June 10, 2019

by Lynda Kiernan

Britain’s Ocado, the world’s largest online grocery retailer, has made its first venture into vertical farming with a pair of agreements representing a total investment of £17 million (US$22 million).

Infinite Acres

As a way to diversify its tech solutions business, Ocado announced a memorandum of understanding that will found a three-way joint venture to provide full-service solutions addressing the challenges faced by indoor and vertical horticulture.

Together with the Netherlands-based Priva Holding BV, a leading horticulture-focused provider of technology solutions, services, and automation systems, and U.S.-based 80 Acres Farms, a top indoor vertical farming company operating multiple farms producing tomatoes, cucumbers, peppers, leafy greens, and fruits such as strawberries, Ocado is launching Infinite Acres, a provider of integrated tech solutions for the indoor vertical production of the highest quality produce on a year-round basis.

“We believe that our investments today in vertical farming will allow us to address fundamental consumer concerns on freshness and sustainability and build on new technologies that will revolutionize the way customers access fresh produce,” said Tim Steiner, CEO of Ocado.

“Our hope ultimately is to co-locate vertical farms within or next to our Customer Fulfillment Centers and Ocado Zoom’s micro-fulfillment centers so that we can offer the very freshest and most sustainable produce that could be delivered to a customers’ kitchen within an hour of it being picked.”

Through the partnership, Ocado will contribute the software, robotics, automation, and AI to the venture, while 80 Acres will bring plant science expertise and operations management to the table.

Founded by Mike Zelkind and Tisha Livingston in 2015 in Cincinnati, Ohio, 80 Acres Farms is a pioneer in indoor agriculture. Utilizing proprietary technologies that include modular grow zones, customized LED lighting, precision climate controls, sophisticated data monitoring, and an AI-based growing system, 80 Acres grows nutritious, pesticide-free greens, fruits, and vegetables that are higher quality than customary produce. And by having its facilities in Ohio, Arkansas, North Carolina, and Alabama geographically situated in proximity to its customers, the produce grown by 80 Acres Farms does not need to be transported long distances, drastically reducing the environmental impact of farming and food waste.

In the first weeks of this year, 80 Acres Farms announced a “significant investment” reported to be north of $40 million from Virgo Investment Group, a San Francisco-based private equity group focused on investments in companies that are disrupting high-potential industries.

At the time of the January announcement, the company was in the process of completing its facility located in Hamilton, Ohio, which will be the first fully-automated indoor farm in North America. Featuring handling robots, AI-based systems, data analytics, and 24-hour sensor monitoring and control systems to optimize each step of production, the Hamilton site will be fully automated from seeding to growing to harvest.

Commenting on the formation of Infinite Acres, Mike Zelkind, CEO of 80 Acres Farms said, “This is an amazing combination of best of breed companies. Priva and 80 Acres Farms provide extensive horticulture, engineering, operational, and food industry expertise. Along with Ocado’s predictive analytics, automation and comprehensive system development, the partnership will provide its customers with everything from state-of-the-art facilities with uniquely developed crop recipes and the right unit economics to an option for facility management with yield guarantees, product packaging, branding, marketing, and distribution. 80 Acres Farms will offer these options for customers seeking an operating partner.”

Jones Food Company

Ocado also announced its acquisition of a 58 percent stake in UK-based Jones Food Company (JFC), the largest operating vertical farm in Europe.

Located in an industrial park in Scunthorpe, England, JFC’s facility hydroponically produces 10 varieties of leafy green herbs including coriander, basil, dill, chives, and mint.

With less than half a dozen human employees and a single robot named Frank, the company’s first crop was sown in October of last year. Trays of plants reaching 40 feet high and representing a growing surface of 5,120 square meters, are grown in a hydroponic solution consisting of water and nutrients including potassium, nitrogen, magnesium, and calcium – all under 7.8 miles of LED lights. Meanwhile, carbon dioxide is pumped into the facility enabling the plants to absorb up to 50 percent more than they traditionally would, resulting in accelerated growth rates.

After its first harvest last autumn, JFC sold its entire initial crop to Greencore Group, a maker of salads, sandwiches, and sushi products that are sold in retail and convenience stores.

In February of this year, JFC CEO James Lloyd-Jones told FT, “We’re now looking for a large fundraising to push the business to the next level,” he said. “My dream is for us to produce fantastic crops in the most environmentally friendly way by becoming carbon neutral.”

Ocado head of finance Duncan Tatton-Brown said that this tie-in with JFC and its reach into vertical farming reflect an opportunity for the company to “leverage its tech expertise”, saying, “We foresee a day when customers’ fresh produce is harvested just hours before they get it.”