How do digital innovations improve transparency in the food & beverage industry?
Blockchain is part of this solution.
The high need for transparency has gone mainstream. Consumers tend to demand products based on their quality, place of production and ingredients. The lack of transparency has become a real problem in the food industry, so the absence of important information has also caused various well-documented food scandals. Consumers expect and deserve to know how their food & beverage products have been manufactured, through which process they went, where they come from and if there are any additives (e.g. lecithins, polysorbates or diglycerides of fatty acids).
In recent years, more and more consumers are becoming educated about what they eat and therefore, buy. Moreover, rising issues around local production and insufficient information about ingredients, have resulted in mistrust between consumers and manufacturers. In general, those who are conscious about nutritional values and try to live a healthier lifestyle tend to avoid additives, artificial and genetically modified ingredients. For people dealing with allergies and intolerances, the nutritional information is even more important.
You are what you eat is a well known saying in many cultures, but how can quality of food be improved for all?
Increasing number of food fraud cases is becoming a global issue. According to every year’s statistics, there is ten times more olive oil, produced in Italy, than the country could produce.
In this case, the problem could be solved by the application of blockchain technology and legislative innovation. So, the company that keeps records on blockchain could “track the olive field source” to the final product — olive oil. This will lead to more efficient operations by reducing the cost of non-quality. If there is any problem found, it can be very easily detected (within individual product, batch, etc.) thanks to intrinsic immutability and traceability of all data recorded in blockchain system.
For instance, in some cases, the temperature has an impact on product safety — such as meat or dairy products the temperature of good while transporting. Manufacturers can avoid scandals by solving these issues before their products are dispatched to local supermarkets. Blockchain features and an application of smart sensors allow us to see the timestamps of all supply chain steps and logs of temperature conditions during transportation can be recorded and shown. Blockchain traced products could also allow for an early-warning system at individual product level to inform the consumers in time about potential risks.
Manufacturers produce what consumers want. Blockchain technology can help manufacturers provide information about the product.
Local products that are not so “local”
Did you know that nowadays if you buy for example sausage that claims to be from country X the meat may come from country Y but has been processed in country X. Then the discussion starts where the product actually comes from? Where it has been produced and processed or where it has been “grown”?
The most recent suggestion for legislative innovation at EU level has given clarification on the origin of the raw ingredient of a specific food. Applicable European rules require that the manufacturer must indicate the origin of raw ingredients or at least clearly state that if the primary ingredient differs from the provenance of the final food product. The aim is to ensure that origin information is provided on the basis of clear criteria and in a way that does not mislead the consumer.
For instance, if the pasta manufacturer states that it is “Italian pasta” on the product packaging, he will also be obliged to indicate the origin of the basic raw ingredient, in this case wheat. Moreover, the manufacturer must clearly state where the wheat comes from if the wheat has not been grown in Italy. This legislation will enter in force on 1st of April 2020.
Can Blockchain technology change the way people choose their groceries?
Adopting new innovations and automating production processes such as implementing blockchain technology can immutably proof origin and fully trace information. According to Verywellfit, there are different ways that you might benefit from food transparency that would lead to healthier eating habits. Moreover, human rights compliant and healthy farming practices, sustainable sourcing and minimal processing would become a part of the product’s labeling. Location and timestamp feature of blockchain would provide an ultimate proof of compliance and thus protect local farmers, manufacturers and also consumers.
Customers can see all important information about the goods through digital solutions such as blockchain technology. For example, if you have allergies or other dietary restrictions, now you can see all the important information after scanning the QR code. Moreover, you can see the whole production process, get the knowledge about the place of origin where the ingredients come from. Showing the consumers transparent and reliable supply chain information is an impressive way of building customer’s trust in your brand, in any industry. This solution can be a strong differentiation factor from competition.
Furthermore, digitalizing processes and implementing blockchain technology along supply chains could improve efficiency of business processes. Blockchain solutions provide automatic audit capabilities in near real time, which substantially reduces audit, process quality and assurance costs. Let’s see how brands will stand up to consumer transparency demand and environmental social responsibility.