Follow the Leaders: Transparency

Unilever recently became the first multinational food company to reveal in detail its entire supply chain of 300 direct palm oil growers supplying 1,400 mills. In announcing the decision Unilever’s CEO Paul Polman said, “Unilever is committed to greater transparency. A lot of people think if you outsource your value chain you can outsource your responsibilities. I don’t think so.”

“Unilever believes that complete transparency is needed for radical transformation. We want this step to be the start of a new industry-wide movement, ” added Unilever’s chief supply chain officer, Marc Engel.

In the latest installment in this series World Tea News asked tea industry leaders:

How important is transparency in tea? Should tea companies reveal the growers, processors and blending partners that make up their supply chain?

A tangible commitment to transparency is an affirmation of a company’s responsibility to its suppliers and customers. With consideration of changing consumer demands, it is also in a tea business’ financial best interest.

To stay in step with consumer sophistication, we as an industry have to start looking at supply-chain information as an essential part of our product’s value. Over the last decade, it is evident from the emergence of goods and services like farm-to-table restaurants, computerized seafood tracking, and even “ethical” diamonds, that consumers (particularly of gourmet, health, and luxury goods) readily view supply chain as an extension of the product they buy. This is forcing merchants to re-evaluate the information that has traditionally been regarded as trade secrets. Now, those secrets about your supply chain may actually be more valuable to your business as openly available information.

Many merchants feel threatened by this pressure to embrace transparency, particularly merchants who do not have the time or resources to invest in their own direct-sourcing operations. To the contrary, I’d argue that these vendors should not underestimate the value their business offers as a trusted curator. To sophisticated consumers, your choice to disclose your partners in your supply chain builds trust and goodwill that is attached to your business, first and foremost. A cafe owner who diligently maintains product quality by working closely with her suppliers ought to make this known — doing so is a concrete demonstration of the value she adds with her careful attention to supply chain. Consumers are now poised recognize her for it.

—Andrew McNeill
Business Development Director, Seven Cups, Tucson, Ariz.

Tea companies should act with integrity because customers are placing their trust in them, even if supply chain information isn’t shared publicly. I believe that tea companies can (and should) take responsibility for their supply chain, but there are other considerations before deciding what information to make available.

First, ask yourself how much of your supply chain is transparent to you. What steps could you take to improve it? The supply chain changes according to country and region. In some places the growers sell tea leaves to a larger factory, co-op style, whereas in other places it is normal for a tea farmer to manage the entire process garden to cup.

Second, consider whether you’d be comfortable sharing the principles and practices of your supply chain with the public. If not, what needs to change so that you would be comfortable sharing this information?

Third, ask yourself what information is useful to customers. The world of tea can be very overwhelming, so it is important to know what will make it easier for customers to choose a tea they will like. For instance, how and where it is grown, how it is processed, how it is blended, as well as how to brew it. That last point is key as it’s the part of the process that the customers have control over and you want to make sure they know how to brew the tea to bring out the best flavor.

Fourth, how do you make that information available in a helpful way? It’s incredibly important to understand your customers and know what stage they are at in their tea decision-making. As customers get more advanced, a portion will find it helpful to choose based on where the tea is grown and how it is produced. Like wine, some people are happy with a red, some gravitate towards French wines, while others choose the Pinot Noir grape. There is a fine line between educating your customers and overwhelming them, so it’s crucial to find the right balance, otherwise you run the risk of making it harder rather than easier to find a tea they will enjoy.

—Katherine Kern
Partner, Churchill’s Fine Teas, Cincinnati, Ohio


A few comments on supply chain transparency:

Transparency can explain to customers why commodity teas are so cheap to buy and in so doing, reveal the adverse effect of this on the pluckers in the field.

It can explain to customers why specialty teas are relatively expensive – and how this benefits the pluckers and entrepreneurial producers.

It also opens the consumers’ eyes to the number of middlemen in the chain – taking a cut for little risk – and the benefit of a retailer who buys at source.

But transparency works in two directions:

Transparency allows customer needs and requirements to be passed back to the growers and producers;

Transparency allows producers to gauge market needs and adjust their product offering; and transparency gives the producers a sense of pride to hear from the end users.

—Nigel Melican
Founder, Teacraft



Tea is no longer just a nondescript bag used to make a hot beverage. Consumers want to know more about their tea and its origins; along with the sustainability projects and environmental stewardship of suppliers. Transparency is a priority.

Retailers, brands, and wholesalers must earn their trust to win these new groups of clientele. Revealing exactly where the product comes from and making consumers aware of how hard it is to produce a good tea is a factor.

Confidence in the supply chain makes a product much more appreciated and more likely to fetch a better price and gain prestige.

We know that our industry is a “people” business where trust and relationships go a long way. We also know tea buyers have many choices in today’s environment which make transparency basically about trust. It is experience that you a buying when you insist on learning all you need to know about the supply chain.

—Holger Lohs
CEO, Haelssen & Lyon North America Corp, New York, NY

 

The number one reason retailers should be concerned with transparency in the tea supply chain is due to the new traceability requirements as part of the FDA Food Safety Modernization Act (FSMA). As part of a comprehensive Good Manufacturing Practice, food companies, including tea companies, need to be able to trace the origin and safety of all ingredients. Tea is processed very near to where it is grown which adds ease to this traceability, but it is the trading and blending of tea that makes this traceability difficult.

Outside of federal regulations that retailers need to be mindful, there is also the element of quality and marketability that comes with transparently sourced and distributed tea. Single origin teas that are made with great craftsmanship are more attractive in the youthful market of new tea lovers. Young tea lovers are excited to taste new origins and processing styles, and the only way you will be able to offer this to them as a retailer is if you seek transparency in the supply chain of your tea.

The final note about transparency in tea supply chain is in regards to sustainability. Consumers and businesses are in favor of supporting products that are ethically produced. Systems such as Fairtrade labeling have been developed in the past with the intention of building trust around products that are ethically produced, but recently, studies and investigations have found that certifications are not exclusively associated with ethical production. The only way to ensure ethics in your products is if the retailer has access to information such as environmental treatment in cultivation, labor practices, and economics in the supply chain. The only way to achieve this is to demand transparency in the supply chain. Retailers shouldn’t be ashamed to ask questions of their vendors and suppliers such as “What is the minimum wage of workers?” “What agriculture practices are used in cultivation?” and “How is the condition of the communities surrounding production?”.

—Elyse Petersen
Founder, Tealet.com