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Thursday, March 12, 2015Market

€5 billion and 50,000 jobs: the cost of counterfeit cosmetics

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According to a report by OHIM (the EU agency entrusted with the registration of Community trade-marks and designs), nearly €5 billion and 50,000 jobs are lost every year in Europe in the cosmetics and personal care sector due to counterfeiting. In the United Kingdom, 6% of the sector’s direct sales are lost annually.

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Sales of counterfeit perfume, makeup and personal care items like sunscreen and shampoo throughout the EU mean that legitimate manufacturers, retailers and distributors lose €4.7 billion of revenue each year.
That equates to 7.8% of the total sales in the cosmetics and personal care sector throughout the EU-28. That lost revenue translates into 50,000 lost jobs, as the legitimate industry sells less than it would have done in the absence of counterfeiting, and therefore employs fewer workers.

Those findings are contained in a new report from the Office for Harmonization in the Internal Market (OHIM), the EU’s largest intellectual property agency, acting through the EU Observatory on Infringements of Intellectual Property Rights.
The report, the first in a series of economic studies assessing the economic impact of counterfeiting in the EU economy, also found that when the knock-on effect on suppliers are taken into account, legitimate businesses across the EU lose €9.5 billion of sales revenue because of counterfeiting, with around 80,000 jobs lost.

Furthermore, €1.7 billion of government revenue is lost due to the presence of counterfeiting, reflecting income taxes, social contributions and VAT that are not paid by the producers and sellers of counterfeits.

In the United Kingdom, …

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