A few months ago, Amazon (AMZN) bought Whole Foods at a whopping $13.4 billion, with a promise to bring cheap, organic, nutritious, low carbon*, and pesticide-free food to the masses. Soon after the acquisition, Whole Foods cut prices by as much as 43%, bringing prices of organic food at or below non-organic food.
Currently, Amazon is well established in 13 countries. With this new acquisition, Amazon gained access to 460 Whole Foods stores scattered across the US, Britain, and Canada. A plan to extend further to be within 30 to 60 minutes away from as many people as possible is underway according to Mikey Vu, a partner at the consultancy Bain & Company who is focused on retail, as quoted by the New York Times.
What’s next for Amazon? Well, acquisition of vertical farm startups, drone delivery, and more. Let me explain.
It is no secret that Amazon got the logistics of warehouses and distribution down to a science, and I would argue that, after the Whole Foods acquisition, a natural next step for Amazon in order to have a complete ecosystem of organic food production, distribution, and sales would be to acquire local and/or international vertical farm startups, which are popping up all over the world at an ever-increasing rate.
Vertical farm startups like Plenty, AeroFarms, and Bowery recently received between $20 million to $200 million in investments from venture capitalists, including Jeff Bezos — more proof that vertical farming is on Bezos’ radar.
For those who are not familiar with vertical farming, here are some advantages:
- Consumes 95% less water that traditional farming methods, by some estimates
- Eliminates the need for pesticides
- Year-round crop production
- Eliminates agricultural runoff
- High yield/acre
- Reduces use of fossil fuels from farm machinery and transport of food
- No weather-related crop failures
- Creates new urban employment opportunities
- Reduces the risk of infection from agents transmitted at the agricultural interface
- Returns farmland to nature, helping to restore ecosystem functions and services
As to why Amazon would venture into vertical farming? First, as mentioned above, to close the cycle and have a complete ecosystem. Moreover, vertical farming is high tech and involves storage and logistics, which fits well with Amazon’s top-notch expertise in these domains.
Soon, you will be able to order a fresh salad, or any organic food, from your phone on Amazon, perhaps even automatically schedule delivery every day at a desired time and have it delivered by a drone or small robot directly to your door within 30 minutes. What an exciting time to be alive!
What are your thoughts on vertical farming and the future of food?
*Low carbon: Vertical farming is quite energy intensive. However, assuming that energy is coming from a renewable source, it will be low carbon.
Core reference: Vertical Farm