Food Tech

Why a major herb grower is switching to a 90% indoor setup

The shift to controlled environment ag is “all about profitability.”
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Soli Organics

· 4 min read

Growing food is a tough business, and growers, whether they are tilling fields or managing lighting schedules in a warehouse, can face difficult choices on how to conduct their business.

Virginia-based Soli Organic, which claims to have a ~35% share of the US herb market, is familiar with such choices: It announced a rebrand from Shenandoah Farmers to Soli Organic in 2021 and has been slowly retooling its operations to grow almost entirely indoors.

The revamp came more than a decade after the company began a slow-burning shift from the great outdoors to the great indoors as the costs of controlled environment agriculture fell. It aims to transition the “bulk of its business” over the next year and a half to its tech-enabled indoor setup, as part of a larger plan to move 90% of its production indoors, according to Matt Ryan, CEO of Soli Organic.

“Converting field-grown to indoors for us is all about profitability. It’s hard to make a dime right now in the outdoor field-grown herb business,” Ryan told Emerging Tech Brew. “It is an incredibly expensive proposition to buy herbs from the field or to grow herbs in the field, pack them, and so on and so forth. So going indoors is basically how we save that business, keep it profitable, and grow our margins.”

Ryan claimed that this approach has reduced costs to the point where it can grow its crops indoors for 30% less than the cost of growing the same crops outdoors, and told us it’s “on a pathway right now to grow at 50% less.” Soli declined to disclose its 2021 revenue figures, but according to a company release, the company generated revenue "in excess of $130 million in fiscal year 2020.” It raised a $125 million Series D last month.

While vertical farms typically favor soil-free methods like aquaponics, hydroponics, or aeroponics, Soli grows its plants in actual soil, which it treats with organic fertilizer created in-house. This soil blend is Soli’s bedrock, but it also relies on tech like wind-imitating automated fans, a recycled water system, and, of course, a whole lot of energy-efficient LEDs.

Shifting earth

The groundwork for the transition was laid 12 years ago by Soli Organic’s leadership, which together decided to steadily shift the company indoors, Ryan said.

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“They gradually stepped their way into it. It wasn’t a Big Bang. Each piece of the growing process, they gradually realized, ‘Oh, if we do this, we can do this,’” Ryan said. “It was a learning curve over time, crop by crop, stage of plant development by stage of plant development. Started with our living organic-herb business, growing those potted things indoors.”

Ryan said that moving more of its operations indoors won’t change prices for Soli’s products, but it enables the company to extend its reach into new markets, lower input costs—it no longer has to buy fertilizer and can recycle use of its proprietary soil, he said—and build new facilities. Soli currently grows leafy greens and herbs in seven locations around the US and has plans to expand to 11 in the next 15 to 18 months, Ryan said.

While the goal is for 90% of Soli’s business to head indoors, the business as a whole won’t ever be entirely indoors, Ryan said. There are select herbs and vegetables like rosemary, bay leaves, and lemongrass that he said are better-suited to the outdoors, either because of the difficulty of growing them indoors or because the quality would be better.

“We’re literally at the tipping point right now, where we go from being a mostly outdoor [company] to a mostly indoor company across the next year to two years. The company has been waiting for this moment,” Ryan said. “The trick is, we’re still and we will always be in the outdoor business. So that’s not going away. It’s just that the balance is tipping.”

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