Tackling counterfeiting in the milk industry: the trace is on

The 2008 Chinese milk scandal illustrated the tragic consequences of allowing counterfeit baby milk to get into the hands of consumers. Daniel Davies speaks to Steve Wood of track and trace company Covectra about what their technology is doing to help


Images: serialised infant formula. Photo courtesy of Covectra


Counterfeiting is a crime that has no borders or ethical restraints, so from fake bank notes to trainers to alcohol nothing is beyond the imagination of counterfeiters. Since the 2008 Chinese milk scandal babies’ formula can also be added to the list of products that have been targeted. A number of people were prosecuted and two people were sentenced to death for that crime, which claimed the life of six infants and hospitalised a further 54,000. Understandably then, there are people working to make sure something like that never happens again.

US and UK-based serialisation company Covectra has developed a worldwide track and trace system that records information from barcodes placed on every level of infant formula packaging (from the formula’s label and can to the pallet it is transported in). Using the method, manufacturers can tack their product during each stage of the supply chain, and consumers can also use the service to guarantee the integrity of formula their children consume. If at any point a breach is detected a red flag is raised and consumers are warned about the authenticity, and potential danger, of their purchase.

“Counterfeiting is a global business,” says president of Covenctra, Steve Wood. “They're everywhere, and particularly when a country's economy is in distress, which many of them are right now. Counterfeiting is a relatively easy business to get into, so we believe it’s good policy in the US and in Europe for their governments to implement these 2D barcode requirements.”

Track and trace technology in the fight against counterfeit products

"Counterfeiting is a global business."

Covectra aren’t the first company to use this type of track and trace methodology to protect against counterfeiting. “As far as I know the first use of it was in the automobile industry and they use it for tracking each component used in making a car during the assembly process,” says Wood. “They used it so that all of the parts in an engine would be aggregated to an engine master-barcode and then the master barcode of the engine would then be linked to the vehicle identification number (VIN). If there's a recall of airbags or seatbelts, that would allow you to get into contact with the dealers that would have ended up with those VIN numbers, and you'd be able to manage the recall much more intelligently than just inviting anybody who brought that particular car to get in touch.”

In fact, the technique Covectra are currently applying to infant formula isn’t even the company’s first foray into the world of track and trace technology. They began, like many others, using barcodes to track pharmaceuticals. The method is popular within the pharmaceutical industry because it allows drugs to be linked to specific patients, and then for usage of that product to be monitored and abuse or misuse to be detected. “We were contacted by a partner company that had received a request from an infant formula manufacturer, and we were able to apply the same basic serialisation system to that product that we use in the pharmaceutical world,” says Wood.

Off limits: no industry is untouchable

"The value of a can of baby formula in China might be 10 to 50% higher than the market price in Europe."

But why is baby formula a popular target for counterfeiters? Even in an illicit industry like counterfeiting, surely there are codes of conduct that dictate children are off limits. According to Wood this isn’t the case. “What we understand in some of these markets is that because the value of a can of baby formula in China might be 10 to 50% higher than the market price in Europe, for example, it's become a very attractive target for a counterfeiter, so they will actually put some low grade, low quality baby formula into a can that has the brand owners packaging details. Sometimes they will recycle cans that are empty and found in the garbage and clean them and fill them with the counterfeit powder and sell them as the European brand owner’s product,” says Wood.

“That's a big liability for the brand owner because if that baby consumes the infant formula and its counterfeit and not produced to quality standards they could get very sick. That's why China implemented this system because there was [during the 2008 Chinese milk scandal] a product substituted for the whey protein, and it was melamine which is a really poisonous. That's why the Chinese decided to implement some very strict standards using this barcode methodology so that product could be tracked into China and inside China.”

Consumers vs. brands

"Brand owners, when they hear about a requirement for serialisation, they get concerned about disrupting their packaging line."

It’s in consumers’ interests to have baby formula and other products protected using track and trace technology and brands obviously benefit from securing their goods from counterfeiters. It’s brand owners though who should be pushing for this methodology to be put in place, but that’s not always the case. So what’s stopping them? Why hasn’t track and trace technology been implemented wholesale? “Brand owners, when they hear about a requirement for serialisation, they get concerned about disrupting their packaging line and the cost of this,” says Wood.

“We have developed a system that is a much more cost effective solution that these companies have been used to seeing in the marketplace, so it's not as expensive as everyone thinks and when you look at it on a per barcode basis it's well under 1% per can. Our argument is: why not protect your consumers with a relatively low investment per can by going through this?”

Even if brand owners don’t willingly choose to act and put track and trace in place, they might be forced to act by regulators. In the world of pharmaceuticals the EU and US are both ordering drugmakers to add a unique identifier and an anti-tampering device to packaging. In the US this will have to be implemented by November 2017 and in the EU it will be required by all but three members by 2019. Once that happens it may not be long before the policy is expanded to other products and this is something Covectra welcomes. “We think that infant formula and many food products can also be protected by this kind of system,” says Wood.