Dive Brief:
- BrightFarms is raising $100 million in new investment funds led by Cox Enterprises, the indoor farming company said in a statement.
- The funds will help expand BrightFarms’ network of hydroponic greenhouse farms to all major U.S. markets, grow existing and new retailer partnerships, and meet increasing consumer demand for fresh, locally grown produce.
- Few sectors in the food space have been as popular with investors in recent weeks as indoor greenhouses, reflecting increased consumer demand for their fruits and vegetables. In late September, Revol Greens raised $68 million in a funding round to finance its growth, AppHarvest announced plans to go public and Plenty Unlimited received $140 million in funds.
Dive Insight:
Consumers are placing even greater importance on both the food that goes into their bodies during the coronavirus pandemic and the impact that raising it has on the environment. Indoor food growers are wasting little time using those values to raise more cash to fund their growth.
In addition to Revol and AppHarvest, which will go public with a value of roughly $1 billion, last week berry farmer Driscoll’s announced a partnership with vertical farming‌ ‌company‌ ‌Plenty‌ ‌Unlimited‌ ‌to grow its strawberries year-round in its indoor farms. Driscoll’s was an investor in Plenty’s latest $140 million funding round, announced last week.
Indoor greenhouses are enticing not only because of where they grow the food — AppHarvest’s 2.76 million square-foot-facility in Kentucky will allow produce to get to about 70% of the U.S. population in one day’s drive — but also how how they grow food: eschewing chemicals and requring signficantly less water. In the case of BrightFarms, its method uses 80% less water, 90% less land and 95% less shipping fuel than traditional agriculture. The farms also are more productive, the company said, with each indoor location yielding 10 times more leafy greens per acre when compared to growing in a field.Â
BrightFarms has raised more than $200 million in funding so far to build the nation’s first brand of locally grown produce. It has a big advantage in that it has already established close partnerships with leading grocery retail companies including Ahold Delhaize, Kroger and Walmart.
As it grows its greenhouse network, BrightFarms can increase the number of stores in which its products are sold among its current partners, while establishing relationships with new retailers. Early partnerships with retailers will be key for many indoor greenhouse companies. As long as a producer can supply an abundant, safe and reliable stream of food, there will be little reason for the store to seek out another grower. This is likely one reason companies are raising money so quickly, as they jockey to rapidly grow their businesses while gradually increasing the types of fruits and vegetables they offer.
BrightFarms currently distributes its products to more than 2,000 stores in the U.S. and expects to expand that to more than 15,000 stores by 2025. The company has indoor farming operations in Illinois, Ohio, Pennsylvania and Virginia, giving it access to several major metropolitan cities. BrightFarms also has three new farms under development in North Carolina, Massachusetts and Texas.
For now, BrightFarms appears focused on the eastern and south-central parts of the United States. As it expands, it appears committed to placing hydroponic greenhouse farms in other large population areas, as well as places where it may be harder to access fresh foods or the growing seasons are shorter.
Clarence Birdseye was credited nearly a century ago with inventing the quick-freezing method, enabling the type of frozen fruits and vegetables that consumers purchase today. As more greenhouses come online with fresh produce, frozen food makers may ultimately find themselves losing share to more fresh-picked offerings. Â
