Walmart Invests in Vertical Farming

Written by Jennifer Clark
Posted January 26, 2022

If you’ve been to the grocery store lately then you’ve probably noticed that supplies have been scarce. Even items that you thought would never be sold out are now sold out. 

I remember in the early days of the COVID-19 pandemic there was low stock of cleaning supplies, toilet paper, paper towels, and hand sanitizer — all items that I could guess would be sold out during fears of a pandemic and lockdowns. However, that panic-buying created months of shortages and limited supplies. Even as the majority of states were in lockdowns, grocery stores were considered an essential business and left open, and there were people still working at those stores.

As lockdowns eased up and the U.S. began to slowly reopen, people started buying in normal amounts again. However, businesses were still affected and had employees out sick or quitting their jobs. That meant fewer people to stock shelves. Fewer people working crucial jobs involved with distribution and the U.S. supply chain. There has also been increased demand from consumers who are buying more online — putting an even bigger strain on shipping and distribution.

Not to mention there have been multiple waves of COVID-19 cases with the emergence of new variants, which hasn’t helped these supply chains to catch up and get back to normal. The pandemic and the after-effects of early lockdowns have created a perfect storm for supply chains and that’s having an impact on grocery stores.

The problems that we’re facing now have raised some important issues like how can we find solutions or alternatives so that we never find ourselves in this situation again. Well, companies like Walmart (NYSE: WMT) have started to try and tackle these issues. 

This week Walmart announced that it would be investing in and forming a partnership with a U.S. indoor vertical farm company called Plenty.

Plenty is based in San Francisco, California, and this partnership will pave the way for Walmart to source leafy greens for its California stores later this year.

Walmart's chief merchandising officer, Charles Redfield, said:

We believe Plenty is a proven leader in a new era of agriculture, one that offers pesticide-free, peak-flavor produce to shoppers every day of the year. This partnership not only accelerates agricultural innovation, but reinforces our commitment to sustainability, by delivering a new category of fresh that is good for people and the planet.

This partnership sets the stage for a new future for Walmart that could help redefine the company. Vertical farming is a way to grow crops in vertically stacked layers in a controlled environment. The goals of vertical farming include optimizing plant growth and soil-less farming techniques like hydroponics, aquaponics, and aeroponics. Oftentimes, vertical farming uses a recycled water system to conserve water usage. Vertical farming can produce twice as fast and has been seen as a way to help with the food crisis.

Plenty’s business model uses engineering, software, and crop science to grow multiple crops on its one platform. Plenty CEO Arama Kukutai said:

Our farms can be sited anywhere allowing us to put fresh fruits, greens, and vegetables on shelf at all times, at speed, for maximum freshness… As a longtime market leader in retail innovation, Walmart is an ideal partner to test and scale access to our quality produce for their customers. This is a game-changer for the agri-tech industry.

Plenty’s CEO is right… This is a game-changer.

A game-changer for both companies. Plenty will have to supply the demand from Walmart and its stores. There are 4,743 Walmart stores throughout the U.S. Walmart has shaped itself into one of the top valuable brands not just in the U.S., but in the world. This will allow Plenty to put its farms near Walmart store locations in order to provide fresh produce to those stores. 

Allied Market Research reports that the vertical farming size was valued at $3.24 billion in 2020 and is projected to reach $24.11 billion by 2020 — that represents a strong CAGR of 22.9%. This market is expected to grow in the next decade, which will also allow Plenty to grow its business in that time. This gives the company a chance to not only grow as a company but also become a market leader in the vertical farming industry. And the company has already started walking on that path with its partnership with Walmart.

Going into the next decade, fresh produce and sustainability are going to become an even bigger factor for consumers. Omar Asali, chairman and CEO of One Madison Group, said:

Plenty has truly “cracked the code” on the technology and economics of indoor farming. It has developed an innovative and scalable model that can deliver fresh, sustainable produce to retailers, growers, and governments anywhere in the world.

One of the biggest retailers in the world, Walmart has already invested in Plenty and within the vertical farming space. Today is the day that you should start paying attention to it too.

Until next time, 

Jennifer Clark
Pro Trader Today
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