Role of Coding and Marking Systems in Making Manufacturers Profitable

• Published Date: March 3, 2022

It is a common observation that food & beverage and pharmaceutical products are extensively labeled. This is because companies are necessitated by governments to mention all the important information about these products, such as their manufacturing and expiry dates, nutritional data, ingredient list, manufacturer details, and batch number, on the packaging. Since these products are directly consumed by people, they have the right to know what they are eating and how it will affect them.

Hence, with the continued growth in these industries, the demand for coding and marking systems, which are essentially the printers used to label product packaging, will increase as well. The advent of shrink-wrapping and tetra packs has given wings to the global food & beverage sector. Long shelves stretching from the floor to the ceiling, laden with processed food and beverages in vibrant packages with attractive graphics, have come to define the modern grocery shopping experience.

Several people are attracted by the mere unique imagery on the packages, which become iconic with time. For instance, the Amul girl is well known in India, while many of those who consume processed cereals can easily identify Cap’n Crunch. Thus, proper coding and marking on the food packaging not only fulfill the government mandates to inform people of all the important information on the product, but also help companies in capturing the attention of consumers.

Every food & beverage brand, be it a processed food company or even a restaurant chain, has an iconic logo that appears on its product packing. Almost everyone around the world can easily identify companies like Pepsi, Coca-Cola, McDonald’s, Starbucks, Pizza Hut, and Domino’s just from their logo. Naturally, considering the success these brands enjoy, many have tried to copy them and produce cheap knock-offs or even fake products. Copying the logo is rather important here as it has a profound impact on consumers.

Therefore, to counter the threat of fake products, major brands are designing their logos in a way that makes them hard to be copied. Hence, a key purpose coding and marking systems are now fulfilling is allowing for the tracking and tracing of products along the supply chain and identification of fake ones. This is especially important for pharmaceutical companies, which suffer huge revenue losses due to the wide circulation of fraudulent drugs. The WHO says that almost 25% of the pharmaceutical products sold around the world are counterfeits!

Counterfeit Threat Grows during COVID-19 Pandemic

With the closure of many large food & beverage and pharma factories, small, independent producers received a boost. However, the problem here is that many of them produce fake drugs and food products, adhering to rather low product quality standards and, often, none at all. In 2020, Interpol and the government agencies part of its Operation Pangea XIII seized 34,000 fake and substandard face marks. Moreover, in just one week, of 3–10 March, 2022; 326,000 packages of fake healthcare goods were seized by participating agencies, aided by the unique logos on the packages of genuine products.

Auto Sector another Prominent Victim of Counterfeits

Another industry where proper coding and marking are essential to reducing the circulation of counterfeits is automotive. According to the European Union Intellectual Property Office, counterfeit tire sales cost genuine companies more than EUR 2.2 billion, while fake automotive battery sales lead to a loss of EUR 180 million every year. Moreover, the chop shop culture is highly prevalent in the U.S. and the center of numerous movies, such as Fast & Furious, and games like GTA.

Chop shops are illegal automotive workshops operating in the garb of a garage and repair facility. They retrieve stolen vehicles, strip them of their genuine parts, and sell them for a profit. This is why all automotive parts, from the main chassis to a nut and bolt, have a unique logo, which could be an alphanumeric code, a hologram sticker, an RFID code, or a barcode, that helps OEMs tell genuine parts from counterfeits.

Additionally, in developing countries like India and China, small garages and repair facilities abound, offering cheaper repairs to vehicle owners than authorized service centers. One way that allows these entities to offer cost-effective vehicle repairs is fake and cheap auto parts, such as fuel filters, sparkplugs, and airbags. While this doesn’t seem as big a problem on the face of it, fake parts can easily malfunction and lead to vehicle crashes and injuries, which is why it has become important to ensure the parts are genuine.

Governments’ Role in Eliminating Fake Products from Market

Fake products can not only harm humans, but they also cause governments to lose massive amounts of money. For instance, the Indian government annually loses over INR 40,000 crore in taxes due to the trade of counterfeit food products, beverages, and other FMCGs, pharmaceutical products, automotive parts, chemicals, and consumer electronics. As a result, governments around the world are mandating the proper labeling of products and their packaging so that counterfeits can be distinguished from originals.

The key government regulations in this regard include:

• U.S. Drug Quality and Security Act (DQSA) of 2003
• U.S. Food and Drug Administration Amendments Act of 2007
• Regulation (EU) 2015/2424
• Prevention of Food Adulteration (PFA) Rules, 1955, Part VII (India)
• U.S. Fair Packaging and Labeling Act of 1966
• Indian Drugs and Cosmetics Act of 1940
• Indian Food Safety and Standards Regulation of 2011
• Directive 94/11/EC

All these and other such laws aim at the labeling of products and their primary and secondary packaging in the vernacular or the most-widely used language, with all the important facts about them. This is why manufacturers across industries are procuring advanced coding and marking systems that can not only help them comply with the regulations but also eliminate counterfeits for their own benefit.

Industry Growth Continues To Drive Demand for Coding and Marking Systems

Apart from the government mandates and threat of counterfeits, another key reason leading to the rising sale of coding and marking systems is the growth in the industries themselves. With the steady rise in population, which is set to touch 10.9 billion by 2100, as per the UN, the food & beverage, pharmaceutical, FMCG, chemical, construction and construction material, automotive, consumer electronics, and all other industries continue to boom.

For instance, as per the OICA, automotive sales picked up from 52,146,292 units in Jan–Sep 2020 to 57,262,777 units during the same period in 2021, thus hinting at post-COVID-19 recovery. This can be credited to the rise in the preference for traveling by personal cars and two-wheelers over shared transportation, out of fears of contracting the coronavirus infection. Similarly, due to the work-from-home orders, laptop sales in India rose by 15% in July 2021 compared to the same month last year.

Further, the social distancing and stay-at-home orders drove the demand for packaged food and beverages, with many people choosing not to visit physical stores until absolutely necessary. As per the MD and CEO of METRO Cash & Carry, a retail chain in India, the company witnessed a 3% rise in the sale of processed food amidst the second wave of the pandemic in 2021. Further, a March 2021 article in The Economic Times said, "Consumption of packaged snacks, ice cream, beverages, chocolates and confectionery have bounced back to pre-COVID levels."

This means that not only do companies have more money to spend on upgrading their production technologies, but that they also need to manage a higher volume of goods in their factories. This has been leading to an increasing demand for coding and marking systems that can print more characters for a given volume of ink. This is why users are shifting from conventional technologies to digital printing technologies to achieve cost-effectiveness in their manufacturing operations. Moreover, digital printing technologies offer a higher speed of the process, thereby shortening the time to market.

Another way companies can achieve lower operating costs is using printers that can work on multiple surfaces and require minimal servicing, despite working for long hours. This is why among all types of coding and marking systems, continuous inkjet variants are used the most widely. Similarly, printing inks with a solvent base (primarily methyl ethyl ketone) are high in volatile organic compounds, which can cause a number of health issues, including cancer. Therefore, bio-based inks and those with weak odors are gaining popularity, especially for food & beverage products.

Therefore, as the industry recovers from the shock of COVID-19, companies will likely increase their spending on coding and marking systems to comply with government guidelines and allay people’s concerns regarding genuine products.