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Good morning! It's Thursday, November 9th. Today, we are looking at Bowery Farming, a $2.3B company that pioneered vertical farming technology!

THE FEATURE

The Billion-Dollar Vertical Farming Company

Irving Fain founded Bowery Farming in 2015, one of the first companies to pioneer vertical farming technology. 

Today, Bowery Farming is valued at $2.3B and provides fresh produce to retail titans like Amazon’s Whole Foods and Walmart!

So, What’s the Business?

Fain grew up in Providence, Rhode Island, where he enjoyed fresh food from local farms. It was this appreciation for fresh food that inspired him to create Bowery Farming and bring high-quality produce to metropolitan areas. 

Unlike traditional farming that requires thousands of acres, Bowery’s vertical farms are installed in abandoned warehouses in urban areas. These indoor farms vertically stack crops soaked in nutrient-rich water and surrounded with artificial lighting.

To top it off, Fain’s indoor farms are hyper-efficient due to his AI system, BoweryOS. BoweryOS integrates sensors, vision systems, automation, and robotics all into one package to make it the most attentive artificial (or human) farmer: 

• Creates floor plans to maximize vertical plant stacking

• Controls watering and nutrient levels for each plant based on its growth period

• BoweryOS’ vision systems alert workers when a crop is ready for harvest

With indoor vertical farms and its AI system, Bowery claims they can grow 100X more food per acre than traditional farming while using 95% less water!

Bowery primarily produces herbs and leafy greens because they are the most economically viable to grow– they have high selling prices, grow quickly, and require less water and nutrients than grains or fruit. In addition to selling basil, bok choy, and romaine lettuce, they’ve expanded into salad kits like their Zesty Caesar and Avocado Ranch. 

One of the primary benefits of Bowery’s vertical farming produce is that consumers are willing to pay nearly double for it (Bowery’s lettuce sells for ~$9/lb while conventional lettuce costs ~$3-4). 

Just like consumers are willing to pay more for “organic” produce, they seek out Bowery’s greens because they are grown without pesticides, thanks to the indoor environment. Also, its urban growing centers ensure that its produce remains fresh upon delivery to surrounding retailers.

How They Win: Partnering with Retail Titans

Bowery hasn’t released any revenue stats since it was founded in 2015, but we do know the company doubled production in 2022 and is on track to do the same this year. Its salad kits and greens are also sold at over 1,900 stores through distribution deals with retailers like Walmart, Giant, and Shoprite. 

Retail distribution deals are certainly important, but what’s more indicative of Bowery’s future growth is its new partnership with Amazon Fresh. 

Bowery’s three farms are located in New Jersey, Pennsylvania, and Maryland. Originally, this limited their distribution to just those states as they promised fresh and long-lasting produce. But with Amazon’s speedy delivery system, they can now sell to the entire East Coast and directly to consumers’ homes.  

In return, Amazon gets premium access to high-margin produce that sells like crazy on their Amazon Fresh store and at Whole Foods (a subsidiary of Amazon). 

When it comes to distribution, no company does it better than Amazon. By forging a partnership with them, Bowery can outsource a core business operation and focus on producing higher volumes and adding products to its selection.

Key Observation

Not many people knew what vertical farming was in 2015, but by getting in early, Irving Fain and his company Bowery Farming won big. 

The global market for vertical farming was valued at $5.1B in 2022 and is expected to grow to $39.9B by 2032. 

Since Bowery Farming is the largest vertical farming company, we can only expect the business to grow proportionately to the increasing industry size. 

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