I can't tell if that is fondant ribbon or real ribbon. If it is real, I have seen it in craft stores. As for fondant ribbon, I will have to leave that to an expert, but it I think it would be done with pulling and running through a pasta machine.
If you look up Skinner blend for polymer clay, it might help give you the idea. It shows how to get the smooth gradation from one color to another. I imagine it would work the same with fondant.
I hope that helps you and I'd be interested to know if it works.
Here's a tutorial link: