Paths to food traceability: The biggest challenges for brands
As a part of our ongoing exploration of sustainability and tech in the food system at Orange Silicon Valley, we have teamed up with our colleagues at Food System 6 to publish a four-part series of insights about the challenges that exist surrounding traceability. While transparency is a goal that stakeholders throughout the food system share, the obstacles for consumers, actors throughout the supply chain, brands, and entrepreneurs can be entrenched and nuanced.
In the third part of our series, we look at the unique challenges that consumer brands in the food industry face. You can catch up on our previous looks at consumer issues and supply chain obstacles here on Medium.
What Stands Between Brands and Traceability
No one feels the demands and costs of meeting traceability goals in the food system in the same way that established brands do. Demonstrating that a non-GMO product contains no GMO ingredients, ensuring that allergen declarations are 100% accurate, or otherwise proving sourcing and sustainability claims requires vigilance, and the cost of failure can torpedo a brand’s value, especially if health and food safety concerns concerns arise.
Consumers, which we looked at as a category in part 1, can bear the brunt of health-related consequences when companies and their supplier make errors. And while catastrophic errors are fortunately not common, any corporation with a significant market presence or long-term growth goals faces daily choices that can tarnish or fortify its brand’s value in the marketplace.
We have already noted how complicated consumer expectations and supply chain issues can be. Regardless of where in the food web a problem occurs — whether it’s at the point of harvest or the hand-off to a consumer at the point of sale — brands remain the most visible, tangible targets. The PR entanglements that ensue can happen on any number of fronts, but the key challenges — along with pathways — to traceability success can be found in the need to substantiate marketing and packaging claims and compliance with regulatory standards.
In the best cases, traceability and transparency can burnish a brand’s authenticity and invite trust from consumers. Both can build brand loyalty and — particularly among millennials — present key differentiators when it comes to choosing among products and stores.
This is especially true at retail and in restaurants, where consumer brands are scrambling to keep pace. While consumers are demanding more sustainable and healthier food, in many cases, they look to retailers and restaurants to act as a filter. As a result, attributes related to the environment, health, or animal welfare are core to many retail and foodservice brands.
Brands that want to position themselves well with young generations and increasingly conscious consumers, while converting skeptical shoppers into lasting patrons, should be able to find value in traceability goals easily enough. In order to fully realize the benefits of traceability practices for brands, however, companies need to substantiate their claims through visible action.
Deciding what to claim and how to claim it is just a starting point for food brands. Research, testing, and creative work all go into making a brand’s case to consumers. And the results can be found on packaging, in-store displays, social media, TV ads, and elsewhere. Consumers then square their experiences and independent research with those claims and develop a level of trust.
“Consumers go to specific stores because they’ve done the vetting,” a source at a major food retail brand told us during the course of our research. “They turn over decision-making [to that brand].”
That act of of turning over decisions to retailers and restaurants marks a huge leap in trust that extends beyond individuals to the health and nourishment of families and friends.
As a result, retailers, and foodservice brands establish clear and strict standards for the products that they carry and in turn place the pressure on consumer brands and their suppliers to satisfy those standards in ways that hold up to scrutiny and preserve trust with consumers.
As consumer demand for transparency increases and brands want to trace the entirety of their supply chain to satisfy consumers, there will be more and more pressure to evolve the current systems and methodology for traceability.
Trust and brand portfolios are important, but any amount of consumer faith can be shaken by incidents at the regulatory level. This is especially true with issues of food safety. At a high level, there is a concept often referred to as “one up, one down,” in that every supply chain participant must be able to trace their products to the players immediately preceding and following them in the supply chain in case of a recall.
As a result, all actors across the food supply chain have at least rudimentary traceability systems in place; although, in some cases, those systems may only be paper-based, leaving no digital record that is visible externally.
We heard differing opinions on the role of food safety in serving as a potential backbone for higher levels of traceability investment ranging from “It’s a game-changer” to “We have to make sure food safety is 100% before we tack on other attributes.” Regardless, food safety is universally expected and assumed as a given by consumers and consumers don’t differentiate between degrees of safety, it is a baseline expectation.
In the U.S., the two primary pieces of legislation that regulate food traceability are the Bioterrorism Act, which is focused on country of origin, and the Food Safety Modernization Act (FSMA), which addresses production and sourcing issues. The first was signed into law in 2002 during the period of heightened awareness that followed the 9/11 attacks. The latter was signed into law in 2011 after a decade of foodborne illness cases that included a 2003 Hepatitis A outbreak linked to green onions and a 2008–2009 salmonella outbreak linked to a peanut butter factory in Georgia.
FSMA was the first overhaul of U.S. food safety regulations since 1938 and gives the Food and Drug Administration the power to prevent food safety problems on domestically produced and imported foods. It also forces food and beverage companies to examine their supply chains. Although FSMA does not require complete transparency, the law encourages it.
Regulations, such as those under FSMA, drive safety within the food system. Regulations can drive other changes in the food system as well. For example, when illegal production is linked to a corporate supply chain, it generates an immediate response as the corporate officers become personally liable. This occurred in 2015 when a World Wildlife Fund investigation revealed that palm oil was being sourced from inside national parks in Indonesia.
Challenges for Entrepreneurs
In an ideal scenario, consumer demand, branding goals, and regulatory frameworks will align. That alignment can incentivize choices that enable food brands to provide value to their customers while meeting reasonable expectations for safety and transparency, ultimately enabling better traceability practices within the food system.
Adapting to implement those practices can be difficult enough for large, established brands. The fourth part of our report will look at the entrepreneurial opportunities associated with traceability and the considerations that new food or tech companies should look at when trying to solve traceability problems.
Read all of the published Medium posts from our “Paths to Food Traceability” report:
- Paths to Food Traceability: Consumer Views of Truth
- Paths to Food Traceability: Knots in the Food Web
- Paths to Food Traceability: The Biggest Challenges for Brands
- Paths to Food Traceability: How Entrepreneurs Can Find Opportunities
Disclaimer: The views and opinions expressed in this article belong to the author and do not necessarily reflect the position or views of Orange or Orange Silicon Valley.