Codentify

Codentify, now known as Inexto, is the name of a product serialization system developed and patented by Philip Morris International (PMI) for tobacco product authenticity verification and supply chain control. In the production process, each cigarette package is marked with a unique visible code (also called “Codentify”), that allows authenticating the code against a central server.

In November 2010, PMI licensed the system to its three main competitors, namely British American Tobacco (BAT), Imperial Tobacco Group (ITG), and Japan Tobacco International (JTI), and the four companies together formed the Digital Coding and Tracking Association (DCTA) which works to promote the system in order to replace governmental revenue stamps. Codentify is branded by its inventors as a “track & trace and product authentication technology”.

In July 2004, Phillip Morris International and the European Union had settled a 12 year long legal dispute concerning cigarette smuggling charges. PMI agreed to pay 1.25 Billion USD to the EU budget and its member states. In addition, PMI was legally obligated to mark its products with trackable serial codes. Agreements were subsequently signed with the other three major tobacco companies.

PMI's daughter company, Philip Morris Products S.A. created and patented the Codentify system in 2005.

In late 2010, PMI licensed Codentify to its main competitors BAT, JTI, and ITG free of charge. The four companies, which together account for 71% of global cigarette sales (excluding China), agreed to use the PMI-developed system on all of their products to ensure “the adoption of a single industry standard, based on Codentify.” The Framework Convention on Tobacco Control (FCTC) immediately voiced concerns that “Codentify should never be used for tracking and tracing purposes as tracking and tracing provisions should be implemented under the strict control and management of governments.”

In 2011, the four companies formed the Digital Coding and Tracking Association (DCTA) to promote international standards and digital technologies to help governments fight smuggling, counterfeiting and tax evasion. The association was officially launched in 2013.

According to the DCTA, around 12% of the global cigarette market is illicit, costing national governments more than US$40 billion a year in lost tax revenues and some say this is a serious underestimate. The agreements between the EU and the four major tobacco companies aim to stem the illicit trade of cigarettes, but are seen by academics in the field as a wholly inadequate deterrent. The EU has since not renewed this deal after MEPs complained that that it was ineffective and inappropriate that governments and tobacco companies have such a deal.

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