Navigating a competitive market

“We realize that we grow leafy vegetables, but we want to improve our range by adding more fruits and vegetables. As a vertical farm we have a certain brand position and negotiating power in the supermarkets. We invite other farms to join us brand that don’t necessarily grow the same way we do, or co-brand with us when we promote their products in store,” explains Jesper Hansen, CCO of YesHealth Group.

As a panel participant at the Asia-Pacific Agri-Food Innovation Summit, Jesper and four other panelists shared their thoughts on navigating a competitive market as CEA growers. “With such an approach we can increase our SKUs (Store Keeping Units) and grow only about 50% of them on our farm. This approach makes it possible to market horticultural products profitably by using a business model in favor of smaller growers.”

Jesper Hansen

Fixed prices crucial
Since its inception, Common Farms has set fixed prices for its products, positioning the company as the quality product on the shelves and giving customers exactly what they want. Jessica Naomi Fong, Founder and CEO: “Once you start lowering prices, it’s impossible to get customers to pay the original price again. Given our D2C (Direct to Consumer), we meet specific consumer needs, which may be niche sounds, but there is a big market for us and that is why we focus on customer needs, especially in such a competitive environment.”

Dave Chen, CEO of Equilibrium Capital, concludes that CEA is on its way to changing human behavior, but growers should keep in mind that unlike technology, human behavior does not change quickly. “Sometimes we think we’re talking about a head of lettuce. Ultimately it’s about selecting human behavior and selected targeting, but consumers do that too.”

Jessica Naomi Fong

Segmentation in the vegetable department
Jesper agrees, saying that Asia in general is a cheap environment for vegetables and leafy greens. “While YesHealth Group could use its low-cost technology to compete on price, we are not concerned about lowering product prices. Instead, we are raising them.”

Why? The agtech wants to disrupt the way consumers think about the leafy greens segment as a commodity in the supermarket. Since leafy greens are sold based on price and weight, it is a ‘no profit’ for everyone involved in that transaction, including retailers. Compared to products such as cosmetics, for example, consumers will easily recognize the cheapest product compared to the best cosmetics in terms of pricing.

“We want the same to happen for fruits and vegetables, because they play an important role in our health. By expanding this market, we can provide products that are not only available to a select few. We are working on this for the next 50-100 years to change how we as a society think about food,” he concludes.

What are the pain points?
Jay Desan, co-founder of Boomgrow: “The pain points in Southeast Asia are import costs, spoiled products once they reach the customer and fluctuating prices. We can respond to this by entering into long-term contracts with fixed prices.” According to Jay, certified, pesticide-free and local products are the main motivations for consumers to choose the Boomgrow brand.

Covid drove Boomgrow to move into retail, but it’s not that easy, Jay said, as customers lack brand loyalty when it comes to fresh produce. “Unlike chocolate, for example, you don’t go to a supermarket and get brand
consistency and transparency of the product.”

For more information:
Henry Tonkin, Event organizer
Asia Pacific Agri-Food Innovation Summit
[email protected]
www.agrifoodinnovation.com