in the market for one to three years, making it easier to catch counterfeit goods. However, in FMCG, products move fast, and counterfeiters can easily shift their operations to different cities or regions. That’s why they find this space so appealing.
TAM: What specific challenges do FMCG brands face in combating counterfeiting?
Padmakumar Nair: The truth is, every brand is doing something. In fact, it’s rare to find a product today that doesn’t have some form of security feature. But traditionally, anti-counterfeiting measures have been provided by printing companies or legacy hardware solutions, such as microprinting or special inks that require UV light to verify authenticity.
The problem is that brands can identify whether their products are genuine, but consumers often cannot. What we typically see is a hologram, and while it might seem like a mark of authenticity, counterfeiters can easily replicate holograms. In fact, you could order holograms from Alibaba for any brand. As a result, consumers mistakenly believe they’re buying genuine products, while in reality, up to 30% of the goods in many countries are counterfeit
TAM: How does Ennoventure’s technology address these challenges? With the rise of e-commerce, how does Ennoventure ensure the authenticity of products sold online, particularly in the FMCG space?
Padmakumar Nair: When we first started as a company, one of our main goals was to introduce a technology that empowers consumers to verify whether a product is genuine or fake. Our entire focus is on giving consumers the ability to make this distinction. Although we provide this technology to brands, it’s ultimately up to them whether they choose to empower their consumers. However, our mission remains centered on consumer empowerment.
Our unique selling proposition (USP) revolves around a few key features. First, our encryption is invisible, which means counterfeiters can’t easily tamper with it because they don’t know what to look for. Second, unlike other solutions that require specialized scanners, our technology can be used with a simple app or even a basic code-based browser. This makes it accessible to end consumers without the need for expensive equipment.
While we aim to empower consumers, the decision ultimately lies with the brands. Some of our clients have made national announcements, educating their customers on how to verify their products. Others have chosen to limit this information to a select few, like employees or key customers. So, we see a wide range of approaches—some companies go all out, while others restrict the use of our technology.
Now, specifically addressing online sales, we work with a company in the multi-level marketing (MLM) space that faced a unique challenge. In MLM, products are sold down a chain, with commissions earned at different levels. However, they were facing an issue where customers were buying products and listing them on platforms like Amazon or Flipkart, disrupting the distribution chain. By using our technology, they can now identify who is bypassing the system. Before the product reaches the distributor, they encode our information, enabling full traceability. So, while the use cases for our technology are diverse, it’s ultimately up to each brand to decide how they want to implement it.
TAM: What impact do counterfeit products have on consumer trust and brand loyalty, and how does Ennoventure’s approach help to rebuild and maintain these crucial elements?
Padmakumar Nair: According to a recent study, 20% of consumers are unknowingly purchasing counterfeit goods online. We think we’re buying everyday items like toothpaste or body lotion, but without realizing it, we could be purchasing counterfeit products. That 20% figure is from the latest research. Now, think about the health risks involved.
Globally, it’s estimated that 10% of pharmaceutical products sold are counterfeit, and in some countries, that number rises to as high as 30%. To put things in perspective, in the 10 minutes we’ve been talking, five children in Africa have died from taking fake anti-malarial drugs. Malaria is a curable disease, but these children lost their lives because they unknowingly took counterfeit medication.
These facts are known to many companies, yet the problem persists. Why? Because the traditional legacy systems in place—mainly print-based security measures—can be easily copied. In a world where AI and generative AI exist, counterfeiters can effortlessly replicate any artwork or packaging, and sadly, innocent people end up consuming counterfeit products.
TAM: Can you explain the role of AI and blockchain in Ennoventure’s anti-counterfeit solutions and how these technologies enhance the security of FMCG products?
Padmakumar Nair: The biggest advantage AI offers to counterfeiters is that they no longer need specialized skills to design artwork or packaging. With many tools available, they can simply describe what they want, and the AI generates it for them. This has made it easy for counterfeiters to replicate packaging with minimal effort.
To combat this, we add an invisible encryption to the packaging that can’t be seen with the naked eye. We also use AI to efficiently train and manage this system. I won’t go into too much detail here because, as you mentioned, it’s a constant cat-and-mouse game with counterfeiters, who are always trying to stay ahead.
For example, just yesterday I was talking to a colleague, and we discovered that our demo carton had been scanned in Japan and Bangladesh, despite us not having any customers in those countries. Counterfeiters there are clearly attempting to figure out what we’re doing.
One of the strengths of our technology is that we receive real-time alerts. If someone scans a counterfeit or lookalike, we get notified on our dashboard. That’s how we discovered the activity in Japan—they were scanning our demo carton.
TAM: How can FMCG brands effectively communicate the use of anti-counterfeit measures to their customers?
Padmakumar Nair: Currently, the technologies being used by brands are only accessible for brand verification. Many brands have to take products to their warehouse or factory to check if they are genuine or fake because the technology in use isn’t available for consumer validation. The most common method we encounter is holograms, but as I mentioned earlier, holograms are easy to counterfeit—you can order them from China, for example.
Consumers can’t identify counterfeit products with the current technology. It’s crucial for brands to start adopting technologies that allow both consumers and brands to validate the authenticity of products.
TAM: Looking ahead, what trends do you foresee in the fight against counterfeiting in the FMCG industry, and how is Ennoventure preparing to meet these future challenges?
Padmakumar Nair: In the FMCG sector, I believe we are going to see significant changes. Take Nike, for example—they used to be available in many stores but have decided to focus more on online sales and their own brand outlets. They’re gradually moving away from multi-brand retailers. Similarly, with the advancements in logistics, more companies are likely to shift toward online platforms and exclusive brand outlets.
However, the rise of online shopping also opens the door for counterfeiters. Consumers may unintentionally purchase fake products, especially as more shopping happens online. After COVID, this trend has accelerated globally—people are moving away from physical stores, and the shift to online shopping presents more opportunities for counterfeiters.
Packaging plays a critical role in this space. It’s a key element where brands can communicate with their customers, and many companies are innovating in packaging materials. However, there’s been little research or effort toward leveraging the latest technologies to protect against counterfeiting.
One promising area is the use of new technologies beyond traditional hardware, ink, and design elements, which can easily be copied. For instance, InnoVenture and companies like Aletheon in the U.S. are doing groundbreaking work in this field. Aletheon uses fingerprinting technology to identify each product, though it may not yet apply to FMCG.
With AI enabling counterfeiters to quickly replicate designs and packaging, the only way to counter this is by adopting advanced technologies.
