The Great Outdoors Gives way to the Great Indoors

Target, Whole Foods, Walmart, Whole Foods and Target assume that the greens you buy come from sprawling farms spread across the great outdoors. However, they only reach the indoors once they reach trucks, trains, or shelves.

However, large quantities of greens are also being grown indoors.

As indoor gardening becomes more popular, CEA (controlled environmental agriculture) is becoming more popular. The latest deal could be a sign that indoor agriculture has a bright future, as it uses climate control to combat climate change.

Local Bounti, a local indoor farming company using proprietary technology, recently agreed to buy Hollandia Produce Group, an indoor agricultural business that also operates under the name Pete’s for $122.5million. It is a significant deal for many reasons. It combines tradition with tech, distribution with research and development. It will create one of America’s largest CEA companies and a new face for high-tech, high-yield farming.

According to the company, the transaction will allow Local Bounti access to Pete’s existing retail customer list of more than 10,000 locations nationwide. This includes retail giants such as Walmart and Whole Foods, Kroger, Kroger, AmazonFresh or Target, among others.

Petes will tap Local Bountis tech which could lower costs and increase yield, as well as boost efficiency.

It’s also a good example of how science is at forefront of farming, funding, and transactions, potentially increasing margins, and possibly removing any weather-related questions.

Craig Hurlbert, Local Bounti’s Co-CEO, shared some insights about what Local Bounti aims to accomplish in a recent interview. He was previously with General Electric. He said that the company plans on installing its stack-and-flow technology, which is a combination of vertical farming and hydroponic greenhouse agriculture, in all Petes facilities. Local Bounti will be able to position itself as a fresh, fast and financially profitable company with strong margins by applying these business practices.

Vertical agriculture yields high yields, but also requires high capital expenditures and high operating costs. Local Bounti blends greenhouse and vertical, essentially combining both the best and worst of both worlds. This allows them to lower high costs, maximize profits, and maximize yields. CEA could become a larger force in agriculture if there are many factors at play.

Farmers have depended on the weather for centuries. The company claims that Local Bountis CEA operates 365-days a year, uses 90% less water and 90% less land than traditional outdoor farming methods. This is the type of thing that investors might be interested in, at least in theory. However, it remains to be seen if this tech will win and transform the agricultural industry.

Although it can be difficult to scale technology geographically, Hurlbert said that the deal will bring Local Bountis system to Petes coast-tocoast footprint in 35 states and Canada. They will roll out their technology at three Pete’s facilities located in California, Georgia.

These numbers are promising for this marriage which could further boost margins. Petes reported $22.7million in 2021 revenue with gross margins of 45% for five years. Local Bounti anticipates a 10 percent reduction in the cost of goods because of the supply chain-related benefits that come with higher purchasing scale. The combined company will have 250 employees, 130 of which will be from Petes.

Hurlbert stated that Local Bounti aims to be an employer choice while maintaining high standards of environmental, governance, and social governance (ESG). Hurlbert stated that his company offers full benefits to all employees, at the same level of executives, which allows them the ability to hire workers and overcome the hiring hurdle.

Hurlbert stated that Pete’s has established a national distribution foundation, which allows us to bring fresh, healthy, and local produce across America.

This could lead to more indoor agriculture sites being created and more change, almost literally. CEA can grow almost anywhere, as technology is a determining factor for what happens next.

It’s the Great Outdoors and the Great Indoors merged.

Hurlbert stated in my recent interview that there is no turning back.