Why it matters: Starbucks is piloting blockchain technology

A Starbucks farmer in Rwanda

A Starbucks farmer in Rwanda

The new ‘Why it matters’ content series from TheCurrent Daily highlights cross-industry innovations and analyses why they are relevant to the fashion and retail space. 

Starbucks has announced the launch of a pilot program working with a select number of farmers to develop real-time blockchain technology that follows the coffee bean’s supply chain journey.

This will help encourage a sense of familiarity between supplier and customer, which in turn enables brands to forge a deeper sense of trust and loyalty within their consumer base. This is something we are starting to see emerge in other industries also and can easily apply to fashion and luxury. Here, using technology to understand the supply chain holds similar benefits to that of Starbucks’ new model – showcasing transparency, making brands accountable, and creating more emotional connections.

It is therefore a great example of a cross-industry initiative that can be applied to fashion at a time when everyone is looking to respond to increasing consumer demands around transparency.

Last year, Starbucks worked with over 380,000 farms, meaning the traceability technology has the potential to have exponential impact on Starbucks’ operations in the years to come.

Working with farmers in Costa Rica, Colombia and Rwanda, the aim of the program is to drive positive impact to its suppliers, and further cement the coffee giant’s ethical sourcing commitment. “Over the next two years, we will look to demonstrate how technology and innovative data platforms can give coffee farmers even more financial empowerment,” said Kevin Johnson, CEO of Starbucks. “We’ll leverage an open-source approach to share what we learn with the rest of the world.”

With this program, Starbucks is hoping to demonstrate how technology and data platforms can give farmers more financial independence and confidence – although details of this are yet unknown. The company is working with Conservation International, which is already their partner on other sustainability initiatives, to measure the impact of the traceability technology and better understand how it will benefit its suppliers.

According to Arthur Karuletwa, director of traceability at Starbucks: “This could be a seismic change in an industry that hasn’t had much innovation in the way coffee moves across borders and oceans,” he said. “At the same time, I’ve met farmers who have very little by way of possessions, but they have a mobile phone. Digital has become the economic engine of this century, and traceability preserves the most valuable assets we have as human beings – our identity.”

Karuletwa believes that beyond transparency the tool will give farmers and coffee drinkers an “authentic, seamless, dynamic” one-to-one connection. “Elevation, process, entomology, soil composition, terroir, nutrients, rainfall – it carries little meaning if I’m not also talking about the rest of what makes the coffee possible, and that’s the people,” he said. “The taste of coffee eventually disappears off the palette, but what never leaves you are the stories of a people and the places. My hope is that this project will create familiarity between farmers and customers and enhance empathy, a commodity we have great need of today.”

The fashion industry is beginning to develop ways in which it can adopt traceability technology too, both from a sustainability perspective and then within the huge potential for combatting fakes. Designer Martine Jarlgaard London has experimented with the former in the past, while earlier this year, diamond company De Beers announced it is piloting a blockchain program to ensure its diamonds are kept ethical and conflict-free.