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Daily news and analysis about the food tech revolution

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We Must Still Define Regenerative Agriculture

This guest post was written by Nate Crosser, J.D., is a food and agriculture technology investor.

Imagine a sandwich that actually made you – and the world – healthier by virtue of making it. This dream is held by hard-nosed ranchers, coastal vegans, corporate types, and hippy homesteaders alike. The term they often use to describe the dream is “regenerative agriculture.” Leo DiCaprio even has a venture capital fund that evokes the term. Surely we can’t all want the same thing for once, right?

Nobody knows because there isn’t a clear or agreed definition of what regenerative agriculture means, putting it at risk of being yet another term greenwashed into meaninglessness, like “humane” or “free-range”, 1984-style. Regenerative agriculture has been used to describe a plethora of agriculture practices: Cover-cropping, no-till biodynamic farming, organic permaculture, sustainable agroforestry, the three sisters, but, most frequently, livestock grazing. These forms of farming aim to restore the terribly depleted soil, which harbors microorganisms and fungi that naturally sequester carbon and nitrogen, fight pests, and reduce erosion and pollution. 

However, the term is capriciously and liberally used by marketers, and is mostly used as a synonym for traditional ranching. Though “conservation” or rotational grazing is surely better than modern conventional factory farming, is that really where the bar should be set?

Some forms of ranching can improve soil health compared to certain baselines; animal dung has undeniable fertilizing qualities (and isn’t made of fossil fuels like most fertilizers). But, regenerative farming should do more than heal the soil, it should heal both human and non-human communities (i.e., societies and habitats, respectively). Our conception of re-generativity should take a systems-level view, rather than focusing on a single measure, like soil carbon, which can be deceiving and incomplete measures. 

There are a few early efforts to create meaningful standards for regenerative practices, most notably the Regenerative Organic Certified® (ROC) certification for textiles, food, and personal care products that is backed by Patagonia. ROC goes a step further than most frameworks, with a focus not just on soil health but also the welfare of farmers, ranchers, workers, and animals. ROC is an important certification program, but is more of an “extra organic” stamp that doesn’t fully capture the possibility of regenerative agriculture; to heal the world through agriculture.

Regenerative agriculture should not just be an appeal to a pastoral food system, but instead should ask what agricultural practices help us move towards better systems, holistically? Can organic rotational ranching actually help us stop climate change and fertilizer runoff, boost soil biodiversity, reverse industry consolidation, reduce rising obesity rates, address environmental justice or land grabbing, and improve animal welfare? Can it do so better than processing feed crops directly into plant-based meat alternatives and re-wilding the excess cropland? Should regenerative even inherently mean organic and non-GMO? These are empirical questions that can be studied, but only if we engage in the requisite research and debate as an industry. 

What about novel practices that are not even tied to the land itself, such as urban indoor vertical farming, precision fermentation, or meat cell cultivation (which has recently been cleared for sale for the first time in the US by the FDA and USDA)? These sound highly technological but might actually serve the goals of regeneration, so let’s not immediately give into the naturalistic fallacy and instead look at the data – regenerative means restorative, not rustic. Just because wild grass-eating cows existed does not mean that grass-fed beef is categorically good. Neither does it mean that non-GMO crops are inherently good. Both grass-fed beef and white rice can be huge methane emitters linked to human health conditions. One peer-reviewed study found that cell-cultivated beef could have almost 90% lower GhG emissions than conventional. Whereas grass-fed beef may actually be the single worst food you could eat, from a climate change perspective, and yet many conflate it to regenerative agriculture, but not so with cell-cultivated meat. 

To create a meaningful “regenerative agriculture”, we need consensus, and regulations, not just one-off certifications from private companies. Luckily, the California Department of Food and Agriculture (CDFA) has recently kicked off the first state-led attempt to do so, which could have repercussions not only for the state’s $50 billion agriculture industry but also for the entire nation. As the country’s largest state, both in terms of agricultural production and population, California often bends the nation to its will. Take Prop 12, the California referendum that imposed very basic animal welfare improvements for poultry and pork within the state. The meat industry went all the way to the Supreme Court to overturn the law, claiming Prop 12 would send ripple effects through the national market. The law was ultimately upheld in a decision penned by Justice Gorsuch in May as a clear case of voter-consumer sovereignty. Maybe California will lead the way again here, as it is in the field of cellular agriculture. 

As we weather another bad wildfire and hurricane season, we are reminded of the urgency of tackling the numerous global ecological crises. We must urgently change agricultural practices, which currently use half of the world’s land, emit over a quarter of humanity’s greenhouse gasses, and account for 70% of global freshwater withdrawals. We cannot afford to lose this chance to transform the food system, to give into greenwashing or Luddite tendencies. Let’s join together as producers and consumers around a bold, progressive vision for regenerative agriculture.

Pizza Hut Sees Huge Runway for Growth in China, Plans to Add up to 1,500 Net New Stores by 2026 (Sponsored Post)

Pizza Hut is planning to rapidly expand its footprint across China in the coming three years as part of an ambitious growth strategy announced by Yum China Holdings Inc. (NYSE: YUMC; HKEX: 9987), at the company’s recent 2023 Investor Day in Xi’an, China.

Following its successful revitalization program, which strengthened the brand’s fundamentals and improved the payback period for new stores, Pizza Hut is poised for rapid growth. The brand is aiming to open 400-500 net new stores per year from 2024-2026, more than double its pace of the past three years, while continuing to maintain a healthy store payback of approximately 3 years.

Pizza Hut’s plans are part of the refreshed “RGM 2.0” strategy launched by Yum China, which also operates KFC, Taco Bell and other restaurant brands in the country. At its Investor Day, Yum China set an overall target to reach 20,000 total stores by 2026 and deliver double-digit CAGR for EPS in 2024-2026 while returning $3 billion to investors during the same period through quarterly dividends and share repurchases.

With a presence in China since 1990, Pizza Hut is a top player in China’s casual dining sector, operating 3,072 stores in over 650 cities. The brand dominates in all of its core categories: pizza, steak and pasta, with over 100 million pizzas and 20 million steaks sold over the last 12 months.

Pizza Hut General Manager Jeff Kuai commented, “As an absolute leader in the sector, our slice of the market is bigger than the next nine brands combined. Despite our leading position, there is still tremendous opportunity for us to gain an even larger share of the market.”

The brand’s strategy for footprint growth includes adding store density in existing cities while continuing to expand into new cities. China has vast untapped markets for Pizza Hut. There are more than 1,200 cities in China that have a KFC but do not yet have Pizza Hut, highlighting the opportunity to leverage Yum China’s infrastructure and resources to expand in many of those locations. Pizza Hut increases its penetration with flexible store models. Its satellite store model, which has a smaller dining area, focuses on off-premise occasions and requires lower capex. The store model has a 2-year payback, which is better than its traditional stores. The brand is also testing a fast-casual store model that aims to provide faster and lighter service while improving labor efficiency.

In addition to expanding its footprint, Pizza Hut has focused on improving its core menu offerings. In particular, the brand has been reinforcing its reputation as a “pizza expert” through product upgrades and new flavors. Its Super Supreme Pizzas and Durian Pizzas have been big hits with consumers. In the first half of 2023, pizza sales rose 56% compared to the same period in 2019.

As Pizza Hut continues to expand, it is aiming to capture more consumer segments through a wider range of food and beverage choices and providing more occasions to visit. The brand is preparing to launch a new line of made-to-order burgers. From September 2023, it also introduced premium Lavazza coffee at its restaurants. Pizza Hut has expanded individual meals, including its personal-size pizza, to cater to solo diners and office workers; as well as breakfast offerings to better serve customers while maximizing store utilization. In addition, the brand is broadening its previous focus on families to better cater to younger generations. Its partnership with Genshin Impact, for example, has attracted many young people and gamers.

Meanwhile, Pizza Hut remains focused on providing excellent value for money. Its popular “Scream Wednesdays”, “All You Can Eat”, and “Buy One Get One Free” value campaigns are huge draws for dine-in and delivery traffic. It is also broadening its price ranges to serve a wider range of customers on everyday needs.

Pizza Hut is also investing in building a best-in-class digital customer experience, an area that is critical to its future success, with approximately 92% of orders placed on digital channels. A key priority is improving its user interface and providing real-time order tracking for customers on its app. The brand is also boosting its member visit frequency through privilege programs and targeted offers based on members’ preferences.

Kuai says: “With continuing efforts to build on our core strengths and expand into new categories, improve value for money, drive delivery growth, and enhance our digital capabilities, we are confident that Pizza Hut will generate even stronger sales momentum and enhance our leading position in the market.”

This post is a sponsored post. See The Spoon’s advertising policy here.

Three Ways Self-Ordering Technology is Revolutionizing Top QSRs (Sponsored Post)

The labor shortage, a facet of the post-pandemic economy, hurt the restaurant industry across verticals as more businesses were forced to close their doors to account for the lack of employees. However, restaurants that embraced self-ordering technology fared better throughout the pandemic, as self-ordering technology positively impacted revenue, franchising, and restaurant design.

This is evidenced by top QSRs that meet consumers where they want to order– be it online, at a kiosk, or using a tableside QR code. Franchises are increasingly relying on technology to automate operations and drive business success in their restaurants. Incorporating technology, such as the Samsung kiosk powered by GRUBBRR, digital menu boards, and online ordering into your restaurant design can have numerous long-term benefits.

Bhavin Asher, founder and CTO of GRUBBRR, a leading self-ordering technologies company, explained, “the pandemic made it clear that the restaurants with automation are most poised to stay open because they meet consumers where they want to order. With demand for omnichannel dining increasing, the restaurants that integrate their physical and digital channels will perform best.”

Increase Earnings

Based on an analysis of several restaurant brands’ Q4 earnings reports, it is clear that automation is the key to long-term success. Chipotle’s Q4 earnings and 2021 results demonstrate this point. The results for the full year 2021 show that digital sales grew 24.7% to $3.4 billion and represented 45.6% of total sales.

In other words, about half of all orders at Chipotle were from order ahead digital transactions, and as such the brand has focused their efforts on growing this segment of the business. This showcases that the industry shift towards digitization directly results in increased sales and revenue. QSR’s like Chipotle are benefitting from new technologies and digitization, and this trend is not new within the restaurant industry.

Chipotle Chairman and Chief Executive Officer Brian Niccol credits the use of automation for his company’s success. “Moving forward, we believe expanding access and convenience through our digital ecosystem, accelerating unit growth, and continuing to develop and support our restaurant employees, will put us in a much stronger competitive position,” Niccol said.

Chipotle has also changed its business model to focus more on drive-thrus. It estimates that greater than 80% of new restaurants will have a “Chipotlane,” including their 3,000th restaurant in Phoenix, Arizona. Chipotlanes offer higher revenue margins than a traditional Chipotle make-line and dining room. Consumers spend on average 12%-20% more when they order with their eyes and with touch from a self-ordering device than when ordering from a cashier.

Strengthen Franchising

For franchisors looking to expand, technology presents a unique opportunity to entice franchisees and strengthen the brand image. One of the first and most obvious benefits of implementing technology, such as the Samsung kiosk powered by GRUBBRR, for franchisors is strengthening the restaurant brand. In a world that is becoming increasingly digital, consumers are likely to experience your brand through digital touchpoints before setting foot in a physical location. And, when they do experience your brand at a physical location, it is imperative that the experience is similar to that of your digital brand.

Consistency is key to developing the brand and building a customer base when establishing a restaurant. Your loyal customers trust your brand and expect a high level of consistency and customer experience no matter which location they visit. By introducing new Samsung kiosk technology at one franchise location, you’re implicitly promising that they can enjoy it at every location.

The Samsung kiosk powered by GRUBBRR allows restaurants to streamline efficiency, leading to a reduction in average transaction time. By rolling out this technology across locations, franchisees are set up for success, as self-ordering technology is proven to increase revenue, decrease operating costs (including labor spending), and improve the customer experience.

For instance, the average cost of a cashier at a quick service restaurant that is open 15 hours per day. With all  associated carrying costs, this position will cost more than $6,000 per month. On the other hand, the Samsung kiosk powered by GRUBBRR is a fraction of that price. In addition, kiosks always show up, don’t call in sick, and are ready to work 24/7.

Improve Restaurant Design

Like many chains, Shake Shack’s Q4 earnings success demonstrated an opening of the digital funnel. Shake Shack’s willingness to abandon its traditional business model and embrace technology, including multi-channel delivery, enhanced digital pre-ordering, and expanding fulfillment capabilities, enabled digital sales to grow at a rapid rate.

Shake Shack’s latest innovation, “Shack Track,” is a tech-forward restaurant that centers on pick-up shelves, windows, and curbside. “The need to enhance and alter the physical restaurant to meet the needs of digital is so important to Shake Shack that today, nearly all new restaurants we open have some aspect of Shack Track,” said CFO Katie Fogertey.

For Shake Shack, the results of embracing technology are astounding. In one example, Shake Shack units with self-ordering kiosks saw 75% of sales come through that channel as well as digital. “We have had to be and will continue to be strategic with our investments, but most importantly, we will continue to invest in digital initiatives to help welcome more guests into our omnichannel,” Fogertey said.

Restaurants that embraced self-ordering technology fared better throughout the pandemic, as self-ordering technology positively impacted revenue, franchising, and restaurant design.

“Technology, and specifically self-automated technology that meets the customers at the point of sale, has been a major boon for many restaurants since the start of the Covid-19 pandemic,” said Asher. “Now, we see the positive effects of technology reflected in new restaurant prototype designs, with many incorporating kiosks, online ordering, and tableside. That is why GRUBBRR partners with tech-forward companies like Samsung to help restaurants to create a customer experience design of the future.”

This post is sponsored by GRUBBRR. To learn more about Samsung’s self-ordering kiosks powered by GRUBBRR, click here.

Meat 2.0: An American Opportunity

Guest Authors: Yossi Quint and Blake Byrne

Over the past half century, the U.S. went from being by far the biggest meat producer in the world to trailing China as a distant second. Today, the protein industry is confronted with a seismic innovation–the rise of alternative protein–that could again radically alter the world’s protein landscape. The alternative protein industry is growing quickly and has the potential to be the protein of the future. In China, the Ministry of Agriculture and Rural Affairs recently included Cultivated meats and other alternative proteins like plant-based eggs as part of its 5-year blueprint for food security. Unfortunately, in the U.S., companies and government agencies are largely ignoring this revolutionary moment and are ceding an opportunity to lead the alternative protein industry to other countries. This strategy, or lack thereof, is antithetical to both our economic and security interests.

In 1961, the U.S. produced over 6x as much meat as China. Today, China produces almost 2x as much meat as the U.S. The gap between the two countries increases to 3x if you include seafood (170 million tons vs. 52 million tons). And the gap is only widening. A USDA report recently led with the headline “China Meat Supply Continues to Grow.” And the U.S. Bureau of Labor Statistics projects that 8% of all farmworker jobs (farm, ranch, and aquacultural animals) will be lost over the next decade. 

The U.S. wasn’t always a laggard in meat production and innovation. In 1878, cattle dealer Gustavus Swift commissioned the design of a refrigerated railroad car. This invention allowed for butchered meat to be shipped without going bad, enabling efficiencies in both the slaughtering and transport of meat. This technological innovation marked a watershed moment in the democratization of meat. For the first time, Americans across the country purchased cheaper and more diverse cuts of fresh beef. Meanwhile, Chicago became a rail hub for major meatpackers and the heart of a beef Empire in the West. The meatpackers’ quick ascent was supported by a regulatory environment that prioritized cheap and sanitary beef.  In the end, U.S. meatpackers leveraged their new position and government support, to become the world’s beef powerhouse. 

Today, we are at a similarly pivotal moment in the production of protein. The global introduction of alternative protein (plant-based meat, fermentation derived ingredients, and cultivated meat – meat grown from animal cells in a controlled environment) may well be a moment in the meat industry’s history of equal or greater importance than the introduction of refrigerated railroad cars. Alternative protein has experienced rapid growth over the past decade with major food and agriculture companies entering the space with billions of dollars in investments. Multiple tailwinds, such as consumers’ concern for sustainability, nutrition, and animal welfare, suggest that alternative protein will grow from less than 1% of total meat volume today, to 5%-10% of the global meat market over the next decade (see estimates from Barclays, BCG, Bloomberg).

Unlike traditional animal protein, alternative protein production does not require large grassy plains or low-cost soy to support the animals. Instead, the main need for the protein companies of tomorrow is large-scale manufacturing infrastructure, such as fermentation and bioreactor farms (massive brewery-like factories). The infrastructure required for the production of alternative protein can be built anywhere. 

Other countries have taken note. China is including these new types of protein in the roadmap for its future. Singapore, a country with minimal livestock production, became the first country in the world to approve the sale of cultivated meat, and is now considered an industry growth hub. Multiple startups now call Singapore home, owing to broad institutional support for the alternative protein industry by the government and state-backed investors. Qatar, another country with minimal historical livestock production, recently announced a deal with a U.S. company to commercialize cultivated-meat. One question now remains: will the U.S. capitalize on this new once-in-a-generation opportunity, or continue to lose jobs and market share to other countries?

Since the 19th century, the food system has become increasingly global. The shift from animal-based protein to alternative protein has the power to shift geographic centers of production and determine which corporations, new or old, command the trillion dollar fortunes attached to protein’s production. But the future is not predetermined. Where these major production centers develop and which companies will control the key infrastructure is still taking shape. Will the U.S. be a leader in this burgeoning space or go down the roads of solar energy and battery industries, which are now dominated by China. Alternative protein represents another critical inflection point for the U.S. to lead in a key industry of tomorrow. 

About the authors:Yossi Quint is the Founder & CEO of Ark Biotech, which develops cultivated meat production systems. Previously, Yossi was an Engagement Manager at McKinsey & Company where he specialized in alternative protein. Blake Byrne is a graduate student in biotechnology at the University of Cambridge. Previously, he served as the lead Science & Technology analyst for the Good Food Institute, an alternative protein think tank.

Calculating Lifetime Value to Disrupt the Kitchen Appliance Industry

Periodically the Spoon publishes guest posts from those in the industries we cover. This post is from Zvi Frank, the Co-CEO and founder of Copilot (www.copilot.cx). Frank describes Copilot as “the first automated customer experience management platform for consumer electronics.”

Lifetime Value (LTV) matters to every business, but in one-time transactional businesses like the kitchen appliance industry, calculating that value can be very difficult. Historically, brands have been reliant on warranty cards, service calls, third-party surveys and, more recently, social media to get a view on the likelihood that a one-time customer might become a repeat customer. All of this can be summed up in one word: reactive. But what if you could forge a more direct relationship with your existing customers and calculate an increased LTV?

The advent of Internet of Things (IoT) for Consumer Electronics and the wave of connected products hitting the market offer a ready-made solution for the historically one-time transaction business. The very nature of connected products puts kitchen appliances manufacturers in direct contact with their user base. By capturing data about your users, you have more insight than ever before. What’s more, you now have the ability to respond to user actions and behaviors in real-time, opening the door for an LTV approach to your revenue stream. This trend enables you to more effectively calculate the LTV for your smart kitchen appliances.

What is LTV for kitchen appliances?

In general, LTV is the net revenue expected from a customer over an expected lifetime. Note that customer profitability is a metric looking back (historic view) and LTV is a forward-looking model based on current available parameters. One of the basic adjustments required when applying LTV to kitchen appliances is the need to deal with net contribution of every device sold, which basically means product billed price less variable costs. These costs include the Bill of Material (BOM), retail margin and any other costs incurred per appliance sold.

Why do I need to measure LTV?

Well, if you are going to be investing in customer satisfaction, you will want to see the monetary return of longer customer lifetime as well as happier consumers. That’s obvious. However, beyond a benchmark to measure change over time and assess progress, LTV will also give you a good sense of what Customer Acquisition Cost (CAC) you can afford in your marketing plans and what kind of retention plans to employ since retention changes impact LTV directly.

How do I measure LTV?

LTV calculation should take many pieces of information into account to make it fully accurate, but for most companies, this exercise may prove too complicated and requires data that is not readily available. The formulas presented below are a simplified version of the complete model that essentially requires the net contribution of a device sold (price less variable costs) with all other parameters that can be automatically extracted from a customer experience platform or database of user information.

Note that consumer electronics companies all have an initial purchase but then vary in the ways they can see further revenue from a customer. The most basic LTV available to all products-–even those without any recurring replenishment, accessory sales or line of product sales–is Refer a Friend (RAF). At the very core, each of your users can and, if addressed properly, will refer a friend for a discount and some personal incentive. The formulas below start with this most basic scenario and add other revenue streams incrementally.

* Be aware that this kind of LTV modeling does serve the purpose of LTV calculation as presented above, but will not stand the sanity check of dividing overall revenue contribution by number of products sold.

LTV Formula

The simplest case for LTV calculates the contribution of customer referrals only. The second most frequent source of incremental LTV revenue comes from accessories and/or other lines of products sales. Products that also have consumables will obviously be able to add that to the mix, as well as any subscription service sold on top of the device, if one exists.

We start with the most basic formula for the most basic products and start adding from there:

LTV = Initial Purchase Contribution 

LTV = IPC 

With refer a friend program:

LTV = Initial Contribution + Recurring  contribution from Referees

LTV = IPC  + IPC * RAF(m) * LT  

Up Sell – For companies with a recurring revenue stream such as replenishment and/or accessory sales, basic LTV will be:

LTV = Initial Contribution + Recurring Profit 

LTV = IPC + RRC(m) * LT 

With refer a friend program:

LTV = Initial Contribution + Initial Contribution from Referees + Recurring Contribution + Recurring Contribution from Referees

LTV = IPC + LT * ( RRC(m) + RAF(m) * ( IPC + RRC(m) ))

Let’s have a look with some real-life numbers:

Retail price – $144.00

IPC – $71.00

LT – 12 months

RRC(m) – $2.00

RAF(m) – 1%

71+ 12*(2+0.01*(71+2)) = $156.32

LTV = $156.32

Legend:

IPC – Initial Purchase Contribution

RRC(m) – Recurring Revenue contribution, monthly

LT – Lifetime (months)

RAF(m) – Refer a Friend  Rate, how many users on average an active user brings in a month

To summarize, in a world of ever-diminishing margins, companies who are quick to adapt their business model and introduce Lifetime Value into their metrics and efforts will have a better chance of surviving the rapid transformation the Kitchen Appliances industry is going through. Accurately measuring LTV is a great place to start, but embracing tools and processes will enable you to act on and improve the LTV (and customer experience) are critical to the success of those products.

Your Turn:
Have you calculated the LTV for your customers?  What opportunities do you see for brands to increase LTV? Let us know in the comments.

How Cannabis Farmers Helped Create the Indoor Farming Industry

By Gabe Blanchet, Co-Founder, CEO of Grove

By now, most of us have heard about how pornography helped shape the development of the Internet. While the exact percentage of how much of the web’s early traffic was made up of porn is still debated to this day, what isn’t up for debate is the outsized influence the industry had on bolstering streaming and other underlying technologies for the Internet in the 90s and 2000s.

Indoor and vertical farming had a similar driving force in its early days, only instead of pornography helping to drive the technology development and innovation of this budding industry, much of the early technology developed for today’s modern indoor farming industry owes a debt of gratitude to the world’s indoor cannabis farmers.

But it wasn’t just pot. Another important driver of innovation in indoor farming was the focus from NASA and the promise/necessity of plant cultivation both in space and on other planets. This spurred a lot of the focus on aeroponic and water-efficient technologies (due to their low weight — optimal for transport). Although astronauts could likely benefit from a bit of recreational cannabis, most of the focus was on growing nutritious, edible and oxygen-producing crops with limited resources.

And although it often gets less coverage, another key element has always been the global greenhouse growing industry. Innovations from R&D in greenhouses of all different levels of sophistication have helped pave the way for indoor commercial farming in its current incarnations.

In short: cannabis, plants in space, and greenhouses → modern indoor farming.

Innovation Drivers

While today’s indoor farming owes a whole lot to the cannabis, NASA and greenhouse research, my focus in this piece is on the formative impact pot growers had on this industry.

There were a couple specific drivers that helped cannabis have an outsized influence on small-scale indoor/vertical farming:

Driver #1: Demand
Combine the illegality of growing cannabis and specifically the 1980’s Regan-era ‘war on drugs’ which drove cannabis growth indoors and out of the limelight (and sunlight, with that) with the MASSIVE, ~$54B annual US consumer demand for cannabis (medicinal and recreational), and you can understand why cannabis farmers felt forced indoors and off the radar. Outside of the driving force of secrecy, the other large benefit to indoor cultivation of cannabis remains consistency, quality and a year-round growing season.

Driver #2: Margin
Cannabis is by a long shot among THE most profitable crops to grow. Although it’s not a perfect comparison (due to cannabis-based on cultivated flower whereas harvested collard greens entail the whole vegetative plant), cannabis represents a price to consumers (avg. legally and illegally) of ~$100-250/ounce, compared to <$.50-1/ounce of collard greens. That’s anywhere from 100-500x more revenue per ounce sold.

Combine massive demand with the huge premium, and it’s no surprise the underground cannabis industry was a major economic driver for the young controlled environment agriculture industry.

Innovating In Secret

Many indoor growing technologies — from high pressure (HPS) sodium lighting to metal halide lighting to LED grow lighting to specially formulated nutrient blends to rootzone technologies like rockwool, hydroponics, + aeroponics, even beneficial mycorrhizal fungi inoculants — were developed, improved, and marketed for cannabis growers, driving innovation in hydroponics and aeroponics, mostly in secrecy.

When we started our company, Grove, in 2013 with a mission to empower people to grow their own fresh, delicious food in their homes, year-round, it didn’t take long for my cofounder Jamie and I to realize the how much we owed to the cannabis industry. We found we were using the awareness, technology, and techniques developed by and for large and small scale indoor cannabis growers in most of our physical and ecological prototyping. Although cannabis is just one of the plants we set out to empower people to grow successfully, we realized we were scouring blogs and forums dominated by anonymous cannabis growers. We learned a lot from them; while they often departed from any form of the rigorous scientific method, there was no doubt these cannabis-growing forum-dwellers tended to have practical and tried-and-true responses and insights.

A Process Of Optimization

This early focus on cannabis resulted in a few defining characteristics of modern indoor farming: 

Optimizing for One Crop Type: Cannabis is a flowering crop, which means it requires nutrient blends (fertilizers) formulated with higher levels of potassium and phosphorus and high-intensity warm-spectrum lighting formulated to trigger and maintain the flowering cycle.

Focus on inorganic methods: There (traditionally) has been less of a focus or keen eye on how ‘organic’ your cannabis is — or where it came from at all. I can attest to this — growing up, my friends were just thrilled to get their hands on some and didn’t ask too many questions.

That means the growing methodology and especially nutrient regimes developed have focused less on organic, sustainable inputs and instead on highest yield. Similar focus to conventional farming throughout the 20th century — yield, yield, yield.

Industry-wide association with ‘weed’: Most consumers in the US equate the term “hydroponics” and indoor growing in general with weed. This is good and bad.

The good: it gets people talking. It’s controversial. It’s interesting.

The bad (for those of us focused on cultivating fresh produce or other medicinals): the industry association with cannabis turns a lot of consumers off from seeing the benefits of the technology. This leads to a lot of quick quips instead of real consideration.

2,000+ brick and mortar indoor growing retailers: The popularization of indoor cannabis cultivation resulted in a boom in brick and mortar indoor growing/hydroponics retailers. There are estimated to be about 2,000 stores in the USA and Canada. Access to these supplies has been a big boost for the indoor growing/smart gardening industry. For example, that’s where Jamie bought his first lighting system for our MIT dorm room setup (which led to us founding Grove).

So Thank You, Cannabis Farmers

With the continued growth in commercial high-tech indoor farming and the introduction and popularization of personal indoor farming appliances (my own company, Grove, will introduce a couple next year), indoor farming will continue to touch more parts of our everyday lives. Everyone touched by indoor farming owes a lot to those maverick cannabis growers who developed the awareness, technology, and techniques that continue to drive the industry today. These developments have helped result in much more expansive opportunities for indoor, controlled environment farming such as the opportunity to reshape how fresh produce ( ~$60B annual spend just in the US) and, more generally, how food is grown on our planet.

So thank you, cannabis farmers.

Gabe is Co-Founder, CEO of Grove. Gabe believes that inspiring and educating people to have fun growing their food is a powerful way to promote healthy food choices for both individuals and the planet.