Vertical Farming - Increasing Retail Presence
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Walmart recently invested in Plenty Unlimited, an agriculture technology company that focuses on vertical farming, to expand its sustainability efforts
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Partnerships with vertical farming companies act as a win-win both for retailers and consumers
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In 2021, the overall market value of the agriculture technology industry was around $11 billion and is expected to grow in the next few years
Vertical Farming - Increasing Retail Presence
In January 2022, Walmart, the world's largest retailer, invested an undisclosed amount in an indoor vertical farming company, Plenty Unlimited. The investment is part of the recent $400 million Series E venture funding round led by One Madison Group and JS Capital. Later this year, the retailer entered into a partnership with the start-up to deliver fresh produce to its 280 stores in California. The fresh produce will be sourced from Plenty's 95,000ft2 facility in Compton, California, and sold under the start-up's brand and Walmart's private label. This investment is part of Walmart's commitment to sustainability. Walmart has a net-zero target for 2040 and has launched a supplier-focused initiative dubbed Project Gigaton, a partnership between the company and more than 2,300 suppliers to prevent one gigaton of greenhouse gas (GHG) emissions.
A Sustainable Innovation
According to the United Nations, "In the next 30 years, food supply and food security will be severely threatened if little or no action is taken to address climate change and the food system's vulnerability to climate change." At the same time, according to Our World in Data, food production is responsible for approximately 26% of global GHG emissions. Innovations for sustainable agriculture are a way to improve crop yield while mitigating the climate impact and creating a sustainable food supply chain. Vertical farming is one such innovation in agriculture technology that offers excellent potential to increase food supply sustainably. Vertical farming is a type of indoor farming that involves growing plants vertically using controlled environment agriculture (CEA) technology and without pesticides. According to GlobalData, the agriculture technology market was valued at $10.8 billion in 2021. The market is expected to grow at a CAGR of 16% during 2021–25.
Increasing Retailer Investments in Alternative Farming
Changing preferences of consumers lead retailers to focus on alternative farming, which addresses the growing farm-to-table trend, limits waste and promotes sustainability. While some retailers have installed on-site farms within the retail stores or distribution centers, others source fresh produce through partnerships. Apart from Walmart, other retailers also invested in and partnered with vertical farming companies.
AeroFarms: In August 2021, AeroFarms partnered with Stop & Shop to supply leafy greens to more than 350 stores in New Jersey, New York, Connecticut, Massachusetts, and Rhode Island. In April 2021, the company expanded its presence in the Northeast US stores of Whole Foods, Amazon Fresh, and FreshDirect. For Whole Foods, the company doubled its product offering, and for Amazon Fresh, the company expanded to five distribution centers in the New York Tri-State Area. For FreshDirect, it grew from one to three distribution centers, enabling same-day delivery through FreshDirect's Express Service. It also partnered with Walmart in the Mid-Atlantic region as part of a pilot initiative to deliver to select stores in Virginia.
Infarm: In July 2021, the German start-up announced the expansion of its partnership with Canadian retailer Sobeys to supply to four additional provinces by 2023, increasing its presence to over 1,000 retail locations across Canada. For context, Infarm has partnered with more than 30 major food retailers and has long-term partnership agreements with major retailers in the US and Canada, including Kroger, Sobeys, Safeway, and Thrifty Foods, since 2019 and 2020.
GoodLeaf Farms: In 2021, McCain Foods announced a substantial investment in TruLeaf Sustainable Agriculture, a subsidiary of GoodLeaf Farms – Canada's largest commercial vertical farming operation. McCain has invested more than $65 million in the company and is the largest shareholder. The investment will fund the company's expansion plan of opening two more indoor vertical farms — one to serve the grocery and foodservice networks in Eastern Canada and one for Western Canada. GoodLeaf's retail partners include Loblaws, Metro, and Empire Co. Ltd.'s Longo's.
Through the partnerships and investments in vertical farming companies, retailers are reaping many benefits, including lower transportation costs, longer shelf life of products, and a reduction in product contamination. It also advances the retailers' sustainability practices as vertical farming is environmentally friendly owing to less use of water and land.
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