Over thepast decade, we have witnessed an increased focus on health and sustainability across the food industry. However, along with it has come the corrupt practice of Greenwashing (making unsubstantiated or misleading claims about environmental benefits or practices). Consumers know this, and as a result, now not only demand better practices, but better verification and provable trustworthiness.
Once we enter the post-COVID-19 era, it’s expected that consumer trust in a brand’s positive societal impact will become even more important. 80% of consumers already report that being able to trust a brand to do what’s right is important in their buying decision. This growing need for trust presents an opportunity in the market – those who manage to build trust will be rewarded by consumers in brand loyalty and customer acquisition.
So how can food businesses go about regaining consumer trust?
According to research, transparency has a direct impact on consumer trust. Additional research has shown us that transparency has a direct positive influence on green perceived value (GPV). GPV also influences brand loyalty positively. In other words, companies that invest in being transparent will reap the benefits in the strength of their brands. Furthermore, consumers in certain segments are willing to pay more at the grocery store for these transparent brands. In conclusion, transparency brings value!
Transparency can be defined on different levels. At its base, transparency means providing information on the ingredients of products. Brands should, therefore, clearly state what ingredients their products contain. Secondly, transparent brands provide details on the nutritional information of their products. This allows consumers to monitor their daily intake and improve their lifestyles. Thirdly, being a transparent brand, means giving information on how products are produced and sourced. This is where the opportunity lies – since most brands already provide some version of the first and second levels, brands who also give info on the source gain the advantage.
However, this layer also presents the highest challenge, since it involves the entire value chain. Although technologies that can link the value chain are emerging, the lack of trust between players is often one of the biggest obstacles, and implementation has remained illusive.
Since consumers increasingly value transparency and have a higher willingness-to-pay for more information, one solution to the aforementioned lack of trust is to distribute any added value throughout the value chain. From that point onwards, brands can choose a two-way approach. In the ex-ante quality assurance approach, quality and certification are measured at the time of sourcing or production. In the ex-post traceability approach, digitization of supply chain records makes it possible to quickly recall products in the event of a health issue. Research shows that the willingness-to-pay for ex-ante information is higher. In other words, brands with digitization are at a monetary advantage.
So what can digitization bring your brand?
Of course, many brands already have some form of quality assurance incorporated. But paper trails often seem endless. Documents and certificates are manually checked at several points in the supply chain and need to be sent back and forth while databases are processed manually. This process often takes months.
Once quality assurance is digitized and automated, this process can be shortened to minutes. After that, quality assurance can be backed up with a verifiably quality process, and transparency can be brought to its full potential. This transparency can then be shared with consumers and will form the basis for increased brand trust and added value. Any food company that does that will be well on their way to fully regaining consumer trust!
Edelman Trust Barometer Special Report (2019)
The transparency imperative product labeling from the consumer perspective (2018)
J. Lin, A. Lobo & C. Leckie (2017), The role of benefits and transparency in shaping consumers’ green perceived value, self-brand connection and brand loyalty, Journal of Retailing and Consumer Services 35 (2017), p.133-141.
B. Hou et. al (2019), Consumers’ Willingness to Pay for Foods with Traceability Information: Ex-Ante Quality Assurance or Ex-Post Traceability?, Sustainability 11 (2019)
It seems like just yesterday that blockchain was all anyone was talking about. Cryptocurrency was the new money. Internet of things was going to change our day-to-day lives. And to those of us in the food supply chain, a revolution in record-keeping seemed just around the corner.
The buzz around blockchain has dipped some in the last couple years, but many food companies are still forging ahead with cutting edge programs to integrate their supply chains into a blockchain. Why the delay? Was tech not ready? Were not all the players on board? Or was blockchain just a passing fad?
None of the above. The real story is that blockchain is only part of the equation.
WHAT CAN BLOCKCHAIN DO
Back to basics: blockchain is a digitized, verifiable, incorruptible, decentralized ledger that captures and records transactions between two or more parties. Because this record can’t be changed or hacked, it can be an ideal base for a system of transactions that requires responsibility and verification. Furthermore, because it’s decentralized, it’s perfect for a multi-entity pipeline like the supply chain.
In theory, this should create the ultimate vantage point to view the supply, and as a result, make it the best version of itself.
•Goods can be located in realtime at any given moment. Sources are verified and held to high standards.
•Every product will have a comprehensive origin record.
•The administrative mess supply chain managers tear through every day will sort itself into a cohesively organized database.
However, this dream of the perfect blockchain-powered supply chain falls short when the blockchain exists in a vacuum.
WHAT CAN’T BLOCKCHAIN DO
Think of the blockchain as a cutting edge superhighway, running between every stage of the supply chain. It’s the digital infrastructure that can connect the information needed by buyers, sellers, and supply chain managers into a streamlined system. That highway is all well and good, but without cars, that highway is going to stay pretty useless.
These “cars” are the other half of the equation. Like a highway needs cars, and supply chain blockchain needs data sets. Copious amounts of information need to be inputted at every step in the supply chain for the blockchain to function to its true potential.
Currently, most of the imported data on in-use blockchain projects comes from barcode and RFID scanning stations. This is a great first step – these tags can give detailed data on shipping times, locations, and even sometimes en-route conditions.
But it’s only a first step.
•Since the barcode is typically placed on a box at a processing center (long after a food product leaves the farm), large swaths of data on the true origin of a product are left ungathered.
•Legacy barcode tracking APIs already do a good job of gathering barcode-only data, so companies have limited incentive to switch to blockchain
•Traditional barcodes are the go-to in many shipments, and only only gather data on time, date, and location
POPULATING THE BLOCKCHAIN IN 2020
Filling the blockchain infrastructure with comprehensive data is the part of the equation yet to be realized. This data integration presents the biggest challenge and biggest opportunity for blockchain in the food supply chain.
The good news is that that data is out there. Upstream supply chain segments (farms, processing plants, washing facilities, etc.) often harbor a wealth of data in various digital silos cut off from the rest of the supply chain. With the right experts on the case, capturing and integrating this data is just a matter of footwork. At FarmTrace, one of our key missions is to collect this hidden data and prepare it for integration with data from the rest of the supply chain.
Blockchain is poised to be an integral part of the food supply chain. With the data to populate it, the infrastructure is set to be a game changer. As soon as the cars are in place, be ready for a true superhighway!