A Q&A with Flavio Musci, Checkpoint Sales Director Source Tagging Europe
What is the Grey Market?
The Grey Market or Parallel Imports is when authentic goods are diverted and distributed outside of the official distribution channels, without the brand or trademark holder’s approval. This diversion usually happens because of price differences across countries. Distributors purchase in country A (at a lower price) and sell in country B, usually at an aggressive price markdown. Grey market trade can mean billions of dollars in revenue loss due to these price differences.
Which sectors are more affected?
The beverage sector is one of them, in particular, the high-quality wine and alcohol brands.
How could brand-owners avoid this loss?
Brands need to implement solutions that give them increased supply-chain visibility. Visibility over the full supply-chain means knowing where products are at every step of the way, from manufacturer to distributor to warehouses to the final end customers. The product needs to be activated directly at the manufacturer facility, and then at every step of the product journey. Obviously, this needs to be fast and effective, so having technology integrated into the supply-chain process is key.
For brand-owners there is a clear need for brand protection solutions to fight against this challenge and avoid the erosion of brand equity and value perception
What role can RFID have to avoid this situation?
Thanks to the use of RFID, the producer and the retailer can know perfectly and in real-time where their bottle is: on the bottling line, in the dispatch warehouse, in which truck or shipping container, and in which country and store. This exact traceability of the product from the origin is what prevents losses and counterfeits, in addition to protecting the value of the brand.