By Annika Monari, CEO & co-founder, Artos

By 2050, it’s estimated there will be almost 10 billion people who need feeding. However, over-farming and the damaging effect climate change is having on supply chains mean we may be unable to sustain our food supplies if we don’t act to make a profound change. This has been exacerbated further by COVID-19, with national lockdowns triggering consumers globally to stockpile food, leaving producers and manufacturers with serious concerns about how global supply chains can cope.

Yet, while climate change is the overarching cause of the food supply chain crisis, this is aggravated by the monopoly that large producers hold on the global market at the expense of smaller, more ethical brands. In this article, I will address this issue before offering a solution as to how we can make the industry more equitable by revolutionising deal discovery and financing. I’ll conclude with a use case of how this solution has been applied by The Vegan Trademark, providing a multi-billion dollar annual revenue opportunity to Vegan Trademark holders within the food and drink industry.

The global food & drink monopoly

Growing crops, for direct human consumption as well as for animal feed, is attributed to 70% of total global water use and agriculture contributes to around 11% of total greenhouse gas emissions. Many consumers now – to an extent – understand this impact and expect their food to have been grown and produced in a way that minimises damage.

The problem is, while a whole host of smaller, sustainable producers exist globally, they are unable to compete with the large organisations on price and are therefore disincentivised from being sustainable. Movements like Fair Trade are empowering smaller organisations to compete, but the overarching trend is that they have no choice but to work with large producers and agree to deals that don’t reflect the true value of the sustainable food they grow.

Additionally, smaller and more ethical brands often face difficulty being discovered by the right buyers in the first place. This is due to the lack of infrastructure at their disposal, as well as distributors, who traditionally facilitate the relationship between suppliers and retailers, being prohibitively expensive, costing up to 40% of the value of a deal.

Then, if brands are discovered by big buyers, they don’t always have the tools and resources available to finance the deal and carry it across the line as the order value is significantly higher than their usual amounts To increase their production capacity to the requirements of these larger deals, they require financing, but banks and other lenders usually take fees in the region of 20-30% on trade financing, making it almost impossible to deliver on larger deals that help growing ethical brands become the category leaders. Due to these costs, 65% of deals are unserviceable, resulting in $500bn USD of potential annual revenue lost to the bigger, more established brands.

Reducing supply chain inequalities

Partial solutions are on the rise. Trade marketplaces, taking advantage of accelerated digitalisation due to the pandemic, are looking to streamline discoverability by providing buyers with a one-stop-shop for upcoming brands. Invoice financing platforms like Funding Circle are providing interest rates to borrowers at a much lower rate. However, no one is doing both – no one has been looking at how to help these challenger brands recapture the deals they are currently losing because they cannot find and service them profitably.

A large part of this involves cementing processes around transparency and traceability, making it easier for producers to showcase their legitimacy via certifications and supplier verification, meaning buyers trust them, and invest faster. An unlikely hero powering this trust is blockchain technology.

Blockchain ledgers act as a single, unchangeable source of information and data which, for supply chain management and traceability, is like gold dust. They create a clear and consistent audit trail across all parties, stakeholders, and vendors. This means buyers are assured that best practices are implemented well and monitored robustly. Quality tests can be carried out at each stage and recorded securely. Every step of the way, monitoring and accountability is built into the system.

In short, systems are being built so that small, ethical producers can enter the market on their own terms without having to pander to unfair demands from large organisations. This means they can continue producing food and drink in the most sustainable way possible.

Case Study: The Vegan Trademark

The Vegan Trademark is the authentic international vegan standard and is managed by The Vegan Society, the charity that created the word ‘vegan’ (in 1944). It has been helping consumers identify that a product is free from animal ingredients since 1990 and is today on 52,000 products worldwide. Big brands utilising vegan trademarks include oat milk producer Oatly, as well as various products from Ben & Jerry, Honest Burger and Pot Noodle.

On the 29th June, The Vegan Trademark partnered with Artos, our revolutionary food and drink marketplace, to give Trademark holders access to the deals they need to grow. Artos matches brands with premium buyers across the world, capturing the booming vegan market, which is doubling in size every year. Sellers can easily showcase their brand quality and match with buyers that are seeking high-quality, sustainable, organic or vegan food and drinks brands.

It’s early days for the deal discovery and financing revolution in the food and drink industry. But marketplaces like Artos, which democratise the process, as well as the creation of Agritech solutions which are making the entire supply chain more efficient and sustainable, are promising. Utilising available technologies like blockchain is the key to a fairer system.

The food industry remains one of the most significant contributors to climate change globally. Change can no longer be a pipe dream; we must empower small and ethical brands today or risk global starvation.