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Ex-Starbucks Executive Aims to Build the Starbucks of Vertical Farming

Soli Organic

(Bloomberg) —

Matt Ryan is making a big bet on dirt.

The veteran marketer has worked on two of the world’s biggest brands in Disney and Starbucks. And now the 60-year-old is applying what he learned to vertical farming as chief executive officer of Soli Organic Inc.

Ryan said the company, which he joined last year following a stint as chief marketing officer of Starbucks, differentiates itself from competitors by growing crops in dirt instead of water. That helps it harvest tastier lettuce with better yields, he said.

The ultimate goal of the company, which generates about $140 million in annual sales, is to reduce costs through scale and automation to sell organic vegetables at prices that match conventional field crops. It’s a similar strategy to how Starbucks brought premium coffee to the masses.

That potential has excited investors, with Soli raising $125 million in October to keep expanding in the US, including opening its first farms in the Northeast and Midwest. Its total funding is now more than $400 million. Bloomberg recently spoke with Ryan about price parity, fundraising and brand building.

When you arrived in June 2021, the company was called Shenandoah Growers. Why change it to Soli Organic?

We wanted to have a new name to signify the superior quality. We also wanted a name that built “organic” into the brand, didn’t sound regional and was easy to remember — two syllables.

And not that anyone knows this, it means “soil” in Latin.

Soli’s packaging uses terms such as “best flavor” and “organic for everyone.” What’s the big idea for marketing?

Starbucks used to spend very little money on marketing because people experienced Starbucks every single morning. It didn’t matter what you said in marketing. If you’re buying a product like a car, you’re in the market every ten years, and you need to understand what’s going on. Car companies spend a lot of time explaining. We don’t have that problem in produce.

We are emphasizing branding, not marketing. We look at packaging and in-store signage being the most important things you can do — and then amplifying word of mouth.

In your opinion, what are the benefits of growing indoors with dirt versus in water (hydroponic)?

We grow in soil, which is a better yield than hydroponic. It’s faster plant growth and a more efficient use of the inputs that go in — fertilizer and energy.

Hydroponics don’t encourage plants to grow in the best possible way, which is to put energy into leaves and fruits. They’re putting all their energy into root balls.

A major hurdle for indoor farming is that it’s usually more expensive. Given that, what’s the bull case for agriculture heading indoors?

You can actually grow cheaper indoors. Not everyone can yet, but that’s where the industry is going over time. People will figure it out.

One big advantage you do have on costs is labor. What’s the difference?

Farms use about 100 hours to produce the same amount of crops that Soli can generate with 10 hours.

Indoor farming with dirt has been criticized for leading to contamination, plant diseases and attracting pests. You also have to spend money to clean the soil, right?

That’s a misconception people sometimes get about growing in soil indoors, probably because growing in soil sometimes looks messy, but it’s not true. We actually see fewer problems with plant pathogens, plant disease, etc. due to the indoor, controlled environment and use of soil. For the same reason, plant pests aren’t a problem for us.

What are your plans for raising money?

We are right now not contemplating a further raise because we have enough to move forward. At some point — but not right now because it would be foolhardy — we could IPO. It won’t happen in the next 18 months. [Editor’s note: the company declined to provide its valuation.]

These indoor farming facilities will be a new asset class that people can invest in just like you can invest in data centers right now. As soon as it’s a safe bet, it becomes the kind of business that people will invest in as an infrastructure play.

When it becomes known and possible, it becomes a safe bet.

Editor’s note: This interview has been edited and condensed.

To contact the author of this story:
Leslie Patton in Chicago at lpatton5@bloomberg.net

© 2023 Bloomberg L.P.

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