Technology-the ROI driver for Food and Beverages Industry
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Patrick Dolan, National Managing Partner - Market Development & National Line of Business Leader, KPMG LLP
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Technology Building a Foundation for Greater Trust in Food
By Linda Eatherton, Managing Director/Partner, Global Food & Beverage, Global Practices Development, Ketchum and Lisa Sullivan, EVP, Director NA Tech Practice, Ketchum
The blockchain train has taken off and it is building steam in the food industry. By creating a permanent and shareable record of every movement a food item makes from farm to fork, blockchain promises to radically improve food traceability and safety while also empowering food companies to more easily provide customers with information about where their food comes from, how it was grown, and how it was processed and delivered to them.
Just imagine the impact on one of the biggest reputational challenges the industry faces: food recalls. The faster the source of an issue can be identified and the impacted products removed from the supply chain, the better–both for the protection of public health and for long-term consumer trust.
Take the spinach outbreak in 2006. It took two weeks to trace the source of the problem back to the original farm. Ultimately, only one lot, from one day, on one farm was contaminated. Yet weeks of supply from multiple farms were thrown out and the financial and reputational impact to the industry lasted far longer as consumers stopped eating spinach for many months.
Blockchain pilots by industry leaders like Walmart and IBM have demonstrated the ability to track a source within hours, not days or weeks, making it far easier to remove only specific tainted items, better communicate with consumers and minimize the impact.
Beyond food safety, building trust with consumers is about being open, honest and accessible and having authentic, unfiltered conversations to understand what they want and expect. Consumers today want to know what’s in their food, how it gets there, how the people who make it are treated, and how food companies behave in nature and in the community.
Blockchain helps food companies deliver on this demand by tracking and verifying the source and every step a food item takes along the journey--without any doubt that the information is factual and unaltered. This means that the food company, the retailer and the consumer can have confidence in the information they receive and share.
Implementation of blockchain will give food companies a technological foundation to drive more trust with their consumers and improve how they communicate with them
The efficiencies and increased visibility into the supply chain also helps food companies automate the process to more easily deliver information to consumers. For example, blockchain, along with QR codes, is now being used by the World Wildlife Fund to improve tuna traceability to help stop illegal and unsustainable fishing practices and ensure consumers are getting the sustainably fished tuna they desire.
But there’s a critical nuance here that is important to understand. Many believe the demand for more transparency in the food system was a cry from consumers for more information. Not so. Our proprietary research series, Food 2020, and subsequent qualitative research determined that what consumers actually want is more access to information. They expect the food industry to carefully package and serve up data and content via portals, cues, invitations, signals, scannable codes, opportunities and engagements that help them learn and self-educate with ease in myriad ways. With the promise of having much more detailed and accurate information about our food, companies have a growing responsibility to identify how to provide the right information to consumers, at the right time, in the right way.
Blockchain, when implemented, will give food companies a technological foundation to drive more trust with their consumers and improve how they communicate with them. As the exploration and adoption of blockchain in the food industry continues to grow, what can companies are doing now to establish that foundation for the future?
Unlike disruptive technologies that have come before, what is unique about blockchain is that it is ineffective when adopted by only a single entity. Where blockchain gets its strength is when multiple players are part of the network. True success will come when every player in the ecosystem–from the farmer, to the processor, to the shipper, to the retailer and every party in between–is on a blockchain network.
Today, there is a tremendous opportunity in the B2B space to work collaboratively to better understand blockchain and to educate key players throughout the ecosystem to ready the network and drive wider industry adoption. There also is an opportunity to communicate with consumers about the coming value of blockchain. According to Ketchum research, two-thirds of Americans are interested in learning more about how technology is used in the food industry, and 56 percent say they are comfortable with technology to grow or produce food. While blockchain is inherently a complex, back-end technology, the companies that craft the right story for consumers will have the opportunity to build trust and demonstrate a commitment to food safety, transparency and greater information access for consumers.
For food industry leaders, now is the time to take a closer look at blockchain: not only to consider how to participate in blockchain networks and how to help build collaboration across the industry, but also how best to tell the blockchain story and use this game-changing technology to build greater trust with consumers.