Tuesday, February 12, 2008

The Dirty Secrets of the Grey Market & Fakes

In addition to the revelations of the exceedingly low costs of several fragrances on the market that we discussed recently, Perfume Shrine continues to be inspired by the juicy behind-the-scenes reportage by Chandler Burr in The Perfect Scent. Unfortunately it corroborates all our worst suspicions and the hush hush gossip we have been hearing from people in the know: "The biggest, dirtiest secret is that you have to sell your products to yourself" as one French executive had revealed. Now that it is in the open, we feel at liberty to discuss this.

The parallel market is what is at the bottom of all this. Burr brings the example of Chanel France who makes the products and has to sell to Chanel USA (there goes the myth, then, dear readers!), who in turn sell the products to the distributors ~where you go and buy your fragrances.
This official practice however is supplemented by them selling to the Arabian Peninsula as well ~Dubai. Which is lawful of course, but which leaves the margin of the latter liquidating the products at some indeterminate moment to dirty little stores on less respectable avenues. Something that was not intended by the headquarters.
This is what happened with the cheap bottles of normally expensive Creed fragrances that so often raise their heads in Ebay or certain sellers online: the grey market. {click for a coherent explanation of how this works}.

Basically valid when the dollar is stronger than other currencies, the grey market operates on

"goods that are legitimately imported from abroad, carry a recognizable trademark or brand name, and are sold at significant discounts outside of the manufacturer's normal channels of distribution".

To restraint such disreputable practices that mar the cachet of any prestigious brand, companies try to shut down those distributors, but more importantly they try to control diverting by marking their product. This practice also protects the consumer from the cheap fakes which circulate as well, usually made in the Far East, more of which later on.
The lot numbering on Chanel bottles started for this exact purpose and they marked the boxes with the country they would sell to (such as, indeed, Dubai). Apart from the etching on the bottom of the glass, Chanel bottles bear a four digit code on the back side of the bottle, just over the base: very discreetly, but there, able to be traced. However diverters soon realised that it was possible to open the boxes, alter the numbers and re-shrinkwrap them. The answer by the legitimate producer was to use invisible ink, but it is a universal thuth alas that anything one devises, another is able to crack...

What is perhaps more intriguing still is that now there is a new technological breakthrough that like a version of Brave New World gone tangibly real it manages to genetically imprint the juice with a recognisable substance that is readable by a gunlike machine which picks up its signal. Very futuristic, no?
Of course this is not very useful to the consumer, who does not possess such a machine, nor is he/she privy to the fact that there is such a process in practice anyway!
To give you an example, this is one method that Jean Paul Gaultier parfums (and therefore Givaudan who produce them) are known to go through. In those beautiful torso bottles there is some genetic stuff floating around that is identifying the juice as the genuine article; something we hadn't thought of when we dabbed the fragrant liquid on our skin.
Other companies such as Chanel do equally well in protecting themselves, with their own methods. Others yet, like the Louis Vuitton Moet Hennesy group (which includes Dior, Givenchy, Guerlain, Kenzo, Lowe and Aqua di Parma parfums) do less well apparently, per the industry gossip.

The following info is especially eye-opening:

"If you take all the sales, 50% are sold in these parallel markets. It helps Chanel France's bottom line, but it hurts Chanel USA's bottom line. Nowadays it's such a common practice it's become uncontrollable. And even the parallel market is in its worst state everywhere because heads of companies have to make their yearly numbers, and so at the end of the year they get desperate and start pouring product into the legitimate markets, which then overflow into the parallel market, which right now is actually flooded".

~Chandler Burr, The Perfect Scent, Holt 2008, p.156

Which brings us back to the matter of fakes as well. Parallel market presence is indavertedly a sign of recognition of a brand's recognisability as much as the production of fakes is a sign of desiribility of the original product.
It is no accident that Chanel is the brand whose products from cosmetics to fragrances have been most copied and faked: it is universally the most recognisable beauty brand and enjoys iconic status accounting for much of its sales.

But time to get practical for the benefit of the customer. In order to differentiate a fake from the original product one has to pay attention to certain details: Usually the cap and lid are not quite right and less luxurious than they should. There is no engraving on the bottom of the bottle but rather a stick-on label, or else the etching is badly made. The logo isn't as sharp as the one on official product in stores, denoting lack of the proper equipement to implement it in the first place. The glass can be a little streaky, not uniform, a sign of inferior quality. And of course in a fake too often the smell is off, with overwhelming alcoholic opening or a stickiness later on, and the colour is not as it should be.
For those reasons, perhaps despite the elevated prices it might be a good idea to purchase your Chanel bottles at a regular store.
But as always whatever you do, it is in your interest to be informed. For this purpose, Perfume Shrine recommends those two Ebay guides for spotting fake Chanel perfumes.
Here is the first one focusing on specific bottles and here is another one about Coco Mademoiselle in particular with info on the box as well.

Accompanied with pics, they are a little nudge to let you make the right choice.

Pic of Eiga Japan from Ebay sent to me by mail by a friend :)


  1. This post reminded me of some really scary stories I heard this year from some people in the beauty business, regarding other cosmetics. (ie. beauty creams etc) Apparently, in some countries, there are factories that buy the rights to bottle the expensive creams and in order to make more money, they dilute them. Yet, the bottle, jar, tube etc. looks (and is) original. It is the stuff inside that isn't. This goes a long way in explaining why sometimes the tiny sample of say, a dior serum made a huge difference but when you buy the big bottle, the product seems different. Disgusting, no? Apparently the only way to avoid this is to check the box to see (at least in the EU) where it was packaged and then decide whether you trust it...

  2. D,
    I agree. And wait till you hear the toothpaste stories I have heard from the inside (on second thought, maybe you don't want to: it will turn you off your toothpaste for good!)

  3. Helg, I read most of CB's book with my jaw on the floor. And I mean that as a compliment. A truly educational read for anyone who loves perfume.

  4. Anonymous05:07

    Ahh...color me naive. Haven't gotten to that part of CB's book yet, but I would never have thought anyone could dupe a Chanel and get away with it. Is this rampant?

  5. Dear Mary,

    I agree that his revelations come as a great surprise to most people. And even to several perfume lovers.
    It's certainly important to build a solid education on inside matters so that we can make an informed choice.

  6. Dear Cathy,

    unfortunately Chanels have been duped for a long time and is one of the brands that is very careful about its prestige, so they are going after them: but still, fakes do crop up, especially on Ebay. (on cosmetics too)

    As to that part of Burr's book: it's one of the juicier ones. ;-)

  7. Anonymous13:03

    It boggles the mind! You do a wonderful expose.
    Thank you yet again for getting the word out.
    I found the ebay guides really useful.


  8. Glad you think so, Abigail. Those guides are written with a good cause at heart, aren't they?

  9. This is such a shame that this happens. It really irks me for some reason. It feels like they're stealing.How can we, the consumer, prevent this from happening? Cause a ruckus at the discount fragrance store when we spot missing serial numbers?

  10. Hi and welcome sirslarty!

    Refuse to buy or take the item back is a good starting place. Check for signs of authenticity is also important, when possible.

  11. Hi there - loved this feature - a real eye opener....I have posted a link to it on my own blog - Britishbeautyblogger - hope that's okay but I want as many people to read it as possible. Can we do a link exchange? BBB xx


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