Vanilla is one of the most ubiquitous ingredients in the world, yet 80% of the world’s vanilla comes from a single place: the island of Madagascar, where small farms are responsible for most of the production. The supply chain is complex, ranging from price fluctuations to major climate challenges and intensive farming needs, and involves a variety of players from farmers to co-ops to fragrance houses. Estée Lauder Companies’ Responsible Sourcing team selected vanilla as a priority ingredient as part of the company’s commitment to develop robust biodiversity and social action plans for sensitive ingredient supply chains by 2025.
In February 2019, Aveda partnered with natural ingredients supply chain partner LMR Naturals by IFF, local Madagascar vanilla supplier Biovanilla, global sustainable business partner BSR, and blockchain innovation partner Wholechain to launch a pilot program to leverage blockchain technology in its Madagascan vanilla supply chain. Blockchain technology provides further traceability by collating data from supply chain partners in real time using a secure, digital system.
The program represents one of the first successful, commercial blockchain pilots at such scale. The investment in blockchain technology raises the bar on beauty industry transparency standards. The program will bring blockchain-enabled, traceable vanilla to more than 125 Aveda products in spring 2021.
Blockchain is an immutable ledger that enables stakeholders to share data and product attributes at each link in the supply chain. From the point of harvest, blockchain inputs data at every step, creating a digital record that enables visibility into the entire supply chain. Blockchain is used to verify the source and quality of ingredients, such as with the Madagascan vanilla Aveda uses in its products.
Tracing and verifying the steps in the supply chain from 450 smallholder vanilla farmers all the way to Aveda’s manufacturing facility, the extensive pilot provides a true proof of concept that can be leveraged by others in the industry to improve transparency and raise sourcing standards.
Using mobile phones and QR codes, the pilot’s blockchain technology created a tamper-proof record of each vanilla bean’s journey. Beginning with 450 smallholder farmers in Madagascar, the technology traced the beans along the process from the sale to the local coop to LMR, ELC’s natural ingredients supply chain partner in Grasse, France, to Aveda’s manufacturing facility in Blaine, MN.
Many commercial blockchain pilots are theoretical or extremely small in scale—Aveda’s program is one of the largest-scale pilots to be launched in the beauty industry. The implementation of digital tracing capabilities at the beginning of the supply chain process helps to facilitate positive impacts across the value chain, including greater transparency for the end consumer. Digital traceability also enables a level of visibility needed to facilitate the management and mitigation of complexities in supply chains arising from unforeseen events such as climate changes or global pandemics.
“This new investment supports The Estée Lauder Companies’ efforts to continuously improve and strengthen our sourcing practices while remaining sensitive to the local communities in which we operate,” said Greg Polcer, Executive Vice President of Global Supply Chain at The Estée Lauder Companies Inc. “Blockchain technology adds an extra layer of transparency to our sourcing practices, verifying our vanilla supply chain’s compliance with the highest ethical and environmental standards, and strengthening trust with our suppliers, consumers and investors.”
The extensive pilot provides a true proof of concept for the use of blockchain to increase traceability in complex supply chains, benefitting the entire industry by establishing robust best practices for responsible sourcing.
“It’s really exciting to see the beauty sector pursuing the use of blockchain at such a large, commercial scale,” said Thibault Gravier, Global Supply Chain Director, BSR. “Improving supply chain transparency across sectors really depends on the investment and leadership of companies like Aveda and The Estée Lauder Companies. The success of this pilot provides a true proof of concept for others to follow.”
