These strawberries were grown in a New Jersey warehouse — and they may revolutionize how Americans eat – CNBC

KEARNY, New Jersey — Inside of a warehouse in this factory town neighboring Newark, thousands of strawberries grow in rows beneath bright lights.

This is one of Bowery Farming’s research and development centers, and these berries are destined for a second life in the big city.

Starting Tuesday, customers will be able to buy the fruit less than a dozen miles away at a few gourmet grocers in New York City. They will star in dishes at some of the city’s top restaurants crafted by celebrity chefs.

Bowery will sell the strawberries for the first time as part of a limited release. But the berries, which taste the same during the peak of summer and depths of winter, are part of an ambitious effort to change how fruits and vegetables are grown and how Americans eat. Crops grown in vertical farms are typically stacked in rows from floor to ceiling in buildings near urban centers. That results in larger yields of fresher, higher-quality produce delivered to city grocery stores a few days after it is picked.

Vertical farming companies have used the tech-based approach to produce lettuce and herbs. Now, they are looking to strawberries and other crops to win a larger share of grocers’ shelves and consumers’ stomachs. At first, the berries will be pricier than the average supermarket offering. But indoor-farming companies hope to expand their output and use automation to harvest the berries, which could bring prices down.

One of Bowery’s competitors, Plenty, said Tuesday that it plans to build an indoor strawberry farm to serve customers and retailers in the Northeast with major berry grower Driscoll’s. Their rivals include venture-backed start-ups AeroFarms, PlantLab and BrightFarms.

Christine Zimmermann-Loessl, chair of the Association for Vertical Farming, said companies must prove they can grow a wide variety of fruits and vegetables to become a more meaningful part of the food supply.

“With salad, you cannot feed the world,” said Zimmermann, who runs the Munich, Germany-based nonprofit and advocacy group. “Nobody can eat that much salad.”

Bowery wants to make food more delicious, too.

“Imagine having a beautiful, fresh-tasting flavorful strawberry in February,” said Susan MacIsaac, Bowery’s senior vice president of agscience. “It really opens up a whole new way, a whole new world of eating. I think we all know we need to eat more fruits and vegetables, but often they’re less than palatable.”

Investors are pouring money into agriculture technology companies at a time when food’s price and availability are on the minds of more retailers and consumers.

Inflation has pushed up food prices by 7.9% over the past 12 months, according to the U.S. Bureau of Labor Statistics data reported this month. The pandemic left some grocery shelves bare and underscored the complexities of the supply chain. In recent weeks, Russia’s invasion of Ukraine has illustrated the risks of relying on other countries to produce energy or grow food.

“Look at the last two years, the number of disruptions that we are all having to deal with in our daily lives,” said Soren Bjorn, president of Driscoll’s of the Americas. “In the fresh produce industry, we are very, very dependent on the climate and the free movement of goods around the world. It turns out that some of those supply chains may have been a little bit more vulnerable than anybody thought, and it’s not that difficult to imagine that these things could get worse.”

With vertical farming, produce is grown without pesticides, with less water and in farms that are only a short drive from consumers. That means fewer hours on a truck, which decreases the fuel used and increases odds of consumers eating fresher food and throwing less away.

Advocates see vertical farming as a more sustainable way to expand food supply for growing global population, particularly as climate change transforms weather patterns.

The farms account for a tiny percentage of the produce that Americans buy and eat, according to the U.S. Department of Agriculture. That definition includes tomatoes and vegetables seen in grocery stores such as broccoli, lettuce, sweet corn and carrots, but does not include corn that is fed to animals or becomes a food ingredient in items such as tortilla chips.

The total value of vegetables grown and sold in 2019 was about $18.9 billion. Within that, the total value of vegetables grown under protection and sold — a category that includes greenhouses and areas grown under temporary covers — was roughly $702.5 million in 2019, the most recent agriculture census available. Vertical farming is just a portion of that, and the federal government doesn’t specifically track it.

Yet the young industry has already gotten buy-in from some of the biggest names in food. Walmart, the country’s largest grocer by revenue, recently invested in Plenty, and it carries some of Bowery’s leafy greens in its stores.

Bowery counts famous chefs Jose Andres, Tom Colicchio and David Barber among its investors.

On Singapore Airlines, passengers this spring in first and business classes departing Newark and New York City can find baby bok choy and arugula that accompany their meals from AeroFarms, which grows them about 5 miles from Newark Liberty International Airport. The airline began buying produce from AeroFarms in 2019.

A spokesperson for Singapore Airlines said the carrier plans to announce deals with other vertical farms later this year for flights from other major U.S. airports. The airline, which operates some of the world’s longest flights, is trying to find ways to reduce its carbon footprint, including sourcing local food. 

Bowery grows its strawberries in buildings that resemble a blend of a science lab and large indoor garden. Agriculture specialists dressed in lab coats, booties and hair nets check on their crops. Bright lights, intricate watering systems and whirring ventilation help create a stable growing environment that doesn’t change — even when sleet and snow fall or summer temperatures blaze outside.

Its New Jersey research and development farm is located in Kearny, about 11 miles west of New York City. It has another farm in Nottingham, Maryland, near Baltimore. It also has three new commercial farms underway in Atlanta, Dallas and Bethlehem, Pennsylvania.

The berries are more complex to grow than leafy greens. With lettuces, leaves can be grown and picked. Strawberries must go through more steps: developing leaves, flowering and turning into a fruit that is harvested. That takes more time — and the help of bees, which are used to pollinate flowers.

MacIsaac said Bowery narrowed the field of varietals to choose ones would thrive indoors and have a pleasing texture and taste.

It landed on two types: wild and garden berries, which will be sold side-by-side in a package that’s designed as an experience. Each pack includes a description of tasting notes similar to what a consumer might read at a wine tasting or a gourmet coffee shop.

Garden berries are classic, with a “balance of sweetness and tartness,” MacIsaac said. Wild berries are more distinct, with floral and tropical notes, she said.

They will be available at Eataly locations and Mercado Little Spain in New York City and featured in desserts at Colicchio’s Craft New York and Andres’ restaurants, Lena and Spanish Diner. The strawberries will appear at other retailers and restaurants later in the spring, the company said.

Each pack comes at a lofty price — $14.99 for 8 ounces.

Yet Bowery said it wants to scale its strawberry business, so they are sold not only to foodies — but also to shoppers at mainstream grocery stores. Its lettuces are carried by retailers such as Walmart, Amazon-owned Whole Foods and Albertsons.

The company said the pack is the first phase of its commercial rollout. “As we move on to our scale phase, our goal is to offer strawberries at a price and value that unlocks scale without compromising on flavor,” it said in a statement.

Last month, Bowery acquired Traptic. The company uses artificial intelligence and high-powered cameras to identify crops at peak ripeness and has robotic arms that can harvest even fragile fruits like tomatoes and strawberries.

Plenty’s first dedicated strawberry farm will be operating by the end of 2023, CEO Arama Kukutai said. The company, which is working with Driscoll’s, hopes to sell its berries at grocers in early 2024, he said. It has not shared the specific location.

The two companies kicked off a joint venture to develop and grow the berries in 2020. It will mark a geographic expansion for Plenty, which only has commercial farms in California. So far, Plenty and Driscoll’s have grown strawberries in an indoor plant science research facility in Laramie, Wyoming — but have not sold them.

Bjorn of Driscoll’s said the Northeast is one of the largest berry markets for the company, so it was a natural place to start. Yet he said the approach would work well in other major markets, such as Dubai, Abu Dhabi, Singapore and Hong Kong, where consumers have a big appetite for berries — but rely on pricey shipments from far away.

Strawberries are an ideal puzzle for the vertical farming industry to solve, he said. The delicate fruits thrive in few places, such as the coasts of California and Chile and the foothills of the French Alps. They rely on fluctuating temperatures, such as cool nights and warmer days, to get the right flavor and texture. If it’s too hot or humid, the fruit gets mushy and loses its taste.

“In the indoor environment, every day would be a perfect day,” he said. “So that is one of the opportunities.”

–CNBC’s Leslie Josephs contributed to this story.