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Blockchain Challenges in the Food and Beverage Industry  

As technology continues to evolve, so does the way businesses handle their data and optimize operations. Many have heard of the emerging technology generally referred to as blockchain, and applications are beginning to emerge in all sectors that will have transformative effects. The modern food and beverage industry is ripe for blockchain application, but it is also important to consider possible blockchain challenges before adopting this technology.

What is a Blockchain?

A blockchain is a secure, distributed, immutable ledger that records digital transactions utilizing cryptographic storage and hashing mechanism on a peer-to-peer network. It allows data to be stored in a privatized, secure network that can be referenced and verified.  

Blockchain is also inherently distributed, which has several benefits compared to current systems where one system owner governs the data management and verification. Blockchain allows a ledger to span over any number of parties – for example cooperating companies or entities around the globe. Nearly any type of data can be digitized to stock on the blockchain.  

Given the countless potential applications of this technology compared to current storage and data sharing approaches, the global blockchain market is projected to grow from $7.18 billion in 2022 to $163.83 billion by 2029, a CAGR of nearly 57% from 2022 to 2029.  

Current Applications of Blockchain 

The food and beverage market is both large and fast-growing, reaching a global value of nearly $6 trillion USD in 2019 and growing at nearly a 6% CAGR.  

Leaders in the industry recognize the opportunity that blockchain represents and have begun to pilot use cases to advance their supply chain and ensure a smooth process from production to consumption. For example, product record data (e.g. specifications, temperature controls), Internet of Things data (tracking systems), and smart contracts for automated payment or verifiable agreements are all under testing.  

The benefits of blockchain – namely better organized, more transparent, more secure, and more effectively tracked data – can bring value to the food and beverage industry and their value chain partners in the coming years. 

Potential Blockchain Challenges

While blockchain represents an avenue to address the rising trend of greater transparency with consumer purchases, however, it is not without hurdles that will need to be solved before mass adoption. The following are possible roadblocks to consider for potential blockchain challenges:


It’s reported that 33 percent of American farmers lack consistent Internet access and only 40 percent use the Internet at all for agricultural enterprises. As a result, a key component of the food and beverage value chain may present an accessibility gap to generating the data that could be secured on the blockchain. Adoption on this front may take time, as many are still most comfortable with more traditional methods of tracking and do not have the capital to invest in new digital systems.  

Privacy and Data Protection 

This emerging technology, which enables direct transactions within a ledger without need for a central authority or trusted intermediary, has the potential to create numerous data problems. Some of these include jurisdictional challenges, crypto asset risk, privacy and data protection, double spending, and distributed denial-of-service (DDoS) attacks. The original purpose of blockchain was to facilitate peer-to-peer transactions without the need of a central party. In a permissionless public blockchain system, no single party takes responsibility for the availability or security of a ledger. This leads to potential for scam, fraud, and error that can be perpetuated throughout the distributed ledger.  


Regulations are rapidly evolving, and creating rapid compliance to emerging regulation always makes it more challenging to produce ROI in early stages. Some of these regulations include: 

  • Cryptocurrency issuers and administrators may be subject to money transmission regulations at both the state and federal levels 
  • Money transmission regulatory regimes, may include Anti-Money Laundering (“AML”) and Know-Your-Customer (“KYC”) compliance requirements 
  • Blockchain and cryptocurrencies involve unique tax considerations that can be subject to higher costs 

Going Forward with Blockchain 

For now, blockchain is an emerging and constantly developing technology. As with many transformative technologies before it, there is often apprehension that comes with adopting a new way of working. Blockchain will take time to mature, for problems to be solved, and scale to be created. As it matures, if pilots prove successful, and ROI is clearly demonstrated, the industry could adopt this as a new platform to the way they operate.  

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Contributions from Vishnu Avva

Tags: Emerging Technology