6 March 2020

Increasingly, consumers are seeking information around how their food is produced, proof of where it comes from and assurance that it is safe. These trends are impacting the end-to-end supply chain, with demand for transparency driving innovation.

Consumer demand for traceability across the supply chain offers opportunities to differentiate products, improve transparency and freshness, and safeguard brand provenance. The necessity for enhanced food assurance is being driven by increased consumer demand, regulatory changes and the increasing complexity and globalisation of food supply chains. Traceability and transparency in the food industry are the foundations to building consumer trust and the COVID-19 virus impact on trade routes and supply chains has accentuated this even more in the past weeks as markets are disrupted. The Australian food industry has an opportunity to meet and exceed consumer and regulatory expectations for quality and assurance.

Transparency is foundational

The spotlight on food safety issues in the past has created a heightened awareness of the potential safety risks behind what we are consuming and is driving an increased demand for transparency. Consumers typically look to buy food that is safe and nutritious, but the marketplace can be confusing. Gluten-free water is an example of a product marketed to attract consumers by falsely inferring other water products may contain wheat.

The heightened importance of transparency brings with it big questions for businesses – what information do we share, when, and how? With smart phones consumers have search engines at their fingertips and they are becoming more conditioned to wanting evidence to the nutritional quality, provenance and sustainability of what they are ingesting.

Despite the broad expectation from consumers that nothing is hidden, what information shouldn’t we share? Food and food production is a highly emotional topic – consumers have both preferences and beliefs and as an industry we want to serve all of them. Transparency of production methods and ways of showing consumers more than we have done in the past on how we produce our products is only becoming more common.

What is the key to building trust?

Transparency and traceability are key tenants of integrity and trust. Agtech and advances in satellite technologies are increasing the transparency of farming processes and beginning to expose the best and worst practices in our agribusiness industry. Taking control of the traceability and transparency of the farming processes agribusinesses are running is key to building trust in the product and our industry.

By way of example, leading integrated beef producers are focused on creating value and trust for consumers through on-farm data collection and breeding values, all the way through to eating quality and consistency of the end product. The journey and understanding of the product is the foundation of traceability. A well-designed reputational system and supply chain is key for building trust, which tools like blockchain can enable the producer to carry evidence of the trust points that matter right up the supply chain to the consumer or regulators.

Sustainability of the red meat supply chain is one of the key interest areas for consumers. However there is a significant knowledge gap when it comes to the red meat production process (and food production more broadly). The ability to build consumer trust lies in perception, reality, and the ability to tell a story in a digestible way that is relevant to the consumer – never watering down the science, but understanding that people are both emotional and logical about their food choices. As trust and reputation increases, so does the ability to create value and customer loyalty.

How is traceability changing and evolving?

Traceability is not a new concept – many companies have been taking steps to increase traceability over recent years. For example Australia Post have been enhancing customer experiences with visibility through process and automation. They have new sites, 35,000 new devices (scanners) going into the field, capacity uplift, and are utilising Internet of Things (IoT) devices and telematics to create this visibility. Aspiring to evolve their customer experience, Australia Post are looking to blockchain, LE Bluetooth and active tracking, RFID, along with improved labelling standards and encoding.

Increasingly, startups are looking to take advantage of the significant opportunity that lies in traceability. Fresh Supply Co are a digital identity company for large-scale food systems. They are integrating food production and logistics systems into blockchain solutions that allow consumers to not just authenticate products, but interact and engage with the client brand ecosystems. This allows the producer to protect their brands, build consumer trust, and gain business intelligence of their distributors and consumers.

Ripe.io are another startup example looking to build trust and confidence in their supply chain through a blockchain platform that provides access to transparent and reliable information on the origin, journey and quality of food. At KPMG Australia we are bringing our trusted assurance brand into the food sector with Food Assurance solutions and a KPMG Origins food blockchain service to underpin trust in our clients’ products and supply chains.

Trust is the underlying element of consumer confidence in a product, transparency is the level of information shared by a company, and traceability is the ability to authenticate the product itself. These three elements are becoming increasingly important with the new age consumer.

However, not every consumer is interested in detailed product information and product journey, and not every market is ready to address this. The first step is looking to build brand trust and reliability by demonstrating the safety of a product to all consumers through transparency across the supply chain and production operations. Transparency and product information should be available to, but not forced on, every consumer. The question for agribusinesses and food businesses is then how ready are you to be able to tell the product environmental footprint story from farm to plate for your products?

Data is everything in agriculture, from on-farm recorded information around breeding, animal welfare and sustainable production, to how the food gets to a consumer’s plate. Utilising the vast data captured and presenting this in a digestible way to the consumer through a product story will build brand trust and authenticity in a product. Australian producers need to be prepared to capture the data that matters to answer questions about source, environmental impacts and community engagement as the modern day consumer continues building awareness and seeking assurances that the product they consume meets their standards.

For more information on this topic refer to KPMG Origins and KPMG Food Assurance.