Counterfeit

Counterfeits vs. Rental

Isaac Mostovicz writes...

The luxury world’s relationship with the counterfeit industry is puzzling. The counterfeit industry seems to cannibalize the luxury industry by offering products that presumably people would have bought from the luxury industry in the first place. However, as I commented in the past (I need to find the article) the luxury industry does not fight the counterfeit one wholeheartedly.

The luxury industry has very good reasons to allow the counterfeit industry to exist. Having counterfeits means that the original has increased status, as Prada’s CEO announced recently, “We don’t want to be a brand that nobody wants to copy.” The counterfeit industry allows the wider society to become fans of the brand while those who use the true product feel more elite and more respected. More significantly, a Sloan MIT business professor Renee Richardson Gosline found that people use counterfeit as an entry-point to luxury. Gosline discovered that within two years, 46% of buyers of counterfeit subsequently purchased the authentic version of the same product they had purchased the counterfeit of — even though other people could not necessarily tell the difference.

 

However, there are problems with buying counterfeits. James Lawson, director of Ledbury Research, points out that most of the time their quality is inferior and it is socially uncomfortable to admit to using a fake. Therefore Lawson suggested that renting luxury products could become a superior substitute for counterfeits, and provide an entry-point to the brand as well. Renting genuine luxury products seems to offset the problems of low-quality and social discomfort associated with fakes. One can experience the thrill of having true luxury products at a lower cost, and then return them later.

It is true that renting luxury may eliminate some of the problems with buying counterfeits. However, from the luxury marketer’s perspective, a major difference exists between them: the time span. People who buy counterfeits become accustomed to having the product in their lives. They identify with the brand that the counterfeit is imitating, and often seek to buy the real thing eventually. Renting luxury doesn’t give this experience at all. People have the great feeling of using luxury, but for a short time only. They don’t necessarily identify with the brand, and there is so far no evidence that they move on to buy the real product. While renting luxury may replace buying counterfeits in the short-term, it is clearly inferior from the perspective of being an entry-point to the brand.

I feel ambivalent about this increasingly popular phenomenon. I would argue that a major component of the luxury experience is purchasing a luxury item at a high price. Renting luxury does not provide a luxury experience just because it involves luxury products. Unlike counterfeits, it is also not an entry point to luxury. However, while it may not fit the definition of luxury, nor lead to a luxury experience, who does not want to be king, even if only for one day?

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Counterfeit wines all over the shop

Isaac Mostovicz writes...

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All our recent talk about counterfeit goods lends itself nicely to this discussion of counterfeit wines on Slate.

The article does a nice job of discussing perhaps the largest counterfeit wine story in recent memory, a story involving Thomas Jefferson, forgery, and multiday bacchanals. In 1988 Bill Koch purchased 4 bottles of wine said to be owned by Thomas Jefferson (they were signed Th. J) for $500,000. Two years ago he had the bottles authenticated and found that Jefferson, a meticulous record keeper, had never noted the bottles and that the signatures were forged. Koch is now suing the man who sold him the wine, a German music promoter and wine merchant (best known for his bacchanalic parties) by the name of Hardy Rodenstock.

How widespread are counterfeit wines? Because many vineyards lack proper records about how much wine was produced and where it went, taste can be the best means of authentication. And according to Allen Meadows, a renowned Burgundy critic, about 10% of the pre-1960 wines that he tastes these days are fraudulent. In the article Meadows notes that in some wine circles alleging fraud is becoming a mark of connoisseurship–it “show[s] off their knowledge and the acuity of their palates.” One hopes that aspiring wine connoisseurs aren’t falsely accusing wines that only taste “young” to seem more knowledgeable than than they are.

Read the full article here.

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The Crime of Counterfeit Goods

Isaac Mostovicz writes...

nytbags

As we mentioned in this recent post, buying a fake handbag can feel like a victimless crime. The buyer might feel good about saving money–perhaps even bragging to friends about it–and think that the luxury company won’t miss the revenue from a single bag. But purchasing counterfeit handbags and other goods might not necessarily be consequence free. Dana Thomas wrote an article for the New York Times last month that highlights several illicit activities and organizations that stem from counterfeiting:

Most people think that buying an imitation handbag or wallet is harmless, a victimless crime. But the counterfeiting rackets are run by crime syndicates that also deal in narcotics, weapons, child prostitution, human trafficking and terrorism. Ronald K. Noble, the secretary general of Interpol, told the House of Representatives Committee on International Relations that profits from the sale of counterfeit goods have gone to groups associated with Hezbollah, the Shiite terrorist group, paramilitary organizations in Northern Ireland and FARC, the Revolutionary Armed Forces of Colombia.

Trying not to sound overly preachy or like a scaremonger, these organizations should not–must not–be funded by counterfeit goods. What can luxury companies do to stop them? They can’t necessarily go after counterfeit manufacturers themselves–that’s the job of law enforcement–but they can be transparent and acknowledge that counterfeiting is a serious problem they face. Too many luxury companies worry that talking about the problem will make more people aware of it thereby tarnishing their reputations. But the counterfeit problem is real and will become worse if companies ignore it.

If luxury companies can give people a better reason to stop purchasing counterfeit goods, everyone will be better off.

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Fake products making headlines

Isaac Mostovicz writes...

Counterfeit goods are a major problem for luxury brands. They remove the exclusivity that luxury brands carefully cultivate and in many cases take the place of goods that affluent people would otherwise purchase. It feels like a victimless crime to purchasers–they might think that with these these goods so in demand and these companies so rich, a single purchase won’t make a difference. But enough people around the world are thinking this way that it is affecting the bottom lines of luxury companies. Authenticity is changing from necessary to optional, and two items in the media this month highlighted this fact.

The first is an article in the UK’s Independent about the fakery related to luxury goods, enhanced physical appearance (via surgery, botox or Photoshop), and ‘reality’ television. For decades celebrities have had a symbiotic relationship with fashion houses–the houses provide clothing and jewelry to make celebrities look beautiful on the red carpet, and the celebrities in turn mention who made their dresses, earrings and other ephemera. But recently a few celebrities (Renee Zellwegger, Courtney Love and Britney Spears are named in the article) have been photographed with counterfeit handbags or dresses, sending the message to the public that it isn’t just legitimate to purchase counterfeit goods, it’s glamorous too. Read the article here.

Earlier this month the BBC Radio 4 consumer affairs program You and Yours ran a similar story, about how the Italian government is cracking down on counterfeit goods. The government believes such goods are costing the country nearly $10 million a year, so it’s taking action by putting tougher customs controls in place and going after wholesalers and importers (rather than the street vendors at the bottom of the chain). You can listen to the whole interview with Silvio Paschi from Indicam, an Italian industry group against counterfeiting, here.

What can turn the tide to make authenticity absolutely necessary again? It’s a similar proposition to keeping luxury brands exclusive as they expand their masstige lines–luxury companies need get the message across that the luxury they offer is incomparable and inexorable–people need to know that the experience and prestige that true luxury offers can’t be matched anywhere.

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