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Research Outline

Prepared for Jenny B. | Delivered August 19, 2019

Transparency and Traceability - Consumer Products: Food

Goals

To understand more about the subject of transparency and traceability within consumer products, especially within food.

Early Findings

  •  Definition of traceability and transparency: "There is a difference between traceability and transparency. Traceability allows food products to be traced backward and forward through the supply chain. Transparency is an open endeavor, which, ultimately, makes tracing food an easier and more honest process. Despite being different, traceability and transparency are interrelated, particularly when it comes to pathogen testing."
  • At its annual March 20 shareholders meeting in 2019, Starbucks unveiled a new feature being tested that allows customers to scan a bag of coffee and trace it through the supply chain. Also shown are origin information, farmer support efforts, and roasting information.
  • In 2019, block chain has been piercing the food industry at an accelerated pace. According to recent research, 20% of the top-10 global grocers will use block chain by 2025.
  • There are at least two essential problems in the food industry that block chain has been presumed to solve. First, the trust issue: According to a 2018 study released by the United States-based Food Marketing Institute (FMI), the public demand for transparency is growing within the market. Essentially, customers are becoming more health-conscious and want to know as much as possible about the food they get.
  • In 2017, the U.S. Food and Drug Administration (FDA) investigated a fatal Salmonella outbreak linked to papayas imported from a Mexican farm. In order to allocate the disease’s original source, the agency conducted over a hundred interviews and studied various mango samples in lab conditions. Block chain can reduce the process of finding the responsible supplier to seconds: By using the technology, stakeholders can track the corrupt harvest of mangoes from a particular farm and then surgically remove it from the supply chain.
  • It has been reported that the U.S. seafood trade association National Fisheries Institute (NFI) is now working with IBM’s Food Trust to trace seafood. Purportedly, this is the first effort to track multiple seafood species, an initiative jointly pursued by multiple companies. Just a couple of months prior to that, North America’s largest branded shelf-stable seafood firm, Bumble Bee Foods, launched a block chain platform for seafood traceability in collaboration with German tech company SAP. Based on the SAP Cloud Platform Block chain service, the new platform can purportedly monitor the supply chain of yellow fin tuna from Indonesia to end customers.
  • Block chain has been picking up pace within the alcohol and beverage industry as well. In March, news surfaced that premium scotch whiskey brand Ailsa Bay is going to release what it believes to be the world’s first scotch whiskey tracked with a block chain-based system, while later in May, the Big Four audit firm E&Y announced its proprietary block chain solution for a major new platform that helps consumers across Asia determine the quality, provenance and authenticity of imported European wines.
  • Starbucks has unveiled more details regarding its “bean to cup” initiative. In May, it was reported that the coffeehouse chain will implement tech giant Microsoft’s Azure Blockchain Service to track the production of its coffee and allegedly provide coffee farmers from Rwanda, Colombia and Costa Rica with more financial independence.
  •  Starbucks is using traceability technology.
  • Clothing company Everlane has established a transparent supply chain by detailing the entire production costs of their products, including materials, labor, duties and markup, on their website.
  •  McKinsey published a report on what radical transparency could mean for the fashion industry.
  •  H&M has just launched a radical new transparency program for its clothes. Under a ‘product sustainability’ section on its website, shoppers can now see which supplier produced each item and in which factory, including the exact street address.
  • Nestlé announced the launch of ‘transparency dashboards’ that allow consumers to check up on its progress against its zero-deforestation targets on palm oil.
  • A 2018 report by the Consumer Goods Forum and Futerra found 70% of consumers are most interested in knowing more about the social, health, environmental and safety impacts of specific products, with just 30% wanting information about the company that makes them.
  • Consumers, particularly millennials, desire for organic, fresh food, and conscious capitalism means shoppers are more vocal than ever about knowing exactly what they’re buying and where it comes from.
  • "Today’s consumers want to feel good about the products they buy and the companies they support. And transparency plays a big role in that, from disclosing information about your company and products to telling true stories about your brand. It demonstrates open communication and helps to build meaningful relationships with consumers."
  •  Label Insight and the Food Marketing Institute (FMI) asked people if they would switch to a brand that provides more in-depth product information, beyond what’s provided on the physical label. In 2016, 39% agreed they would switch to such brand, while in 2018, 75% of them answered the same.