B2B Is Sold on Blockchain. Real Folks, Not so Much

With its hot pink pouch and promises of orange blossoms and berries, Token coffee would stand out on any supermarket shelf. But there’s another reason for tech-forward consumers to notice the new brand. Printed on its 8.8-oz bags, in type bigger than Tom Cruise’s name on a movie poster, are the words “Blockchain Coffee by FairChain.”

The Ethiopian heirloom arabica, which recently launched in Europe, is marketed by FairChain Foundation, a Dutch social enterprise, its sister outfit Moyee Coffee, and Bext360, a Denver startup that uses AI, IoT, and blockchain technologies to grade crops, pay farmers, and trace beans from bush to barista. The alliance is helping farmers to retain a greater share of their profits by controlling roasting prior to export, while linking them, via blockchain, to progressive and picky-about-origin consumers.

Each hot pink bag includes a €0.50 “token” that customers can apply toward future purchases, donate back to the farming communities, or—eventually—trade for shares in the company itself. (The company’s site is thin on details about how the mechanics of this would actually work.)

Bext360 recently traced a batch of limited-run coffee from Uganda to Denver, where it’s now available from a local supplier, Coda Coffee. Customers are invited to follow the coffee’s intercontinental journey by scanning a QR code on each bag. “Origin and quality are marketing hooks with coffee and we are starting to see this a lot more of this in many other industries. It is being driven both by younger consumers and the smart companies who want their business,” says Bext360 founder Daniel Jones.

He sees blockchain-engineered traceability coming to a host of supply chains where authenticity or origin is frequently suspect, including palm oil, cotton, minerals, and timber. Next year, the company is even planning to roll out facial-recognition software for a sustainable seafood project.

How much—or, indeed, how little—consumers care about any of this remains to be seen, whether it’s coffee, or cotton, or a Thanksgiving turkey. Last year, agribusiness giant Cargill ran a blockchain experiment centered on its Honeysuckle White turkey brand. Before Thanksgiving, consumers in certain markets could text or enter online a code to get a folksy view of the farm where the poultry was reared as well as a message from the farmer. But the company today won’t discuss the project, or say how many customers entered the code.

Sascha Martini, managing director of U.S. digital agency R/GA, says marketing the blockchain angle of any particular product may put companies in the “too early” category when it comes to consumer awareness.

I just can’t help thinking that this is a little like the Internet-connected washing machine...No one is asking for it.

“Millennials and other generations increasingly care more about social issues and crave more transparency, but I have a feeling it will take 10-15 years before blockchain is incorporated into mainstream consumer marketing,” says Martini, who is based in Berlin, a hotbed for both cryptocurrency and social activism. “I think the main focus for the next couple of years will be transactions in the supply chain. After that, I expect some brands will experiment with the technology [for marketing], because they’ll think not doing so will put them at a competitive disadvantage.”

In the near-term, though, Martini remains somewhat skeptical, comparing blockchain to hyped-up campaigns of the past. “I just can’t help thinking that this is a little like the Internet-connected washing machine,” he muses. “No one is asking for it.”

Which is not to say some very notable companies—especially those with a B2B focus—aren’t trying to spread the word about blockchain. One of the first tech giants to see blockchain’s game-changing potential was IBM, which contributed code to an open-source effort and encouraged startups to experiment on its cloud for free. Earlier this summer, ten of the world’s biggest grocery brands, including Walmart and Nestlé, partnered with IBM on Food Trust, a blockchain to track food through its global supply chain.

It also produced high-concept television ads for a general audience (“This is a tomato you can track, from farm to pot to jar to table, and serve with confidence…! This is a diamond you can follow from mine to finger, and trust it never fell into the wrong hands…”), and a quick Google search for “IBM and blockchain” turns up page upon page of examples of the ways it’s touting blockchain as a solution for all sort of things like media buying, supply chain tracking, and reducing banking fees, among others.

Ramesh Gopinath, vice-president of blockchain solutions and research at IBM, says marketing was not the key goal of the Food Trust project; it was to improve company efficiency and identify issues involved with recalled produce. But he recognizes the future marketing potential of blockchain-verification. “Currently, more organic food is sold than is produced,” he deadpans. “There’s one opportunity.

Some consumers might be interested in the product’s backstory. Others may simply want a reassuring verification symbol. “Either way, blockchain represents a quantum leap in creating trust,” Gopinath says.

Gopinath insists that once consumers are more familiar with the technology, they absolutely will care. “People will care if their food is safe to eat, or if medicines are genuine, or if machine parts are counterfeit. This is going to happen anyway,” he says. “Blockchain is going to turn many industries completely on their heads.”

Or as Bext360’s Jones puts it, “Consumers may care that a Ugandan farmer is being paid fairly, but there is as much self-interest as there is altruism. They want to know exactly where the shrimp they’re putting in their mouths came from, or if something contains chemicals that shouldn’t be there.”

Bext360 is currently collaborating with the nonprofit Better Cotton Initiative, which promotes pesticide-free crops, and Fashion for Good, launched last year by the Netherlands’ C&A Foundation, to accelerate a “sustaining fashion industry.” Partners in the latter include the German sportswear giant Adidas, Target, and the Parisian luxury group Kering, owner of brands like Gucci and Yves Saint Laurent.

The breadth of these companies’ demographics is why Jones is convinced that blockchain-verification will one day become a mainstream marketing hook. He notes that another partner, Zalando, the Berlin-headquartered e-commerce giant, recently began to highlight items on its website if their production was deemed to have a reduced impact on the environment or improved social conditions along the supply chain. “There is a perfect storm brewing [caused by] the pace of technology, the rise in conscientious consumerism, and the market infrastructure being assembled,” Jones says.

This fall will see the full launch of the first industry-focused blockchain platform. Tracr, a traceability tool developed for the diamond industry, which has suffered a decades-long PR crisis thanks to its association with blood diamonds, is being developed by diamond giant De Beers in association with Boston Consulting Group’s startup incubator BCG Digital Ventures. (Other independent blockchain companies like Everledger are also targeting the diamond industry.)

“Consumers increasingly want to know more about luxury goods and the route they have travelled to the retail counter,” explains Feriel Zerouki, senior vice president for international relations and ethical initiatives at De Beers. “Providing the ability to communicate this story more effectively will enable retailers to engage better with customers. We also want to provide consumers with irrefutable assurances about their diamond purchase—including that it comes from a conflict-free area.”

In coming years, industry experts say blockchain will become less of a marketing hook than background noise—like, say, cloud storage—so ingrained in supply systems that consumers don’t even think about it. “It will be closer to someone experiencing a new functionality in an app that will give them new options,” says Erica Blair, founder of Blockchain Branding, an agency for blockchain startups. “The average person won’t even be aware of the technology.”