"It struck me how hard scaling is. Back in 2018, we started with a shipping container, and as we moved to our larger farm, we thought we had figured it out. However, as we moved to a 25,000m² farm, a whole series of things emerged that didn't exist at a small scale," Tristan Fischer, Founder and CEO, commented on the lessons the enterprise has learned in the past years. Fischer Farms is currently operating from a facility that holds up to 25,000m² of growing space, located west of Norwich.
During a panel on vertical farming's hardest learning points in the past years, the importance of branding, and the lowest-hanging fruits in vertical farming, Richard Hall, Director of Zenith Global and panel leader, kept things interesting as always. He questioned panelists Tristan Fischer, Founder and CEO of Fischer Farms, Rick Vanzura, CEO of Freight Farms, Roel Janssen, Chief Business Officer of Planet Farms, and Andreas Wilhelmsson, CEO and Co-founder of Ljusgårda.
Tristan Fischer on the right, pictured with Nick Green
The risks of scaling
"However, once you get it, you have some significant advantages in the productivity your facility can generate," he emphasizes. Moving forward with its third farm, as Tristan explains, this will deploy a different design and philosophy, adopting learnings from the previous generation farms. The third-generation farm will comprise 120,000m² of growing space.
"Automation and software at this scale is hard." Therefore, most of Fischer's hardware and software learnings from its previous generations were adopted in Farm Two. Loads of factory tests were done on the farms, whereas dynamics in a farm are different from a factory test. This resulted in slight adjustments on the equipment and software end. "It took us months to get to where we actually were supposed to arrive. That's why scaling is hard but definitely worthwhile," Tristan affirms.
Andreas Wilhelmsson keeping things 'Supernormal'
The importance of branding, or is it?
Ljusgårda, a vertical farming company from Sweden, has spent quite a fair budget on branding recently with their 'Supernormal greens' campaign. Therefore, Andreas Wilhelmsson, Co-founder and CEO of Ljusgårda, talked us through the importance of building a brand as a vertical farming company aiming for the consumer market.
"How important is branding?" Richard asked. Instead of answering the question directly, Andreas began with a different angle. "Walking into the Swedish grocery stores, at some retailers, we are the cheapest bag of lettuce you can buy on the shelf, including imported and non-organic brands. At Ljusgårda, we have the fundamental belief that you cannot charge more for being sustainable lettuce or for the benefits it has. Simply, as long as you grow lettuce or rocket, you need to be price competitive if you want to hit mass volume."
Coming from that, Andreas believes that pricing beats branding by far. However, having a brand does certainly help to build a relationship with your customer when making the first decision, he explains. The Swedish population is very much triggered by domestically produced products. Yet, a couple of years ago, that was replaced by pricing. Following that is sustainability, and lastly, the brand.
Roel Janssen
Commenting on that, Richard expressed, "We used to want what we would like, and now we want what we need to have." Agreeing with that, Andreas said, "It's not unique for this kind of vertical farming produce, but for many general products. Through our brand, we pop out slightly to potentially reel in a new customer."
Sharing a totally different angle to the slight hiccups or, let's say, hardships of bringing vertical farming produce to retail, Roel Janssen, Chief Business Officer of Italian vertical farm, Planet Farms, said, "It's also a matter of speed. Selling under a private label in retail takes much more consensus across the organization, and it's much easier to start with something new and better tasting. Taste is the main differentiator for us. Once you're in on flavor, you'll reach the scale, and the relationship, and it will be easier to tap into the private label category as well. Eventually, you'll be able to bring a cost-competitive mass product to the consumer at scale with the retailer."
By keeping a close partnership with retailers, Planet Farms has been able to explore new products to launch in-store. Exploring new varieties in its R&D center, retailers were kept in the loop about which new varieties were coming soon, allowing them to eventually add these to the product basket. "If they like your product and you keep communicating, retailers will be open to restocking your product. Now, Planet Farms is restocked at all retailers where we were already present, adding even more."
Rick Vanzura
A unique distribution model
Thousands of container farms in the world, are they individual container farms, or are they small-scale one-on-one networks?, Richard asked Rick Vanzura, CEO of Freight Farms. "Depending on the use case. 30% of our business that's not for the commercial end, those are all overwhelmingly individual containers as they deploy a community-integrated model."
As Rick highlights, some users, especially non-profits, aren't focused on sales but rather on covering operating costs, "which is fairly easy to do for the profit needed." On the for-profit side, Rick explains that "our customers are generally focused on industrial conglomerates, wanting to scale on a highly distributed basis where the thesis is 'no off-taker is more than a bike ride away from the farms.'" This hyper-local approach is key to their differentiation.
Operating one container farm takes about 25 hours a week for small business farmers. These farmers typically aim to manage three container farms, which allows them to "reach a good economy of scale and have a good business," while also maintaining a manageable lifestyle. However, as Rick notes, "if you want to get really big, at some point we've got to reach parity with what our farmers are able to sell at, at least matching organic pricing in grocery stores." This opens up niche markets, making the business even more profitable.
To access those markets, quality becomes the tiebreaker. As Rick observes, "One of the transitions we've seen in the past years is moving from an era where people were spending highly on organic produce to being more pragmatic about how much money they want to spend to manage their budgets." The focus now is on increasing yields so farmers can "match organic pricing in grocery stores" while delivering the additional value that comes with the product.
For those unable to join this year's event, Zenith is delighted to announce that exclusive post-event access is now available, including downloadable PDF presentations and recordings of all the presentations and panels from the Congress. Click here for full details, or get in touch at [email protected].
For more information:
Fischer Farms
Tristan Fischer, CEO
www.fischerfarms.co.uk
Planet Farms
[email protected]
www.planetfarms.ag
Ljusgårda / Supernormal Greens
[email protected]
www.supernormalgreens.se