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5+ Startups Using Blockchain To Transform Our Food Chain

Last updated on April 20th, 2018 at 03:55 am

The complexity of today’s food chains has resulted in problems such as food fraud (which is estimated to cost US$ 30 – US$ 40 billion a year according to PwC), food waste (which is estimated to cost US$ 750 billion annually to local food producers according to the United Nations), and food safety problems such as food contamination (which is estimated to result in an estimated 600 million people falling ill and 420,000 deaths every year, resulting in the loss of 33 million healthy life years according to the World Health Organization).

Blockchain, the underlying technology behind Bitcoin is increasingly being considered as a solution to address the above food chain problems. Although the technology is still at its infancy and has several challenges to overcome such as high computing and energy needs, major food corporations such as to name a few, Walmart (NYSE:WMT), Chinese e-commerce giants Alibaba (NYSE:BABA) and JD.com (NASDAQ:JD), French retailer Carrefour (EPA:CA) and UK retailer Sainsbury’s (LON:SBRY) are all testing or have incorporated blockchain technology into their supply chains.

According to a 2017 survey conducted by global consulting firm PwC, just about 1% of companies in the retail and consumer sector are making substantial investments in blockchain today. However, in three years’ time, the number of companies in the sector making substantial investments in blockchain technology rises to 6%.

Bar chart showing blockchain investment by industry according to a 2017 survey by PwC

Food safety concerns and increasing demand for food supply chain transparency are key growth drivers in the food traceability market which uses technologies such as RFID tags, sensors and blockchain to track food products from farm to fork. Market research firm MarketsandMarkets projects the global food traceability market to grow to US$ 14 billion by 2019 and Research and Markets expects the market to reach US$ 16 billion by 2021.

Tech giants including Microsoft, Accenture and notably IBM (NYSE:IBM) have rolled out blockchain solutions. IBM has formed a blockchain collaboration with food companies including Walmart, Dole, Driscoll’s, Golden State Foods, Kroger (NYSE:KR), McCormick and Company, McLane Company, Nestle (NESN:VTX), Tyson Foods (NYSE:TSN), and Unilever (NYSE:UN) (LON:ULVR).

IBM has also partnered with Walmart, China’s Tsinghua University and Chinese e-commerce giant JD.com to form the Blockchain Food Safety Alliance which aims to use blockchain technology to achieve greater food safety, tracking and traceability in China

A Blockchain Enterprise Survey conducted last year by Juniper Research revealed that IBM had the strongest blockchain credentials, while Microsoft (NASDAQ:MSFT) came in second and Accenture (NYSE:ACN) was placed third; amongst enterprises either actively considering, or in the process of deploying blockchain technology, nearly half (43%) ranked IBM first while 20% selected Microsoft (20%).

While major tech companies grab headlines with their blockchain solutions, a number of startups are also vying for a share of the food blockchain market. Here is a list of noteworthy startups to watch.

 

bext360

Colorado-based startup bext360 is on a mission to re-invent today’s coffee supply chain using technology such as artificial intelligence, the Internet of Things (IoT) and blockchain to introduce greater transparency, improve coffee quality and better compensate coffee farmers.

bext360 has partnered with Great Lakes Coffee (a Uganda-based coffee sourcing, milling and exporting company) and Coda Coffee (a Denver-based to conduct a pilot program using bext360’s “bextmachine”, a mobile kiosk that uses machine learning and artificial intelligence to evaluate coffee cherries and beans from farmers, and grade them based on quality. Coffee farmers can view the grading results using a mobile app, accept payment offers and receive payment electronically immediately. This a revolutionary change from the current status quo in which coffee farmers would deliver their coffee crop to buyers that would manually inspect and grade the beans, and pay farmers days or sometimes months later.

The system then follows the coffee’s journey to the end consumer, tracking relevant data along the way. The bext360 platform uses blockchain to store an immutable record of transactions in real time, which all actors in the supply chain such as coffee farmers, coffee roasters and consumers can view.

bext360 has also partnered with Moyee Coffee, the world’s first FairChain coffee brand to launch a full-scale revenue generating program to trace coffee from Ethiopia to Amsterdam as well as payments made to coffee farmers in Ethiopia using the startup’s bext-to-brew platform which is built on Stellar.org’s blockchain technology.

The partnership makes Moyee Coffee Europe’s first blockchain-traceable coffee brand. Moyee Coffee fans will gain an unprecedented level of transparency, gaining access to verified data such as the origin of the coffee, while Moyee Coffee gains by being able to reduce overheads as the bext360 system eliminates the requirement for time-consuming, error-prone documentation etc.

The opportunity is substantial. The global coffee market is worth US$ 81 billion and growing. However, while global coffee revenues jumped from US$ 30 billion in 1991 to US$ 81 billion in 2016, small-scale coffee farmers who make up the majority of the world’s coffee producers, saw their incomes drop from 40% to under 10% during the same period, according to Fairtrade International. Most of the farmers’ families live on less than US$ 2 a day.

The winds are changing. Millenials and other coffee drinkers are increasingly seeking greater transparency fueling growth in the fair trade coffee market. According to the Tropical Commodity Coalition, ethically certified coffees accounted for 6% of worldwide coffee production in 2008, up from just 1% in 2002. And retail sales of Fairtrade coffee beans have soared 250% in the decade from 2004 to 2014.

 

Ripe.io

Californian startup Ripe.io says it is building the “Blockchain of Food”, a food supply chain solution that uses the Internet of Things (IoT) and blockchain to provide real time monitoring and collection of crop data such as location, environmental conditions and quality factors such as ripeness and taste.

The solution aims to solve food supply chain problems such as transparency, wastage and food quality by providing food supply chain participants a historical record of validated crop data which could be used for analytical purposes; farmers for instance could use the data to decide when a plant is ready to be harvested and once the plant has been harvested based when it reached optimal ripeness, this information can be communicated to participants along the supply chain.

The startup conducted a pilot project with Ward’s Berry Farm in Massachusetts, placing tomatoes on the blockchain to track their ripeness, color, PH levels, sugar content which is used to assess the quality of the tomatoes in an effort to reduce spoilage and deliver verified higher quality and more flavorful produce for the farm’s customers such as fast-casual salad chain Sweetgreen which participated in the pilot program.

 

ZhongAn Technology

Innovative Chinese startup ZhongAn Technology, which is the technology unit of Alibaba-and-Tencent-backed Chinese insurtech giant ZhongAn Online Property & Casualty Insurance (HKG: 6060), which made headlines as the world’s first insurtech IPO when it filed for a listing in Hong Kong last year, has developed a blockchain-based technology to track chickens, recording important information such as the age of the individual bird, its location, the food it eats and how much exercise it gets daily. Each chicken wears an anklet since the day of its birth which connects wirelessly to a blockhain-based network that records and stores data on a blockchain ledger in real time about the chicken. Customers can download a smartphone app that enables them to track the chicken’s journey along the supply chain.

Known as Gogochicken, the technology offers a solution for customers to validate chicken producers’ claims such as “hormone free chicken”, “free-range chicken” and “cage-free chicken”. For chicken farmers, the technology allows them to sell free-range, hormone free chicken at higher prices which consumers are able to pay a premium for but are hesitant due to a general lack of trust in locally produced food and the inability to validate claims on product labels.

As of September last year, ZhongAn has worked with 200 farms. By 2020, the company expects to increase the number over ten-fold to 2,500. The startup believes its technology could be expanded to pigs, cows and other livestock. The opportunity for the startup’s solution is substantial. Food safety is a key concern for consumers in China which is the world’s second largest poultry market, and the world’s largest pork consumer, importer and producer.

 

Advanced Research Cryptography Ltd (Arc-net)

Founded in 2014, Northern Irish startup Advanced Research Cryptography Ltd (Arc-net) offers a cloud-based traceability solution through its arc-net platform which uses blockchain technology to enable food corporations to validate the authenticity and provenance of food products as it moves along the supply chain thereby empowering the food industry to tackle food fraud.

The startup has teamed up with Scottish distillery Adelphi Ardnamurchan Distillery to place their new Ardnamurchan 2017AD spirit on Arc-net’s platform which would securely store information on the product’s production process from seed to bottle thereby allowing the brand as well as the brand’s customers to trace the product’s journey across the food chain; each bottle of limited edition Ardnamurchan Spirit 2017 AD features a unique QR code which, using blockchain technology, links to a digital, validated record of the bottle’s history, providing information such as the origin of the barley used to produce the spirit, the bottler and when the contents were bottled. This would help the distillery prevent or at least mitigate counterfeit products from stealing sales and diluting the brand’s reputation.

The tie-up could be just the tip of the iceberg for Arc-net. Counterfeit alcohol is a serious global problem; according to a news report by Interpol, in a joint Interpol-Europol operation conducted between 1 December 2016 and 31 March 2017 targeting counterfeit food and drink around the world, counterfeit alcohol was the most seized product, followed by meat and seafood.

Arc-net has also been selected as a technology partner in a £10 million pound EU-China food safety program. As part of the program, Arc-net is working with UK food producer Cranswick PLC (LON:SWK) to track pigs being exported to China. This could be a major revenue stream for the startup given that China is the world’s largest pork importer. The country’s pork imports are expected to grow 6% this year, according to Rabobank’s Pork Quarterly Q1 Report, and with China considering a 25% tariff on US pork imports, imports of European pork could potentially increase. In 2017, America exported US$ 1.1 billion of pork products to China and Hong Kong, making it the third biggest market by value. Arc-net has also partnered with global consulting firm PwC to help fight food fraud.

 

EZ Lab

Italian startup EZ Lab has partnered with management consulting firm EY to create a “Wine Blockchain”, a blockchain-based traceability system for Italy’s wine supply chain. Data on the entire wine making process such as the location of the vineyards and cultivation of the grapes, the process of producing wine and its distribution, and information related to the final product such as organoleptic characteristics are recorded on the system which can be viewed by all actors along the supply chain from the wine producer to the customer. Using their smartphones, customers scan a QR code on the wine bottle to retrieve the data.

The first wine to be tracked using “Wine Blockchain” is Falanghina Wine, which is produced by Cantina Volpone.

The solution is timely for Italy’s wine industry; according to a 2016 report by the European Union Intellectual Property Office (EUIPO) Italy’s wine and spirits manufacturers lose an estimated €162 million annually (equal to approximately 2.7% of the Italian wine and spirits market) as a result of counterfeiting and an additional €18 million is lost each year in excise duties.

Most of Italy’s prized culinary specialties such as Parmigiano-Reggiano cheese, traditional Italian balsamic vinegar, and Italian wine are certified by the Italian government for authenticity and quality. In the case of wines, certifications such as “D.O.C.G.” – Denominazione di Origine Controllata e Garantita (controlled and guaranteed designation of origin) and “D.O.C.” – Denominazione di Origine Controllata (controlled designation of origin) are awarded by Italian government-licensed committees and these wines tend to command extremely high prices. However, their high prices make them an attractive target for counterfeiters. EZ Lab’s “Wine Blockchain” solution is expected to help Italian wine producers (particularly those with such certifications), protect their brands and fight counterfeit products. 

The solution is also a boon for Italy’s wine connoisseurs; reportedly nine out of 10 consumers said they would like to have more information about Italian wine, their certification criteria and origin and more than 70% are willing to pay a premium for a guarantee of certification and origin. 

Italy is the world’s leading wine producer and with the country’s wine industry on an upward trend, EZ Lab looks positioned to ride on this growth too with its “Wine Blockchain” solution. Italian wine exports have increased 74% between 2006 and 2016 and the momentum shows no sign of slowing down; Italian wine exports grew by 7% in 2017, reaching a record high of around €6 billion, according to Italian agricultural organization Coldiretti. 

 

Everledger

London-based blockchain technology startup Everledger rose to prominence with its blockchain solution which tracks the provenance of diamonds to fight counterfeits in the diamond industry. Since 2015, Everledger has placed more than 1.6 million diamonds on its blockchain solution and the company is adding other luxury goods to its platform such as fine art and fine wine.

The startup has partnered with renowned wine expert Maureen Downey to jointly create Chai Wine Vault, a blockchain-based solution that uses Maureen Downey’s TCM (The Chai Method) wine authentication method to track the authenticity and provenance of fine wines. Downey’s method of wine authentication involves collecting more than 90 data points on a bottle in addition to high-resolution photographs and records of the bottle’s ownership and storage which are permanently and securely recorded in Everledger’s blockchain platform to create a permanent, verified digital record of the wine bottle which can be accessed throughout the bottle’s lifetime to verify its legitimacy, thereby securing the investment value of the wine asset for centuries. The first bottle to be certified on the Chai Wine Vault is a bottle of 2001 Margaux. 

The solution is aimed at combating counterfeit wine which Downey estimates accounts for much as 20% of wine sold globally.