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Lessons Learned: Ilana Jivago Reenters Fragrance Business After Cracking Counterfeiters

The Jivago brand is launching fragrances in time for Christmas.

Ilana Jivago was flying high in the early Nineties. Her Jivago 24K fragrance, featuring gold leaf pieces suspended in the bottle, eclipsed sales of $100 million.

The thriving business hit a roadblock several years later, the victim of counterfeiters knocking off the original and flooding the market with fakes. Like handbags, counterfeiting is a big business in premium fragrances. Upward of $75 million in annual losses are attributed to counterfeit products in the beauty industry, according to estimates.

“We were growing nicely and had a strong and developing business in high-end department stores and perfumeries,” recalled Jivago. But then she started hearing reports of retailers getting their hands on her premium fragrance that weren’t in her distribution scope. Some customers complained the fragrance wasn’t lasting. “At first I was so busy running my business I couldn’t pay attention and it was just a trickle.”

A keen-eyed border patrol agent in Laredo, Tex., saw a truck loaded with 32,000 bottles of her scent and contacted the company to make sure it was an expected delivery. That’s when Jivago realized counterfeiters were siphoning off her business. She embarked on a five-year journey to trace the sources and shut down the counterfeiting ring. Along the way, she shared her knowledge with others who were the victims of fakes. Through detective work, they traced back the company who had been importing the counterfeit goods. It was a costly and lengthy investigation spearheaded by Jivago and probably cost her business more than $30 million.

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“Beyond the money, it was the safety and brand protection,” added Jivago. When the U.S. government was reticent to assist, Jivago devoted $900,000 of her money to get to the bottom of the issue. It also took her away from what she loved  best, creating new scents. “I’m not as big as Estée Lauder, who has deep pockets for dealing with issues like that,” she said. “But I really love what I do.”

Now with safeguards in place, including holographic chips to track the products, Jivago is back in the launch business. She’s gone the extra mile to attach the chips to the bottle and box, since sometimes counterfeiters remove the bottle from packaging. She’d also like to see the formation of an organization to help protect small- to medium-size companies from counterfeiters. “The money it takes to save your brand can be devastating to a company or brand in the process [if fighting fakes].”

One of the launches is called The Gift, which Jivago said she created to recognize the importance of taking time for one’s self. It features top notes of ylang-ylang, musk, peach and basil blended with Lily of the Valley, jasmine and rose. The dry down has notes of a cocktail of white musk, amber and vanilla. Retailing for $180, Jivago can keep control on distribution by selling it exclusively online.

Additionally, the company is introducing Exotic Noire. It was developed with autumn and winter nights in mind with top notes of Tagete, Davina and a secret fruit. “Think fireplace, cozy settings, red wine and warm colors,” said Jivago.

While online will play a key role in distribution, Jivago also hopes to link up with physical store retailers, a distribution channel that was key for 24K. “I want to make fragrances that don’t smell like others. I love to get letters from customers who say my fragrances helped change their lives,” she said. Plans also call to license the Jivago brand. There are already two deals for lifestyle products with plans for skin care, health-related items like a spa line, color cosmetics and aromatherapy.