How Grocers are Growing Local Produce Offerings

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How Grocers are Growing Local Produce Offerings

By Jennifer Strailey - 03/05/2016

Trust has become the hottest trend in food today, and with it, demand for locally grown produce has skyrocketed. As consumers increasingly want to know where their fruits and vegetables come from, they’re seeking sustainable sources closer to home.

Local food sales totaled about $12 billion in 2014, up from just $5 billion in 2008, according to the USDA, which predicts the market value for locally produced food could hit $20 billion by 2019.

Suppliers across the country are offering everything from potatoes to kale as local, where possible, while retailers are promoting the connection between food and the farm in-store.

While the challenges of supplying the nation with locally grown produce, particularly in the dead of winter, are obvious, they don’t sway consumer demand. Shoppers still want local in February. In response, a growing number of produce companies are expanding their greenhouse operations to provide fresh local produce year-round.

In particular, leafy greens, herbs, microgreens and tomatoes lend themselves to greenhouse cultivation.

Local Leaves

BrightFarms is on a mission to become the first national brand of local produce. It designs, finances, builds and operates hydroponic greenhouse farms near a growing number of supermarkets, to provide consumers with locally grown produce year-round, while reducing the environmental impact of growing fruits and vegetables.

“Our experience shows that consumers want to trust their food, and to know where their food comes from. And they want food that is fresher, tastier and more nutritious,” asserts CEO Paul Lightfoot of New York-based BrightFarms. “Local greenhouse produce does this for consumers on a year-round basis, and the demand for locally grown in a greenhouse appears to be just as strong as demand for locally grown in fields.”

Last November, BrightFarms received $13.65 million in Series B-1 financing, led by WP Global Partners, NGEN Partners, Emil Capital Partners and several other investors. “This financing bolsters BrightFarms’ leadership position in the local-produce movement,” says Lightfoot. Currently, the company has about 350,000 square feet of greenhouse farms housed in three commercial-scale facilities in operation or development, including a greenhouse farm in Bucks County, Pa. (operating since early 2013); a greenhouse farm in northern Virginia (recently opened); and a greenhouse farm under construction in Chicago.

The nearly 150,000-square-foot Chicago facility will provide more than 1 million pounds of fresh local produce per year to Kroger’s newly acquired Roundy’s stores, while the 150,000-square-foot Virginia greenhouse will provide Ahold’s Giant Food stores with nearly 1 million pounds of fresh local produce annually. The 50,000-square-foot Pennsylvania facility supplies McCaffrey’s Food Markets, a grocer with four locations in Pennsylvania and New Jersey, as well as Kings, Balducci’s, Acme and Best Markets.

BrightFarms grows baby greens, including spring mix, baby arugula, baby kale and baby spinach, in addition to basil and tomatoes.

“We only compete in categories where we can replace a long-distance and complex supply chain with a shorter and simpler supply chain that is better for the product, better for the environment and profitable,” notes Lightfoot.

The environmental piece is a driving factor for most consumers who purchase locally grown produce. Lightfoot notes that BrightFarms greenhouses are pesticide-free, and use 80 percent less water, 90 percent less land and 95 percent less shipping fuel, as well as less overall energy than traditional farms.

“By placing greenhouses as close to their distribution sites as possible, BrightFarms ensures customers receive fresh produce that tastes better, looks better and lasts twice as long in the refrigerator when they bring it home,” he explains.

Gotham Greens is another greenhouse grower with its sights on expansion. The New York-based company recently opened a 60,000-square-foot location in the New York City borough of Queens, and its first greenhouse in Chicago, a 75,000-square-foot facility it dubbed the “World’s Largest Rooftop Farm.” The latter greenhouse is expected to produce more than 10 million heads of leafy greens and lettuce for Chicago-area markets annually.

“We believe locally grown is very important as consumers increasingly care about how their food is produced, where it’s produced and who is producing it,” notes Viraj Puri, Gotham Greens co-founder and CEO. “However, simply being ‘locally grown’ isn’t enough. It must be consistently of high, reliable quality — that is most important.”

Currently Gotham Greens operates more than 170,000 square feet of greenhouse in four facilities — three in New York and one in Chicago. The urban locations allow the company to harvest in the morning and deliver directly to its customers the same day or next.

“Being hyperlocal is very important to our brand, as customers know they are getting our products straight from the farm, which guarantees a fresher, better-tasting product with more shelf life,” says Puri.

“But, all that being said, at Gotham Greens, we don’t just blindly talk about being ‘local’, ‘sustainable, and ‘natural’,” he adds. “While our business is about those things, we care about what those things stand for: flavor and nutrition, preserving water and soil resources, biodiversity, reducing harmful chemical use in food production, fair treatment of workers, strong food safety standards, and spending our dollars closer to home.”

The expansion into Queens and Chicago translates to greater than 400 percent growth for Gotham Greens in the past 12 months. Its 60,000-square-foot rooftop greenhouse in Queens has allowed Gotham to triple the amount of year-round fresh produce it can provide to its tristate-area (New York, New Jersey and Connecticut) customers. Additionally, the company has several new projects under development in cities across the country.

Gotham Greens’ produce, which includes a variety of leafy greens, bok choy, basil and tomatoes, is labeled to help consumers understand that it’s locally grown in climate-controlled greenhouses.

“Our specially designed recirculating hydroponic methods save land, save water, eliminate agricultural runoff and chemical pesticides, an offer the benefits of efficient, high-yield, local, year-round food production,” asserts Puri. “Our greenhouses are all powered by renewable energy, and our proximity to the market reduces impacts from transportation.”

Is greenhouse growing the future of the fresh produce industry? While Puri calls it “a robust form of farming that is practiced on a commercial scale in many parts of the world,” he explains that for the time being, its scope is narrow.

“The commercial viability of current greenhouse and indoor-agriculture technology is limited to highly perishable, high-value vegetables, fruit and herbs, and does not currently play a role in producing other agricultural staples like grains, proteins, root vegetables and others,” Puri notes.

“We believe that greenhouse, and specifically urban, farming can and will play a greater role in the future of a more sustainable, secure and just global agricultural system, but it is not necessarily the ‘future of farming,’” he adds.

Tomatoes Year-round

Expansion is also the order of the day for NatureFresh Farms, a Leamington, Ontario-based greenhouse grower, which recently picked its first crop of OhioRed tomatoes at its new greenhouse facility in Delta, Ohio.

Demand for tomatoes from the 15-acre facility, which opened in late November 2015, was so great that NatureFresh has already broken ground on Phase II of the Delta greenhouse facility. Phase II, adding a little more than 15 acres, is slated for completion by midsummer.Chri

A third phase, scheduled for November 2016, will bring NatureFresh’s total greenhouse space in Ohio to 45 acres. The company operates another 130 acres in Canada.

“Locally grown, in general, has been focused primarily on field-grown products, but that is changing, with greenhouse produce gaining more share of the produce aisle,” says Chris Veillon, director of marketing for NatureFresh. “Even though we grow dozens of varieties of tomatoes, four types of bell peppers and two types of cucumbers in a greenhouse environment, we still consider ourselves farmers.”

He adds: “With the upcoming launch of Delta, Ohio-grown OhioRed tomatoes by NatureFresh, we will change consumers’ perceptions of locally grown and how greenhouse grown can help provide fresh produce year-round.”

Veillon sees greenhouse technology as an evolution in fresh local produce. “We will be changing the landscape of locally grown produce [offered] 12 months a year in the East,” he asserts. “The fact that we are the builder, grower and marketer allows us to maintain control of the quality that we market under the NatureFresh Farms label.”

Make Way for Microgreens

Urban Produce, in Irvine, Calif., cultivates organic living microgreens and wheatgrass, using a high-density vertical growing system in a 5,600-square-foot indoor farm. Its products, which are sold still rooted to their coconut coir, recently became available at 226 Vons and Pavilions stores across Southern California.

The plants have a five- to 10-day growing period during which they receive a variety of supplemental LED lighting. “It’s the same light that the sun would give,” explains Danielle Horton, Urban Produce director of marketing and food safety. “We’re just providing the exact lighting spectrum each plant needs.”

Urban Produce microgreens and wheatgrass are sold in the containers in which they’re grown. They’re harvested the day before or day of pickup for transport to stores, and stay fresh for 30 days in refrigeration.

In drought-plagued California, Urban Produce’s watering system is a key component to its success. “Our watering system provides the plant with exactly what it needs, which is about 93 percent less water than the typical farmer uses,” Horton asserts.

“The industry is definitely growing with hydroponics and indoor farming,” she observes. As more farm-fresh produce is cultivated indoors, however, consumer education becomes increasingly important.

“Education is critical, especially with microgreens,” affirms Horton. “People confuse them with sprouts. Microgreens are grown in air root-down. They are basically the first days of what would become a fully grown herb or vegetable, whereas a sprout is a sprouting seed that will never be a full-grown vegetable.”

Horton believes nutritionally powerful microgreens will eventually catch up to best-sellers like kale. “I expect microgreens will be the next superfood,” she predicts, pointing to a 2012 USDA and University of Maryland College of Agriculture and Natural Resources study that found microgreens contained four to 40 times the level of nutrients of their mature counterparts.

“Microgreens are very concentrated in nutrition and flavor,” she says. “You don’t need as much to flavor dishes like smoothies, salads, tacos and burgers. They are healthy for you, and they give you a lot more bang for the buck.”

While the company sells exclusively in California at the moment, Urban Produce is poised for further expansion. “We are currently considering areas where we want to put five additional locations to provide locally grown produce to all of the U.S.,” says Horton. “Our mission is to bring locally grown food to local urban hubs by Q3 or Q4 2016. We’re hoping to have the locations secured by end of year.”

Kale Continues to Climb

As America’s hunger for kale intensifies, the leafy green is increasingly becoming a star player in value-added produce, from bagged salads to vegetable blends.

“We continue to see a very strong pull in kale — both green curly and Lacinato,” notes Patty Emmert, specialty crop manager for Duncan Family Farms, an organic grower in Goodyear, Ariz. While its products are promoted as local in California and Arizona, where it farms, Duncan sees demand for organic kale from far and wide.

“Green curly is outpacing Lacinato for us, particularly in value-added processing, as kale has moved into salads,” says Emmert. “Green curly holds up better than Lacinato. It just has a sturdier structure.” Duncan also grows a red kale.

Mark Haun, business development manager for Walter P. Rawl & Sons (WP Rawl), in Pelion, S.C., agrees that kale is on the move. “Kale continues to outpace everything,” he observes. “The biggest shift in trends continues to be moving from bulk sales and more into value-added. We can attribute this to new users coming into the category, those who care more about convenience [and] less time spent washing and chopping the product. The organic side of our business also continues to grow in an impressive way.”

WP Rawl recently introduced Nature’s Greens Seasonal Harvest, a blend of green, purple and white kale leaves.

“We were presented with the opportunity to have an exclusivity to this particular variety of kale, and after testing it, we were really excited about it,” says Ashley Rawl, VP of sales, marketing and product development. “This milder kale tastes great and cooks well.”

While Rawl recognizes the impact of local, she believes that integrity, quality and consistency keep shoppers coming back for more. “Locally grown has been, and will continue to be, important,” she says. “However, our focus is more on regional correctness. Our focuses are food miles, fresher product, etc.”

Merchandising Local

As demand for locally grown produce builds, so, too, does the need for signage, packaging and merchandising that communicate the local message to shoppers.

“Local is important throughout the produce department,” says Lee Anne Oxford, director of marketing for Raleigh, N.C.-based L&M Cos. Inc., which grows, packages and markets fresh fruits and vegetables across the United States. “Promoting fresh local products benefits the retail store in so many ways. It add freshness, taste, smells, seasonality, excitement and a neighborhood feel to your store,”

L&M promotes local potatoes, vegetables and melons from its farms in Florida all the way to Michigan. “Our marketing programs tie in with the local state departments of agriculture and include a variety of locally branded items, including ads, POS materials, bins, display stands, poly and paper bags, clips and tags, and labeled trays’ wrapped items,” explains Oxford.

“Some of our best promotions have included an entire program featuring POS with stories from our farm, alongside matching bags and bins,” she adds.

At present, L&M is working on Eastern broccoli and fresh new potatoes in its Florida program, which will be followed by its Georgia Grown local vegetables and melons, as well as North Carolina-grown vegetables and new potatoes.

“This summer, we are excited about our new programs from our new farms in Michigan and Indiana,” says Oxford. “We are already working on our local-potato bag for Indiana. And then in August, we begin with our From the Land of Kansas onion harvest and promotions.”

Locally grown varieties will remain a focus for L&M, according to Oxford, who says the company continues to plant new and different items on its farms. Most recently, it’s growing broccoli in the Southeast, russet potatoes in Florida and onions in Kansas.

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