Food safety: Chinese supermarkets bet on Blockchain
In China, a number of counterfeit food and false certification scandals have hit consumer confidence in the products they buy from their supermarkets hard.
As Chinese consumers slowly but surely opt for organic and healthier food, finding a solution to guarantee greater food safety has become a major issue for manufacturers and distributors.This is the backdrop against which Alibaba began looking into Blockchain. The group started integrating this solution back in 2016 to track the origin of food, via its Hema supermarkets and its Yiguo fresh produce e-commerce platform.
Food traceability made possible by Blockchain
40% of businesses in the global agri-food industry think the traditional certification approach is insufficient, and 39% know that their products can be easily counterfeited(PwC, 2018). So Blockchain has real potential to guarantee consumers reliable and unalterable traceability, and solve the health and safety issues businesses in this field are facing.
In 2016, Alibaba launched the first Hema connected supermarket: one of its main innovations is the way customers can scan the product’s QR code using the store’s mobile app either when they shop in-store, or when their online purchases are delivered. This gives them access to the following information:
The location of the product and its temperature during the entire delivery process
The producer’s name
Photos of the government permits and stamps certifying the distributors
Food certificates and standards
Pesticides and chemicals used on crops
The system currently provides tracking of a range of products including meat, seafood, rice, tofu, soy, fruits and vegetables, poultry, eggs, dairy produce, cooking oils, and food supplements. Each product has a unique code, meaning that the information provided is specific to the product itself, rather than the batch it belonged to.
The system brings together farmers, small- and large-scale manufacturers, delivery firms, distributors, certifying bodies and consumers on a single platform, making it as transparent as possible. The open-access public platformmeans information on transfers of goods between supply chain partners can be integrated in real time clearly and honestly.In addition to making the product traceable every step of the way up and down the supply chain, Blockchain’s implementation also makes returns easier to manage. It allows the identification and localisation of products that need to be replaced. This process is usually expensive and complicated, causing significant physical and economic losses.
The system is possible because a growing number of brands have adopted Blockchain technology and are implementing the traceability process.
Agri-food businesses adopt Blockchain technology
To make Blockchain really effective and trustworthy, the more businesses become involved, the more precise the traceability will be. This has resulted in the creation of alliances and consortiums in China, set up by the main distributors, delivery firms, technology firms and supermarkets that have adopted Blockchain internationally.
For example, theFood Trust Framework (Alibaba) is a consortium whose members want to track food produced in China and guarantee international imports from Australia and New Zealand. Since 2018, members have included:
Tmall international, supported by the Alibaba e-commerce platform that set up the initiative
Fonterra, a New-Zealand dairy cooperative featuring 10,000 farmers
New Zealand Post
Blackmores, an Australian food supplement specialist
At the final stage of the supply chain, and in contact with consumers, are the Alibaba supermarkets, which adopt the technology via their channels:
Yiguo: the Chinese online food distribution site has 5 million customers and more than 1,000 businesses that can now track the origin of their products purchased online
Hema (Freshippo): the brand’s mobile app allows its consumers to access information before they buy in store
The Blockchain Food Safety Alliance launched in 2018, also in China, has four founder members:
Walmart: the American distributor has 500 stores in China and in 2019 announced its intention to open further outlets to double this number
JD.com: Alibaba’s main rival e-commerce platform, which is more specialised in electronic products
Tsinghua National University: the Beijing university research centre, which possesses blockchain and Chinese food ecosystem management expertise
IBM: the software firm behind the development of the Blockchain IBM Food Trust platform
More than an alliance, the IBM Food Trust, which is based on use of the IBM blockchain, has been adopted worldwide by distributors and brands includingCarrefour, Kroger, Dole, Tyson Foods, Nestlé and Unilever that contribute to the constant growth of the number of products added to the system.
Restoring consumer confidence by addressing their concerns
Food fraud is a global challenge. According to research by Michigan State University, counterfeit food is worth $40 billion every year, making the implementation of these traceability systems an important weapon in this fight. As mentioned earlier, immutable traceability means fake ingredients can be detected, which increases confidence in international trade of food products and local production. This makes it possible to solve cases of food contamination, as the product can be identified quickly on the blockchain and immediately withdrawn from sale.
Finally, by using the technology to restore consumer confidence in the information and labels found on packaging, distributors can guarantee they are supplying authentic products, increase their sales, and gain a new competitive advantage. This is the start of a new, fairer, transparent mode of distribution, focused on consumer preferences.
The Chinese traceability system has seen its adopter numbers rise since its launch in 2018. Distributors and international brands have joined the platform to work together to create and consolidate a global traceability network, discourage fraud, and promote food safety in local and international trade.Blockchain is also used on supply chains by manufacturers and distributors.
This is clearly a use case with strong economic potential; a comprehensive traceability system, from the production site to the consumer’s plate, and not far off for most of the food produced worldwide.