As the research partner of Distributed: Trade, Chain Business Insights is providing this early access into its exclusive research on blockchains’ role in supply chain management. At Distributed: Trade, we will present highlights from our research and lead a panel of blockchain innovators to offer a technology response to business issues.
Supermarket shelves are barometers of consumer demand for food and they are pointing to a sunny future for fresh foods and an uncertain outlook for processed products. In this shifting and highly competitive climate — as exemplified by Amazon’s pending acquisition of Whole Foods — blockchain technology is emerging as a key enabler as the industry looks to reshape supply chains to meet customers’ changing demands.
A recent Wall Street Journal article maintains that the consumer shift “started several years ago, but its impact on big food makers is intensifying now because of added pressure from retailers.”
Supermarkets are allocating more shelf space to fresh food, prepared hot meals and local products, exacerbating “a drumbeat of bad news” for packaged-goods companies, reported the Journal.
A Nielsen consumer analyst characterized the plight of packaged goods as “death by a thousand cuts.”
This realignment is forcing many established brands to rethink their market strategies. For example, Unilever announced recently that it is looking to exit the margarine business as part of an overhaul of its food and beverage operations.
The rise of fresh food offerings reflects a general shift toward healthier consumables containing less sugar and fat, and buyers’ concern over ethical issues and environmental sustainability. As a result, shoppers want to know how and where their food purchases are sourced and created, and what’s in them. This is particularly important for specific categories, such as organic and gluten-free, which are experiencing substantial growth.
Blockchains have a key role to play in supporting the focus on these markets. The technology — with its shared ledger and immutable data architecture and its ability to run smart contracts — is being developed and tested in three critical areas of the food supply chain:
Such applications will increase in importance as the market for fresh foods continues to evolve. The Amazon/Whole Foods tie up is indicative of market dynamics and pressures, with the likes of Walmart (which is testing IBM blockchain technology) stepping up its fresh food offerings and specialist home delivery services gaining attention, customers and venture investment.
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