A survey from the UK’s Anti-Counterfeiting Group (ACG) and the corporate fraud consultants, Maxima Group Plc, profils buyers of fake goods and the effect of counterfeiting on the share price and valuation of brand owning companies.

According to the study, those who are statistically most likely to buy counterfeit goods in the UK are men rather than women, people who have A-levels, workers with salaries between £17,500 and £29,999 and people in Yorkshire and the West Midlands.

The first part of the survey ‘Attitudes Towards Counterfeiting’ was designed to identify the general public’s awareness of and propensity to buy a range of counterfeit products. Part two questioned business investors to see if their opinion and valuation of a company was affected by the possibility of counterfeiting problems.

In terms of the public’s general awareness of counterfeit goods, perfume, clothing/footwear and watches ranked respectively as the top three categories.

Ruth Orchard, director-general of ACG said: “Many people think it’s OK to trade in fakes because the products provide ‘an affordable choice’ to the consumer. This excuse just does not hold water, behind the cheeky market trader lies a network of serious organised criminals who make millions stealing the ideas and investment of brand owners, with no regard for those who buy their sometimes dangerous rip-offs. Anyone who turns a blind eye, or buys such goods, is contributing to major criminal activity, which undermines genuine brands and legitimate businesses and is known to fund drug and gun crimes and even terrorism.”

Maxima Group Plc surveyed 52 city analysts to discover how they viewed the problem of counterfeiting in terms of its effect on a company’s valuation and share price. The key findings were:

• almost a quarter of the analysts surveyed (23%) felt that a major brand owning company’s share price would fall by between 5% and 9% in the face of a high profile counterfeiting story;

• the majority view (23%) was that it would take 6 months for the price to recover from such a fall;

• 33% said that a brand scare or security issue had affected their confidence in a company; this increased to 50% of those specialising in pharmaceuticals and consumer products;

• 46% said that such a scare had affected how they had valued a company and this increased to 60% of pharmaceutical specialists and 67% of consumer product analysts;

• a quarter felt that a counterfeiting scare involving a company with brands on its balance sheet would concern them more than the resignation of the chief executive or annual results below expectations.

Lindsay Hudson, operations director of Maxima Group Plc said: “Across the board, one in five analysts do not think that CEOs treat the problem of counterfeiting seriously enough and this increased to 50% of the consumer products’ analysts we surveyed. CEOs must wise up and realise that counterfeiting is a real threat to their business. If they concentrated as much effort on protecting their brands against unseen counterfeiting competitors as they do on increasing market share against their legitimate competitors, it would pay dividends both in sales and company valuation.”

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