LONDON: Ocado Group Plc is investing in a pair of vertical-farming ventures as the UK maker of online retail technologies branches out following its mammoth deal with Marks & Spencer Group Plc.
The company said it bought a 58% stake in Jones Foods Co, Europe’s largest operating vertical farm, based in Scunthorpe, England.
Ocado will use its know-how in automation and distribution to make the herb grower more efficient and potentially integrate it with Ocado Zoom to deliver fresh products to customers within an hour.
The online retailer is also helping set up a company called Infinite Acres that will use artificial intelligence, climate control systems and other tools to design infrastructure for environmentally friendly vertical farms.
The joint venture includes US-based 80 Acres Urban Agriculture Inc. and Dutch firm Priva Holding BV.
“Vertical farming has always been on our wish-list for a lot of strategic reasons, but we were really busy doing other core things,” Stewart McGuire, Ocado Group’s head of corporate development, said in an interview.
The two investments combined total £17mil.
The shares gained as much as 2.6% in early trading in London.
Ocado has struck technology licensing deals with US grocer Kroger Co, France’s Casino Guichard-Perrachon SA and others in the last few years.
It’s also entering a joint venture with UK grocer M&S, which agreed to pay £750mil for a 50% stake in Ocado’s retail business in February.
The company has been evaluating new fields for growth, and vertical farming is its first step away from its main business.
“The sale of half of our retail business to M&S changed our ability to invest ourselves in spin-out opportunities and to accelerate what we wanted to do,” McGuire said.
Vertical farming is an emerging industry in which crops are grown in controlled indoor environments, reducing waste and the use of water and pesticides.
Jones Foods’s farm is partially powered using solar energy and it’s planning to use more renewable energy in the future. — Bloomberg