29 November 2017 Startup 2018: The companies and issues to watch

When blockchain meets luxury

Startup 2018: The brutal transparency of blockchain is set to give luxury goods, from coffee to clothes, a new gold standard.

The days of Fairtrade certification are numbered. At least that’s what Dan Jones has predicted. He is one of a fast-growing number of founders using blockchain technology to make it clearer just where their coffee or clothing has come from, and whose hands it has passed through.

Blockchain was once simply known as the engine behind cryptocurrency Bitcoin. It’s a piece of software that records transactions in a spreadsheet that everyone can access, but no one can alter. Now, it looks set to usher in a retail revolution all of its own.

Tracking device

Using blockchain, companies can attach digital histories to all goods they handle; everything from the location of the farm where something grew, to the name of the factory worker who processed it. At a time when ‘authenticity’ is the ultimate consumer buzzword, it’s a low-cost, high-prestige way of proving a product’s credentials.

It is set to prove just how meaningless labels like ‘Made in Thailand’ and lists of ingredients are, and give companies making and selling high-value goods a new point of differentiation.

Jones’ company, Bext360, is launching the first blockchain-traced coffee in time for Christmas. The beans will be tracked from the moment they’re harvested – and the amount the farmer is paid will be logged – through the process of packaging and roasting. Every time a shipment changes hands, it’ll create a new piece of data on the blockchain ledger.

‘There’s no reason you need a Fairtrade label on coffee if it’s blockchain traced,’ says Jones. ‘The value that [Fairtrade certification] adds is going to be overwhelmed by the value other services can provide at a lower rate.’

Cost saving

In many consumer industries, particularly luxury goods, similar actors are emerging. Everledger is using blockchain to create unique IDs for diamonds, helping ensure they’re not from war zones, and potentially saving insurers £38.1bn annually in avoided fraud.

Fashion designer Martine Jarlgaard is using it to trace her alpaca wool – a way of proving that her £300+ jumpers are worth the price tag. Scottish whiskey distillery Ardnamurchan has partnered with Belfast-based blockchain providers Arc-Net to put a QR code on bottles of its latest limited edition, so consumers can learn more about its production process – a smart gimmick in an industry awash with counterfeits.

‘There are a lot of big bluechip companies moving into blockchain,’ says Brendan Smyth, chief development officer at Arc-Net. While unsure of whether blockchain can completely fix dodgy supply chains, Smyth predicts it will become the go-to system for “good actors” to differentiate themselves in notoriously shady markets: ‘People who are doing the right thing but are impacted by those who are doing the wrong thing.’

Most consumers won’t really understand the software, he thinks, but says they won’t need to: ‘Everyone uses email but no one understands IP addresses. All people need to know is it’s safe.’

One leading provider of blockchain technology is Provenance. Founder Jessi Baker says her business is growing rapidly. Unilever and Sainsbury’s signed on this autumn, joining existing big ticket customers like the Co-op Food Group, which uses blockchain to track tuna from trawler to tin.

‘We can digitally enhance certification massively,’ says Baker, who raised £610,170 in seed funding in mid-2017 and currently works with more than 200 companies. ‘The method of proving you’ve met that standard could completely change.’

In 2018, her focus is on making the ‘digital histories’ Provenance collects more user-friendly, so the public can understand and appreciate the value of tracking its food and fashion from field to point of sale. The goal is to have a simple interface that will allow consumers to scan or input the code of a product and scroll through the relevant blocks of data on their device, illustrated with pictures and supplier profiles.

She thinks it is likely that as more companies sign up to blockchain services, one provider will rise to the top as the go-to stamp of trust. ‘I think there will be a bit of a land grab,’ she predicts.