OrgHive, a Shanghai-based start-up, is aiming to tackle a lack of transparency in China’s organic food market by allowing consumers to easily access and verify data behind certified goods and simultaneously help companies tap into growing demand for better quality consumer products.
Backed by Hong Kong-based digital marketing solutions provider Integrated Management Systems (IMS), OrgHive, in April, launched a blockchain driven consumer community platform – portal.orghive.cn – to help companies market their lifestyle products to mainland’s growing middle class.
It followed it up with a WeChat applet in October that allows consumers to instantly verify the authenticity of mainland-labelled product by using their mobile phones to scan the 17-digit bar code unique to each item.
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After syncing information about the manufacturer and the certifying body, the applet then directs consumers to OrgHive’s portal, where they can learn about the product, the brand and browse content shared by other consumers.
“The main reason why Chinese buy organic is because of food safety, but some of the obstacles for consumers in doing so is that they often have a low recognition of what organic food is, besides getting information behind the identification labels,” OrgHive CEO Anastasios Papadopoulous told the Post.
Although Chinese consumers can currently access data behind organic labels by manually entering the 17-digit bar codes at a website operated by the National Certification and Accreditation Administration (NCAA), the mainland’s governing body, it is not quick and convenient when shopping in a store, said Papadopoulous.
“The organic food certification system in China is very advanced, and although the information exists, it has not been made easily accessible,” he said.
Some 2.12 billion unique 17-digit organic food packaging identification labels were issued in China in 2019, of which 70 per cent were for sterilised milk, according to the NCAA.
China’s retail market for organic packaged food – defined as certified produced and processed in an ecologically sound manner – amounted to US$3.3 billion in 2019, or 7 per cent of global demand, according to market research provider Euromonitor International. After growing at an average annual rate of 13.6 per cent in the four years to 2019, the Chinese market’s growth rate is expected to ease to 10.2 per cent in the five years to 2024, reaching US$5.5 billion.
The market was dominated by dairy and baby milk formula products makers. Inner Mongolia Yili Industrial Group, Mengniu Dairy and US-based Abbott Laboratories were leading companies with market shares of 22.8 per cent, 13.5 per cent and 13.4 per cent, respectively.
China’s melamine-laced milk and infant formula scandal in 2008, which caused the deaths of six children and led to the poisoning of 300,000 others, had dealt a heavy blow to the nation’s food industry.
OrgHive works with all the organic food certification bodies on the mainland, of which there are more than 60, responsible for ascertaining the production processes and supply chain of the products. It then obtains the bar codes issued by them and applies blockchain technology to ensure the data cannot be tampered with.
The start-up aims to have 3 million registered users of its portal by the end of 2021, and expects its fee-paying brand members to grow from 13 to over 20 by February, said its head of strategy Manuela Burki.
It charges companies membership fees for marketing services and provides them with data on consumers’ online behaviour.
Brands paying the highest-tier of membership are also provided with their own “micro-site” within OrgHive’s platform where consumers can browse products. They are then directed to the brands’ own e-commerce platforms to complete purchases.
IMS co-founded OrgHive in 2018 with Patrick Kaminski, who held senior roles at German consumer goods firms Beiersdorf and Henkel Group before becoming OrgHive’s co-CEO.
“He understands how transparency is a problem mainland Chinese consumers face when purchasing organic products,” Papadopoulous said. “Consumers used to fly to Hong Kong or Australia to get infant food formula, or to Paris to buy organic cosmetics. They didn’t believe the products on the shelves were actually what their sellers said they were.”
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This article originally appeared on the South China Morning Post (www.scmp.com), the leading news media reporting on China and Asia.
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