The consumer packaged goods (CPG) industry is transforming rapidly. In the past decade, technologies from automation to artificial intelligence to recommendation systems have revolutionised the CPG industry to match up with ever growing consumer expectations — and blockchain might be the next big thing. Why? It brings in the two most fundamental things to a business – Trust and Transparency. Blockchain, with its multitude of applications, empowers the industry to increase trust and transparency across the supply chain and, more importantly, with the consumers.
Blockchain represents a new way to store information. It facilitates a paradigm shift from a single source to a decentralized and distributed model. Hence, it cannot be tampered by a single party, and every stakeholder can see all records, thereby promoting trust and transparency.
With the supply chain growing more diverse and complex every day, it has become virtually impossible for companies to maintain full visibility over the entire supply chain. That diminished visibility has resulted in increasing fraud and possible events of reputational consequences. It is therefore not surprising that CPG companies are fast-tracking blockchain adoption into their business strategy. Here’s a look at some examples.
Alibaba’s Food Trust Framework:
In 2018, Chinese e-commerce company Alibaba launched a food-tracing system built on blockchain technology. Alibaba partnered with Australian companies Blackmores and Australia Post, along with New Zealand–based firms Fonterra and New Zealand Post. The initiative, named Food Trust Framework, helps customers track the supply chain of foodstuffs ordered online, as well as preventing food fraud. Customers in China making purchases through Tmall Global, Alibaba’s international online marketplace, will be able to check every step of the supply chain process in pre-delivery for goods they purchase from Blackmores and Fonterra.
IBM partners with CPG & food brands:
IBM partnered with ten of the world’s biggest CPG and food companies to integrate blockchain into their supply chain in 2017. The cohort included Walmart, Nestle, Unilever, McCormick, Tyson, Kroger, McLane, Driscoll’s, Dole, and Golden State Foods — representing more than half a trillion dollars in aggregate annual global sales. The initiative, named Food Trust, uses IBM Blockchain technology and IBM Cloud.
In 2020, olive oil producers Conde de Benalua, a cooperative in Spain made up of more than 2,000 farmers, and Rolar de Cuyo, an olive oil supplier in Argentina, joined the initiative. According to IBM, by scanning a QR code on each bottle of olive oil, consumers can trace its production from the groves where the olives were grown. They can also see images of where olives were picked and the farmers behind it. According to Frank Yiannas, former vice president of food safety at Walmart, “We can trace origin of food products back to stores in 2.2 seconds. That’s food traceability at the speed of thought.”
AB InBev trials blockchain:
In 2020, multinational drink and brewing company AB InBev launched a pilot of blockchain technology to give full field-to-bottle traceability to its beers while supporting its barley farmers. By scanning a QR code on pack, consumers can learn about where the barley for their beer was grown.
A peek into the future:
With rapidly growing choices, real-time product information at consumers’ fingertips, and faster delivery times, the age-old business adage “The Customer is King” has strengthened ever more. To win the market, CPG companies must constantly embrace growth and invest in innovative technologies.
The potential of blockchain technology is crystal clear. However, there are still many obstacles to its widespread adoption. The technology is not yet part of the mainstream and lacks a uniform policy across the world. Moreover, consumer data protection laws conflict with the very foundation of blockchain technology by raising the evergreen debate of transparency versus privacy.
Amid all these uncertainties, one thing is for sure: Blockchain is here to stay.
