Sustainable Expansion Strategy for AeroFarms: A Case Study
AeroFarms faces the challenge of managing its vertical farm operations for sustainable long-term expansion and growth. Key issues include American protectionism, funding, carbon emissions, and consumer perception. The objectives are to transform agriculture responsibly and ensure long-term sustainability. The recommendation suggests a global approach starting with the United Kingdom. The analysis focuses on internal capabilities, industry overview, market outlook, and global trends in the sustainable farming sector.
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AeroFarms SucSee s ALTUM CONSULTANTS MEMORIAL UNIVERSITY
AGENDA 1. THE CHALLENGE KIM SHEPPARD 2. ANALYSIS CURTIS WHELAN 3. ALTERNATIVES & RECOMMENDATION KIM SHEPPARD 4. IMPLEMENTATION PLAN CHRISTINA FONG 5. FINANCIALS & RISKS EVAN FOOTE
Challenge How should AeroFarms manage its vertical farm operations for sustainable long-term expansion and growth
Key Issues American Protectionism Funding Carbon Emissions Consumer Perception
Objectives Transform agriculture in an environmentally responsible manner Expansion Long-term sustainability
Recommendation AeroFarms should take a long-term global approach to expanding its leading-edge proprietary vertical farming model, beginning with the United Kingdom
ANALYSIS CURTIS WHELAN
ANALYSIS FOCUS AREAS AeroFarms Internal Capabilities Industry Overview Market Outlook Global Trends
AeroFarms Sustainable Leading Edge Innovative
AeroFarms Sustainable Leading Edge Innovative Everything is Impossible Until It s Done.
Industry Overview Traditional Farming Large Land Footprint Slow Maturation Times Low Technology Subject to Drought & Uncertainty
Industry Overview Traditional Farming Large Land Footprint Slow Maturation Times Low Technology Subject to Drought & Uncertainty There Must Be a Better Way.
Industry Overview Vertical Farming 390 X 75 % 0 More Land Use Efficient Quicker Maturation Drought Uncertainty
Industry Overview Vertical Farming 390 X 75 % 0 More Land Use Efficient Quicker Maturation Drought Uncertainty Imagine the Possibilities. The Sky is the Limit.
Industry Overview - Competition AEROPONICS Google Alphabet X (2015) VertiCrop (2014) FarmedHere (2017)
Industry Overview - Competition AEROPONICS Google Alphabet X (2015) VertiCrop (2014) FarmedHere (2017) Before Their Time. The World is Changing.
Industry Overview - Competition Aeroponics AeroFarms Hydroponics Bowery Plenty Gotham Greens BrightFarms Aquaculture Lufa
Industry Overview - Competition Aeroponics AeroFarms Hydroponics Bowery Plenty Gotham Greens BrightFarms Aquaculture Lufa You re All Alone in Aeroponics. That Matters.
Market Overview Vertical Farming Market Value (MM $USD) 110 Asia-Pacific North America Europe Rest of World 355 215 340
Market Overview Vertical Farming Market Value (MM $USD) 110 Asia-Pacific North America Europe Rest of World 355 215 340 This is Today. Plan for Tomorrow.
Global Market Projections ($ US Billion) 14 12 Massive Growth Potential 10 8 6 4 2 0 2013 2016 2020 2023 2026
Global Trends 2019 1. 2. 3. Climate Change Food Security Water Scarcity
Global Trends 2019 1. 2. 3. Climate Change Food Security Water Scarcity Aeroponics Will Weather the Change.
ALTERNATIVES KIM SHEPPARD
Alternatives Continue growth in USA exclusively 1 2 Product development high calorie grains 3 Expand operations to the United Kingdom
Alternative 1: Continue growth in USA exclusively Pros Cons Familiar established market Explore new types of crops New American foreign investment laws Brand image No global expansion investment risk
Alternative 2: Product development High calorie grains Pros Cons Sustainable domestic food security Diversified produce revenue stream Lack of expertise R&D costs American market restrictions No expansion plan
Alternative 3: Expand to UK Pros Cons Shared environmental values Urban/population capacity Step towards global model Time to implement Political uncertainty Brexit
Decision Matrix Objectives Alt 1: USA only Alt 2: Product dev. Alt 3: UK expansion Transform agriculture - environmentally responsible Expansion Long-term sustainability
Recommendation AeroFarms should take a long-term global approach to expanding its leading-edge proprietary vertical farming model, beginning with the United Kingdom
IMPLEMENTATION PLAN CHRISTINA FONG
Its Not Just Plants. At the End of The Day Its About Nourishing Communities and How We Can Build Responsible Farms in Major Cities All Over the World. ~ Marc Oshima, Cofounder AeroFarms LLC
AeroFarms Action Plan Expand in US & UK and Increase Efficiency Strengthen Brand & Educate Consumers Talent Management Navigate Funding Challenges Tighten Data Security
Farm Facility Expansion Framework Renewable Power Capacity Existing Building Consumer Proximity Population Density
Addressing the Carbon Footprint Renewable Energy Expansion Demonstration through renewable energy expansion to target carbon neutrality Improve LED Efficiency Seek additional LED optimization contract AeroFarms Custom LED Lighting System. Industry-Leading Energy Efficiency.
Education Program: Improving Branding Shift the Focus from Organic is Best to Sustainable Matters. 1. Educate Consumers on High-Protein Content in Leafy Greens. 2. Educate Consumers on Aeroponic Technology and Carbon Footprint. No Pesticides. Less Water. More Sustainable.
See the Future 1. Full Transparency into Carbon Footprint. 2. Continuous Count of Gallons of Water Saved Over Traditional Farming Shared Online. 3. Aeroponic Technology and Nutrition Seminars Hosted at Major Agricultural Colleges. From Day One This Has Been About Having an Impact Around the World.
Talent Management for Scalability 1. Partner with Educational Institutions (Agricultural Students and Sustainability Programs). 2. Implement Train the Trainer Model for Knowledge Transfer to New Employees. 3. Hire Regional Directors in Key Global Regions.
Navigate Funding Challenges Action Dedicated Lobbyist in all key geographic locations. Locals understand local governments and culture. Goal Secure funding to assure competitive pricing.
Tighten Data Security Protect Patents and Trade Secrets Hire Contracted Security Specialist Start with Six-month Contract Experience with Leading Tech-Firm Aeroponics and Data Science-based Vertical Farming: The Future of Crop Cultivation.
Implementation Timeline Short-Term 2020 US Expansion to 3 Locations Using Expansion Framework Roll out Seed the Future Program Contract Data Security Specialist Mid-Term 2021-2023 UK Expansion Using Expansion Framework Monitor and Prove Carbon Footprint and Sustainability Recruit Regional Directors for Operating Regions Long-Term 2024-2026 Evaluate South America, Australia, and Asia for Potential Expansion Opportunities.
Anticipated Implementation Cost $98.7MM Expansion. Talent Management. Marketing. Seed the Future Program.
FINANCIALS & RISKS EVAN FOOTE
Assumptions Assumed 6 existing farms 20 employees per farming location Farms assumed to be relatively the same size similar revenue generation of ~8.3MM per location Power consumption assumed constant @3.5GWH per location
Cost overview Intention to utilize the $100 million USD funding for the long term expansion. Building cost range of $2-5 million USD Setup cost of each building approx. $1 million USD Employee costs to be paid for by funding for first year, through cashflow thereafter Anticipated costs of 20 employees: $1MM
Expected Implementation costs US expansion $15 million for buildings, $3MM for setup & people, ~$4MM for power Total $24.7MM UK $8MM for buildings, $2MM for setup & people, $2MM for power total $17.7MM
Implementation costs continued Expansion costs for other countries expected to be similar to that of the UK Marketing costs: $1MM paid for through funding Total costs by dec. 31st 2026: $98.7MM
Projected Revenue $200,000,000.00 $180,000,000.00 $160,000,000.00 $140,000,000.00 $120,000,000.00 $100,000,000.00 $80,000,000.00 $60,000,000.00 $40,000,000.00 $20,000,000.00 $- 2019 2020 2021 2022 2023 2024 2025 2026 2027 Current farm revenue New location revenue Total revenues
Risks & Mitigations Risk Level Mitigation Established model focused on realistic locations Operational losses new locations Medium Flexible, conservative timeframe Too big too fast Low Proven demand for current product offering Product diversity Low
What Success Looks Like Improve LED Technology Connect Exclusively to Renewables Environment Reducing Health Risk for Consumers Addressing Food Security Issues Sustainability US Expansion UK Establishment & Long-Term Global Expansion
