|Oishii thrives growing premium berries despite difficult times for vertical farms|
"I was confident that precisely the same thing would transpire. The technology was likely to stir much excitement because it is cutting-edge and sustainable. But then, it would not be easy to demonstrate that the business model is viable.
The vertical farming market in Japan ten years ago is being contrasted with the recent wave of farm closures, failures, and staff layoffs in the US and Europe by Hiroko Koga, CEO of US-based vertical farming business Oishii.
The current crisis was "fully foreseen," he continues.
"I already watched the entire cycle in Japan ten years ago. Japan likely had more vertical farms in the early 2000s than in the US now, with a few hundred spread out nationwide. Nearly all of them were closed. Although they found the technology fascinating, many soon understood that the unit economics were flawed.
This is why Oishii hasn't "spent a dime" on leafy greens in its five-year career. Instead, the business specializes in strawberries, and as of today, it has added the Koyo berry to its lineup.
The US-based vertical farming business Oishii has expanded the production of its indoor farm by introducing the Koyo berry kind of strawberry.
FreshDirect currently offers the new Koyo berry in a few American cities, and Oishii plans to expand to Los Angeles this year.
Hiroki Koga, co-founder and CEO of Oishii, claims that the business is "doing better than ever."
In 2021, Oishii collected $50 million from the Mirai Creation Fund and other sources.
Hiroki Koga, co-founder, and CEO of Oishii. Picture source: Oishii
solving the pollination conundrum
In vertical farming, strawberry cultivation is still relatively uncommon. Scaled production of them is unheard of.
Yet when Koga founded Oishii in 2017, the Japanese native chose fruit over leafy vegetables.
He adds that he was a consultant in that sector about ten years ago and claims that vertical farming was commercialized in Japan before anywhere else. "I had to learn the hard way by watching many Japanese companies struggle by starting with leafy greens," said the speaker.
Because we believed strawberries had a high value-added crop, a more vital cash flow, and a superior business model, we started with them. This one was one of the most challenging crops to raise steadily and with consistent quality.
Pollination, according to Koga, is the key and one of Oishii's key differentiators.
Whereas flowering crops like strawberries, tomatoes, and melons require pollination, leafy greens don't.
Nevertheless, the vertical farm's artificial illumination makes it challenging for bees to maneuver through the area. This, according to Koga, is one of the main reasons blooming crop vertical farms have yet to advance very far.
According to this statement, unit economics cannot be applied if manual pollination is used instead of bees.
Koga claims that Oishii has substantially engaged in R&D into the bee issue, albeit he needs to go into great detail about how the company has changed this. "We were determined to figure out how to perform flawless pollination indoors. When I refer to "perfect pollination," I don't just mean a pollination success rate of 30% or 60%; the unit economics require a pollination success rate of at least 90%.
The company combines AI, data, and image recognition to monitor its crops and ensure successful pollination. The technological component is essential. You will need technology to make this firm into a lucrative model, claims Koga.
Pollination, however, is just one of the factors at work.
"How to continue growing strawberries all year is another issue you can address [with technology]. If you can accomplish that, you're producing three times more cash flow than you would spend four months outside.
The difficulty of keeping strawberry plants alive for more than a year without pesticides and other inputs is also addressed by Oishii's technique.
All of these factors must work together for indoor strawberries to be consistently high-quality.
The main distinction between where we are now, and other firms who claim to have figured out how to cultivate strawberries is that, claims Koga. "Under an LED light, strawberries can be grown by anyone. The central question is whether they can do it on a large scale and profitably.
The berry Koyo. Picture courtesy of Jennelle Fong.
The following benchmark for agriculture
In 2018, Oishii unveiled the Omakase berry to the hype and Tesla parallels. The Omakase gave US consumers a unique strawberry experience based on the same berry cultivated in the Japanese Alps. The Omakase has a softer texture, making it likely the most soothing strawberry on the market in the US, according to Koga.
Initially available for an excellent $5 per strawberry, they are now sold for about $2.50.
Because of its slightly greater tartness and firmness, the Koyo berry will be more comfortable for US customers. He claims it feels more like an American fruit but much better.
FreshDirect, a delivery business, offers it for $15 for a tray of six berries in the Northeast.
Koga is the first to admit that Oishii berries are very expensive. He claims that his company's ultimate goal is not this.
We aim to make this more accessible and affordable so that you can buy our berries at practically any store for a much lower price, he says. "We're obviously at the early stages, starting with a premium product," he says.
According to him, showing consumers that these berries are superior products overall, not just more sustainably produced, is also crucial. That is the moment the paradigm shift genuinely occurs. And to accomplish so, we want to guarantee that our quality is consistently excellent and constant.
He claims Oishii is doing "better than ever" in growth. The corporation runs three vertical farms, two outside of Manhattan and one in Los Angeles. Berries are distributed through a few extra, mainly relatively high-end retailers as well as Whole Foods stores in certain cities.
He said strawberries were chosen as the company's first product because they had a high-value addition. "We've shown investors that our facilities generate a positive cash flow."
On Oishii's farm itself. Oishii CEA correction will only endure image credit for a while.
Positively, this time of adjustment won't persist indefinitely. The businesses who make it through "will have demonstrated to investors and the general public that they can actually deliver on at least some of the promises they've made," claims Koga.