U.S. greenhouse company BrightFarms says there is huge untapped potential in the locally grown produce market and believes the rapidly growing category is roughly where the organic sector was around 15 years ago.
The company, which was founded by CEO Paul Lightfoot nearly a decade ago, is undergoing a major expansion, this year opening its fourth greenhouse, based in Ohio, and also completing a series D funding round of US$55 million led by Cox Enterprises.
Now, BrightFarms is aiming to build a further 10 to 15 greenhouses around the country over the next three to five years.
Speaking to Fresh Fruit Portal, vice president of marketing Abby Prior said preference toward locally grown produce is one of the biggest consumer trends nowadays.
“We see massive untapped potential from the consumer side,” she said.
“When you ask a consumer, ‘If pricing were consistent, would they prefer a locally grown, a conventional item or an organic item?’, about 56% of consumers will tell you that they prefer locally grown.
The category is still dwarfed by the organic segment – which is about four-times larger – mainly because of the complexities of growing and distributing local produce, Prior said. But although the category remains small, it is undergoing “explosive” growth.
Sustainability and consistency are two of locally grown produce’s stand-out benefits, with much of the produce industry facing issues such as rising freight costs, a shortage of truck drivers, and weather and climate volatility.
“We see local not only as a consumer demand driver but also as a solution to the major issues facing the produce industry today,” Prior said.
One of the biggest challenges for growth in the local produce segment has been achieving supply for a significant period of the year. But the increasing focus on greenhouse production is changing that, with numerous new farms cropping up around the country that can provide a year-round supply of local produce to retailers.
Many greenhouse companies, like BrightFarms, are focused largely on leafy greens, but Prior said there is “great progress” being made in growing a wide range of crops.
“There’s lots of testing going on in berries, for instance, which is an extremely short-shelf-life product that really varies greatly in quality when you’re in and out of a local season,” she said.
“I believe that the category will continue to grow over time. You’re seeing it being led today by the big category drivers like salad greens, tomatoes and peppers, but there are plenty more categories that will follow as companies establish themselves and their brands in local market across the U.S.”
Potential to outgrow organic?
The growth in and demand for locally grown produce is so great that BrightFarms believes it will eventually outgrow the organic fresh produce sector, which in 2017 saw sales rise by 8% to nearly US$5 billion.
“Right now there are much fewer commercial-scale local growers and much more limited availability of those products versus organic. We think of the local segment being today where organic might have been 15 years ago,” she said.
The locally grown salad category alone has grown by 250% in the last three years, she said.
“Yet still, we’re only 1% of the total salad category. So there’s no question that there’s consumer demand for it, the growth rate is explosive, but we haven’t even scratched the surface just yet.”