A leading online grocer is getting into the vertical farming business.
Ocado, which sells groceries online and licenses its tech to supermarket chains, said Monday that it has invested £17 million ($21.5 million) in the nascent industry.
Vertical farming refers to produce that’s grown indoors, often in stacks that resemble a bookcase. It requires less space and water than traditional cultivation methods.
The UK company said it has formed a joint venture called Infinite Acres with vertical farming company 80 Acres Farms, and Priva Holdings, which sells industrial horticultural systems.
Ocado (OCDDY) has also taken a majority stake in Jones Food Company, which it describes as the largest operating vertical farm in Europe.
While Ocado touted the sustainability of vertical farming, it also said that consumers would benefit from the “extreme density” of indoor farming, which allows food to be grown next to supermarkets and fulfillment centers.
Just-in-time harvesting
“We foresee a day where customers’ vegetables are harvested hours before they are packed, meters from where they are shipped,” Ocado (OCDDY) said in a statement.
Critics of vertical farming say the technique uses too much energy and is more expensive than traditional farming.
The move marks another push by Ocado into the food tech business. It’s already well known for building warehouses where thousands of robots zoom around the premises to pack groceries.
“The fusion of technology, sustainability and innovation is relatively new, but is a growing trend in the industry,” said Mike Watkins, head of retailer and business insight at Nielsen UK.
The company is increasingly focused on licensing its robotic warehouse tech to other retailers, and already has deals with Kroger (KR) in the United States and Casino (CGUSY) in France.
It is also developing a robot called “SecondHands” that can pick and package produce without damaging it.
Ocado’s stock jumped 3% in London, pushing its gains so far this year to 45%. Yet the company faces tough competition from retail giants including Amazon (AMZN), which is also expanding in grocery deliveries.
