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Market

Leafy greens indoor market: competition, pricing and future

The U.S. is starting to reopen as vaccinations help with getting COVID-19 under control. With that said, what will the post-pandemic market look like for the lettuce and microgreens markets?

Gotham Greens
Leafy greens indoor market: competition, pricing and future 88

Greenhouse Grower asked three companies about how they see the current state of the lettuce and microgreens markets and where they see the market headed in a post-pandemic world. Here are the main takeaways.

The competitiveness of the lettuce market

According to Donald “DJ” Grandmaison, Sales and Marketing Manager at lēf Farms, the greenhouse lettuce market has only grown more competitive. This competitiveness has led companies like lēf to pursue stronger relations with their retailers.

“Over the last five years, there has been a proliferation of greenhouse and controlled-environment growers in the lettuce sector, especially in the Northeast and Mid-Atlantic regions,” Grandmaison says. “This has caused fierce competition on the retail level, especially given the limited retail space for new products and packaged salads. Our farm has worked hard on developing relationships with our key retail partners.”

Consumer preferences and desires

When it comes to consumer preferences, Grandmaison says he sees people shifting to prefer romaine or iceberg textures and flavor profiles. He has also noticed that spice has caused heads to turn in the supermarkets.

“We have incorporated more varieties that fit that profile in our blends to provide more texture and added crunch,” Grandmaison says. “We also notice that mustards and spicy leafy greens catch consumers’ attention, which has created strong demand for our top-selling spice blend.”

Consumers are also more interested in how their greens are grown, according to Viraj Puri, Gotham Greens Co-Founder and CEO. People want to know their greens are free of any foodborne illnesses and are grown locally.

“Consumers are demanding greater transparency in how and where their food is produced, particularly given the rise in foodborne illness outbreaks linked to open-field farming,” Puri says. “Hydroponic greenhouses allow us to grow a reliable and safe supply of fresh produce all year round. Greenhouse-grown lettuce can also often be more locally produced than conventional and organic lettuce. Local items continue to see high consumer demand.”

Pricing of greenhouse lettuce and microgreens

There are two perspectives when looking at the pricing of greenhouse leafy greens. Grandmaison sees greenhouse-grown lettuce and micro greens as fetching higher prices than field-grown varieties due to freshness and quality.

“From our analysis, we see that greenhouse-grown lettuce and microgreens continue to be double if not triple the price on the shelf,” Grandmaison says. “As an example, our product sells at retail $16 to $20 a pound where California [field-grown lettuce] is being sold for $6 to $11 a pound.”

To Serdar Mizrakci, CEO of Element Farms, pricing isn’t an apples-to-apples comparison. He sees pricing as a key motivation for getting more consumers to try greenhouse-grown leafy greens.

“We are comparing different qualities of produce,” Mizrakci says. “Given those quality differences, the price is really where it needs to be for the consumers to start picking up more greenhouse-grown [leafy greens]. I think, in the near future, I see the price gap closing.”

The future of breeding

As indoor varieties of lettuce continue to become more competitive with their field-grown counterparts, breeding companies are taking notice. Seed companies now are paying attention to controlled environment needs as greenhouse growers become bigger players in the market.

“Historically, all breeding efforts have been geared toward field agriculture since lettuce is primarily grown outdoors,” Puri says. “Indoor producers (greenhouse and vertical farms) use field-lettuce seed varieties. Breeders have been asking producers to try popular field varieties as well as older varieties that may have been ruled out by field growers but that could have appealing traits for indoor growers.”

Leafy greens indoor market: competition, pricing and future 89

Mizrakci would like to see breeders bring out more leafy green varieties other than just lettuce, as there are many leafy greens like spinach and arugula that could be adapted to the greenhouse.

“Any leafy green, that’s not lettuce, producing cultivars that have high yields per square foot, and that can be grown easily — that’s what breeders should focus on,” Mizrakci says. “I know some breeders are putting effort and resources towards it, though.”

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Labelling

“Natural Branding”: Made in Germany

The term “Natural Branding” was applied by the Laserfood company as a word trademark, but not as a technology. However, on 5 May 2020, this trademark “Natural Branding” was declared invalid by the EUIPO (Invalidity No. 000029701C) due to its descriptive character. For this reason, EcoMark – as well as any other company – is allowed to use the description “Natural Branding” for laser marking of fruits and vegetables. The proceedings are currently still pending in the court of appeal. It is expected that the new decision will confirm this, as no new evidence was presented in the appeal.

The mentioned regulation 510/2013 is about the use of iron oxides and hydroxides (E 172) as contrast enhancers after fruit laser processing, not about the laser process itself. The use of laser technology for fruits and vegetables is not a protected process and is therefore permitted to virtually anyone. In this respect, there can be no question of “fraudulent behavior by competitors”. The only protected process that exists is a patent (see also Regulation 510/2013) for spraying fruits and vegetables with a special liquid after laser treatment. However, the liquid is not approved for organic products, and there is no connection to the term “natural branding”. That is why, in the organic sector, only the pure laser technology is used, which is not patented.

In 2018, EOSTA won the award for sustainable packaging, not with the technology of the company Laserfood, but for the basic use of laser technology instead of packaging. At that time, EOSTA was also already in possession of a Natural Branding machine from the company EcoMark Ltd.

The term “Natural Branding” had demonstrably been used by EOSTA and EcoMark for a long time when Laserfood was still using the term “natural light labeling”. It was not until “natural branding” had become accepted as a term for the laser labeling of fruits and vegetables that the company Laserfood applied for the trademark “natural branding” and only then used it itself.

The Laserfood company is not the inventor of the technique for laser branding fruits and vegetables, nor is it the market leader. The technology has also been continuously optimized for use on fruits and vegetables. For example, EcoMark now offers special laser techniques for specific products that are not offered by any other machine manufacturer.

“Building your own laser makes no economic sense when there are good systems ready to buy,” says Richard Neuhoff, managing director of EcoMark Ltd. “Sure – it saves money to buy the laser components cheaply,” Neuhoff adds. “However, the development effort for a good laser is high, and to offer worldwide service for it is not possible for small companies like EcoMark,” he said. That only leads to dissatisfied customers!”

Bild2eco

EcoMark Ltd focuses on developing its own software to achieve competitive advantages in handling and for processes, ultimately increasing productivity. There is currently no faster product recognition than EcoMark. “With our concept, we can easily respond to customers’ needs and thus increase productivity. After all, in addition to the environmental reasons for Natural Branding, it is productivity and thus the profitability of the marking that is decisive in the end. That’s where EcoMark can score with the new “NB 12003 Professional” machine.” The fast 3D camera evaluation for product recognition combined with 120W laser power could already sell EcoMark several times.

“Currently, our NB machines are mostly used for organic product marking. However, due to their cost-effectiveness, they are now also increasingly requested for conventional products. It is not possible to mark more cheaply than with a laser, especially for large quantities.”

EcoMark’s claim is that every customer is able to react immediately to the degree of ripeness of the fruit, for example, or to create new products with new logos themselves. After all, this is the daily routine for our customers. If help is needed, however, it is usually very quick, so that the support is usually not charged for. “In the meantime, we live from our good reputation and further recommendations,” says Richard Neuhoff, managing director of EcoMark Ltd.

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Asia

Fruit salon – prices are the same as in a jewelry store: the most expensive fruit store operates in Japan

The Japanese are more than extravagant people, they always come up with something, go ahead of the rest of the world. This time they distinguished themselves with the world’s most expensive fruit salon.

Sembikiya is essentially a fruit shop, but the goods here are so expensive and the interior of the store resembles a jewelry salon, so “fruit salon” is a rather apt name.

This is the main store of the Japanese fruit giant Sembikia. It has been run by the same family since 1834. At the time, it was an ordinary fruit shop, but one day the second generation wife of the owner of the shop decided that they could make money in another way.

So, this is more of a gift shop than a store. About 80–90% of these goods are bought as a gift, because in Japan it is customary to give expensive fruits for official events (weddings, business negotiations and hospital visits).

Square watermelon – for only $ 212.

$ 69 for a package of royal strawberries (12 pieces).

Or a watermelon denuke for $ 127 ???

By the way, in 2011, farmers from Hokkaido were very sad because the price of these watermelons fell: the most expensive of them was then sold for “only” $ 4,000. Only 100 of these watermelons are grown in Hokkaido every year.

Yubari melons (one for $ 160 or two for $ 265). These are the most expensive fruits on earth. Once such a melon was sold at an auction for $ 23,500.

What’s so special about them? First, they are grown in ideal greenhouses and covered with hats to keep them from drying out in the sun. Each plant produces only one fruit, and to get the sweetest fruits, farmers cut the fruits ahead of schedule.
The Sembikia family claims that it was she who started the tradition of giving expensive fruits.

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Market

Generational change at KWS

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At this year’s Annual Shareholders’ Meeting, seed specialist KWS will be initiating a generational change to be implemented in several steps. Continuity, family tradition and expertise are the focus of the future Supervisory and Executive Board line-ups.

Andreas J. Büchting (74), Chairman of the Supervisory Board of KWS SAAT SE & Co. KGaA and general partner KWS SE, will resign from his position as scheduled at the end of his period in office in December 2022. At the request of the KWS SE family shareholders Büchting and Oetker, the current spokesperson of the Executive Board, Hagen Duenbostel (51), will be recommended as his successor starting in 2025 at the Annual Shareholders’ Meeting on December 6, 2022, and will subsequently begin the customary two-year cooling-off period on this date. It is intended that the former spokesperson of the Executive Board, Philip von dem Bussche (71), will assume the office of Chairman of the Supervisory Board on an interim basis through the end of 2024.

Felix Büchting (47) will succeed Hagen Duenbostel as the Executive Board spokesperson. With these decisions, the two top management positions will be filled for the long term.

Overview of the intended changes in the Executive Board and areas of responsibility:

  • End of 2021: Léon Broers will leave the KWS Executive Board as scheduled. Felix Büchting will assume responsibility of Research and Breeding. Peter Hofmann will assume responsibility of Cereals, Vegetables, Oilseed Rape/Special Crops & Organic Seed.
  • January 2022: Nicolás Wielandt, currently Head of Corn Europe, will join the KWS Executive Board. He will take over responsibility for Corn Europe (Peter Hofmann) and Corn South America (Hagen Duenbostel).
  • Fiscal Year 2021/2022: Responsibility for Corporate Governance, Compliance and Risk Management will be allocated to CFO Eva Kienle.
  • January 2023: Felix Büchting will assume the position Spokesperson of the Executive Board and responsibility for Group Strategy from Hagen Duenbostel. Nicolás Wielandt will take charge of Corn North America and Corn China and will therefore be responsible for the entire Corn segment.

KWS is a seed specialist among the world’s leading seed companies and has been independently managed and sustainably developed by the founding families since 1856. With the appointment of Felix Büchting as a seventh-generation representative of the founding family, and Marie Th. Schnell, who in 2016 succeeded her father Arend Oetker as a member of the Supervisory Board, the Büchting and Oetker shareholder families have underpinned their personal dedication and commitment to the company.

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