Wait. Vertically Farmed Lettuce at Walmart?
Plenty is a wildly funded ag-tech startup with a crudely estimated trailing revenue of ~$100M a year. Founded in August of 2014, it is coming up on eight years in the market, refining its offer and, most notably, its indoor, vertical, hydroponics technology. Salad greens are plagued by near-constant recalls lots of spoilage at retail and in our refrigerators. Fundamental quality issues and back-end supply-chain costs of traditional, farmed greens are undoubtedly hard to downplay. Not to mention that climate change makes it harder for the Yuma operations to sustain themselves (in a desert).
What is intriguing about Walmart’s involvement in California is three-fold:
- Probably the most satisfied market of all: California is the produce basket of America and the summer producer of our salad greens. The drive from Salinas to any store in California is pretty quick by supermarket standards. In other words, Plenty is daring to take on a market share battle where salad greens are already really fresh tasting. Bold.
- Very high per capita consumption of vegetables: Yes, California is a large market for any consumer product. But, it punches above the national per capita averages on daily consumption when it comes to fresh veggies. This suggests lots of salad green occasions to tap into.
- Walmart has notoriously horrendous produce quality and in-stock rates at its Supercenters. This has only gotten worse during the pandemic. Consumers who routinely eat salads do make store runs to get more. In other words, like milk, salad greens drive trips. Walmart could gain two benefits here: more affluent shopper trips AND boost its quality halo in a major trip-driving department in which they historically underperform.
The problem posed by raising $900M when your revenue is still only $100M is that Plenty may be very impatient. If their Walmart placement underperforms, will they listen to the numbers and grow more slowly or shove it throughout the Walmart system, deep into counties where consumers don’t care about salads. (Image courtesy of www.geekwire.com)