Reflection on Brodies Food & Drink virtual conference 2020: unlocking the benefits of blockchain

The Brodies' Food and Drink Virtual Conference on 28 October focused on the key themes of innovation and resilience, which in the face of the ongoing challenges presented by COVID-19 are credentials that are being widely demonstrated across the sector.

Alex Bruce, managing director at Adelphi Distillery provided his insights into the importance of innovation as a driver for growth in both local and global markets. One of the issues raised by Alex was the increasing deployment of blockchain technology by a variety of organisations in the food and drink industry.

The Adelphi example

Adelphi has embraced blockchain for its capability to provide a secure and immutable model that describes the manufacture and product journey in each bottle of whisky. Adelphi is able to track each and every finished bottle of whisky through the use of QR barcodes and other smartphone scannable technology. The technology is a powerful tool to verify authenticity, provenance and ultimately provide greater consumer confidence by enabling customers to trace every step of the production process.

Unlocking the potential of blockchain

Applied to the food and drink sector, blockchain facilitates a shared records system to enable products to be tracked from farm to fork. Specifically, product information such as farm origination, batch numbers, factory data, expiration dates and shipping details are digitally connected to food items and become readily accessible by consumers and regulators. This information is then entered into the blockchain at every step of the process. In this context, blockchain has the capacity to improve traceability, transparency and food safety across the global supply chain. For more information on the concept of blockchain, please refer to our Food and Drink Handyguide.

Of course, blockchain is not exclusive to the whisky industry and we have also seen increasing trends of deployment by a range of food producers. We have previously written about the emergence of blockchain within the food and drink industry. In particular, we discussed various case studies in which large supermarkets have embraced the technology as an effective measure for delivering enhanced traceability and penetration of complex supply chains, which can provide a wide range of benefits to suppliers, producers and consumers.

There are other examples of food producers such as salmon farmers using blockchain as a method of verifying where salmon was hatched and processed as well as more specific data such as vaccination records and health checks.

In our Food and Drink Handyguide we noted that regulatory authorities have been tentatively trialing blockchain as a tool to support regulatory inspections. It remains possible that regulators would view blockchain as an appropriate method for demonstrating regulatory compliance, especially for audit and inspections. In this respect, blockchain has significant potential to reduce the compliance burden for the food and drink sector by establishing a more streamlined and efficient relationship between industry and regulators.

Sustainability

As Alex discussed during his talk, blockchain may also become an important vehicle for companies in establishing corporate commitment to sustainability and environmentally friendly practices. Sustainability is increasingly important to consumers: recent research by IBM found that 71% of consumers are willing to pay a premium for the ability to trace the supply chain of a product, while 57% are willing to change their purchasing habits to reduce the negative environmental impact.[1] This means there is a financial incentive, as well as an ethical one, for businesses to use sustainable practices.

Summary

The emergence of blockchain as part of an integrated solution to enhance supply chain transparency and data integrity, as well as improving food safety and traceability have been well-documented. As we see from the Adelphi example, blockchain can also be applied effectively within the drinks sector to validate provenance and verify authenticity and provenance of source ingredients. The food and drink sector continue to identify innovative uses for the effective deployment of blockchain. In particular, given the increasing focus on environmental sustainability it would appear that blockchain could be an effective verification tool for businesses to demonstrate a commitment to sustainable corporate practices and to achieve industry accreditation with schemes such as B Corp.

[1] IBM, 'Meet the 2020 consumers driving change': https://www.ibm.com/downloads/cas/EXK4XKX8