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Hologram stamp of approval for genuine alcohol

14 April 2015

Recent news that hundreds of thousands of litres of illicit drink seized across dozens of countries by international police authorities reminds us that the battle to beat the counterfeiters remains a hard one to win, says Ian Lancaster, general secretary of the International Hologram Manufacturers Association (IHMA). However, drink manufacturers and distributors have an effective anti-counterfeiting weapon in holograms which is an important authentication device for government tax stamps.

Interpol and Europol’s recent Operation Opson IV across 47 countries saw nearly 275,000 litres of counterfeit drinks seized, most of which was illicit alcohol. In the UK, officers discovered a fake brand-name vodka plant and recovered 20,000 empty bottles ready for filling and hundreds of empty five-litre anti-freeze containers used to make the counterfeit alcohol.

The illicit trade in beer, wine and spirits, through smuggling and counterfeiting, costs treasuries billions of dollars a year in lost revenue. And the cost is not just a financial one - the damage done to a company’s brand reputation, loss of sales and market capitalisation due to brand piracy is virtually incalculable.

All this activity has encouraged the drive by global governments and law enforcement agencies to find better solutions for protecting alcohol tax-raising stamps against the indelible mark of the counterfeiter – a role now being filled by holographic technology.

Holographic tax stamps are becoming an effective authentication device, now specified in government tenders and commercial bidding opportunities. Today, there is no better opportunity for governments to act decisively to boost excise revenue from growing alcohol sales in the face of the toughest global economic recession for decades by continuing to use the technology as an integral part of their strategies.

Holography is also seen as a complementary technology by the majority of potential buyers of forensic markers and highly covert products schemes while the market for holography on tax stamps will continue to grow – both as an additional security for tax stamps not currently carrying holograms and for new schemes.

The growth in alcohol consumption (worldwide, people 15 and older consumed 6.2 litres of alcohol per person in 2010, according to a recent World Health Organization [WHO] report) is a massive opportunity for resourceful counterfeiters ready and willing to take advantage of regional markets where governments and security agencies either lack the wherewithal to tackle the problem or existing resources are over stretched. It’s in these volatile regions - aiding the authorities in stemming the trade in illicit goods - where one possible future for holograms for tax stamps lies.

But there are other challenges on the road ahead. One of the most important will be the extent to which holograms can continue to maintain their position in light of the growing demand for so-called ‘digital’ tax stamps. The audit trail for taxed products is a critical component of tax stamp schemes, and digital technology is now being deployed to mark stamps with unique codes and store this on a database which can be interrogated in real time by in-field tax inspectors, and which also provides data on products marked which tax authorities can correlate with revenues received.

Such systems are aimed at fiscal recovery and not authentication, and hence do not obviate the need for robust physical security features on tax stamps such as holograms. Tax stamps serve two purposes. One is to provide a record of payment of tax. The other is to provide evidence that the stamp, and hence the product to which it is affixed, is genuine.

Digital systems are just the latest delivery vehicle for serialisation that enables products to be traced and traced, hence fulfilling the first purpose. The physical integrity of the stamp – protected with holograms, security print, taggants etc – fulfils the second. It is to be hoped that tax authorities, in a quest to reduce costs, do not confuse the roles of the two.

ENDS

Note to editors

The International Hologram Manufacturers Association (IHMA) - www.ihma.org - is made up of more than 90 of the world's leading hologram companies. IHMA members are the leading producers and converters of holograms for banknote security, anti-counterfeiting, brand protection, packaging, graphics and other commercial applications around the world. IHMA member companies actively cooperate to maintain the highest professional, security and quality standards.

Issued on behalf of the IHMA by Mitchell Halton Watson Ltd. For further details contact Andy Bruce on +44 (0) 191 233 1300 or email andy@mhwpr.co.uk