Chris Copenhaver and Ken Reiff are co-leaders of Cushman & Wakefield’s Food & Beverage Advisory group. They specialize in helping clients navigate the unique challenges faced by the food and beverage sector.
Everyone cringes when there is a food recall on the news or an alert in the checkout line. Lately, everything from romaine lettuce and ground turkey to processed snacks and even dog food have been recalled. The list goes on and on.
Whether it is for consumer health safety, like listeria, or simply product mislabeling, recalls are a detriment to a company’s financial stability, brand confidence and most importantly, the health of its consumers. Considering that the E. coli outbreak in lettuce last spring sickened 62 people across 16 states and resulted in a roughly $70 million loss in year-over-year romaine sales, food producers, government agencies, tech companies and even commercial real estate advisors are all focused on how to make the food supply chain safer.
Blockchain and food
If it wasn’t clear before, it is now: food safety is not just a food issue; it’s also a supply chain issue. But, thanks to advances in technology, people are beginning to learn how the issue can be contained.
Beyond imposing stricter regulations in farming and food processing practices, one of the most promising answers to increasing food safety is blockchain. Blockchain is a list of records linked together into what is essentially a digital ledger. Imagine a block that holds a piece of information that is saved to a database in the cloud. This block is linked to other blocks of data to form a chain that represents a series of actions. The chain can’t be altered, meaning the data is secure and easy to verify.
When it comes to food, blockchain is used by food producers and retailers to track items from field to fork. The blockchain record typically starts at harvest or sometimes even with the seed. For example, a container of apples may travel through the supply chain to your grocery store via trucks, ships, air freight and so on. Along the way, the container is scanned every time it changes transportation modes, stops for a period, passes through ports or customs or gets stored in a warehouse. Basically, any time the container is touched or moved, a block is added to the chain.
This type of data tracking doesn’t only apply to fresh produce. Blockchain can be used to track ingredients that go into processed foods like cereal and yogurt. It can also be used to track meat, dairy and egg products. Last Thanksgiving, Jennie-O Turkey and Honeysuckle White used blockchain to allow consumers to trace a turkey back to its home farm. More than just a non-political conversation starter for the Thanksgiving table, the “Turkey Tracker” provided consumers with a history of the bird and, for some, piece of mind as to where it originated.
Faster recall response
Blockchain can make the task of tracking down recalled food a far less daunting feat. In fact, the transparency and instant answers that blockchain technology can provide into the origin of food can make it easier to pinpoint the source of recalled items, saving lives, time and money, while preventing waste.
The CDC estimates that more than 48 million people get sick from foodborne illnesses each year. This results in 128,000 hospitalizations and roughly 3,000 deaths per year. And the average direct cost of a recall to a food company is $10 million, not including lost sales revenue and brand identity damage, according to a joint industry study by the Food Marketing Institute and the Grocery Manufacturers Association.
But with blockchain, recalled foods can be traced in a matter of minutes, limiting chaos up and down the supply chain and allowing the tainted items to be immediately pulled off the shelves to prevent additional consumer illness. Furthermore, knowing the exact source of the bad food can prevent mass recalls. In the case of the recent romaine lettuce recall, the CDC issued a mass recall of all romaine lettuce because the source of the tainted greens couldn’t immediately be discovered, resulting in good lettuce being thrown out.
Besides tracking the recalls, blockchain technology can be combined with RFID temperature sensors in shipping containers to send alerts when a product goes above or below a specific temperature. Foodborne illnesses often manifest when a product sits out at a higher temperature, so having the temperature records for a container of food can prevent potentially tainted foods from hitting the store shelves. Temperature sensors also remove any mystery surrounding the reliability of reefer containers on long journeys.
Finally, temperature records can be used to monitor food quality. If a frozen product, like an ice cream bar, gets slightly above freezing for a short time, it isn’t necessarily spoiled, but the bar may melt in the package and refreeze into a different shape. No one wants a Salvador Dali-inspired ice cream bar.
Adoption of blockchain
It’s clear that food producers need to find a way to keep food safe and maintain consumer trust. Tech companies are jumping in to help. In August 2017, IBM announced a blockchain collaboration with the intention of strengthening consumer confidence in the global food supply. The collaboration includes major food manufacturers such as Dole, Driscoll’s, Golden State Foods, Kroger, McCormick & Co., McLane Company, Nestlé, Tyson Foods, Unilever, and Walmart.
To package it all together, real estate advisors can help companies understand how to incorporate blockchain into their commercial real estate strategies to mitigate risk up and down the food supply chain.
So, next time you bite into an apple or roast a Thanksgiving turkey, think for a moment about where your food comes from. Did your meal originate at an urban farm in Pittsburgh, or did it travel from a food processing plant in Chicago? In time, you won’t have to imagine the results, you will simply be able to scan a QR code and let blockchain do the rest. For food producers to consumers to everyone in between, this transparency will provide more than just peace of mind – it will spare time, money and lives.