Looking to 2025 and Beyond: Greenhouse Operations
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As 2024 comes to a close, the greenhouse sector of the controlled environment agriculture (CEA) industry is in the spotlight. Some call it a greenhouse renaissance; others call it overdue interest in the foundation of CEA. At its heart are greenhouse growers who have been steadily, persistently and successfully building sustainable businesses that garner the respect of their peers and delight an ever-expanding pool of consumers.
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For insights into the present and future of the greenhouse produce industry — and their companies — CEAg World reached out to two greenhouse growers who fit that description well: Viraj Puri, CEO and co-founder of Gotham Greens, and Paul Sellew, founder and CEO of Little Leaf Farms.
CEAg World: What is the most significant issue you see facing the greenhouse produce industry?
Viraj Puri: First, the greenhouse produce industry continues to scale and play a bigger role in the overall produce supply chain. That being said, despite the growth of the sector, it is also the case that greenhouse produce operators, both the incumbents and start-ups, are facing a more challenging financial environment that is straining operating margins as well as limiting new capital investment.
Greenhouse farming is a capital-intensive business model that requires extensive business planning and execution, a high degree of technical skill required to grow produce indoors, as well as strong marketing to be successful. Younger controlled environment CEA growers — both greenhouse and other indoor farming operators — with relatively less operating experience have seemed to be the most challenged in recent years. This is a challenging industry, especially in a competitive market. Gotham Greens, along with other industry leaders, have proven financial success with more than a decade of commercial operating experience demonstrating sustainable operating margins and market success.
Paul Sellew, Founder and CEO of Little Leaf Farms
Paul Sellew: The CEA industry makes up less than 6% of the packaged salad category but has been driving category growth with high-tech greenhouse-grown products making up the vast majority. One of the biggest challenges the industry faces is its need to grow and expand, and that requires ongoing capital investment to build out additional capacity. These greenhouses need to be staffed with skilled employees, which is also a challenge.
Although the industry has faced recent challenges around primarily failing vertical farms and its fair share of skepticism, our approach has worked as we have maintained a focus on unit economics, day-to-day execution, and great quality product since our startup. We also believe in the power of the CEA industry as a crucial part of transforming our food system.
At Little Leaf Farms, we employ a consumer-first approach to growing our leafy greens — prioritizing fresher, better-tasting greens and delivering them to grocery store shelves within 24 hours to get them to consumers faster. We’re also grateful to have a best-in-class team that’s committed to growing great lettuce and helping us continue to innovate.
We’ve continued to scale our business and in addition to our greenhouses in Devens, Massachusetts, we just recently opened our third greenhouse in McAdoo, Pennsylvania, and have broken ground on our fourth at that site. The growth has allowed us to expand our retail presence further throughout the Northeast, Southeast, and Midwest regions. It has led us to the position of the country’s #1 brand of packaged lettuce sustainably grown through CEA. Little Leaf Farms is profitable and we believe our efforts show proof that the model can work.
CEAg World: What is the most significant opportunity you see in controlled environment agriculture?
Viraj Puri: While indoor farming will never have the capacity to replace traditional farming, there’s a significant opportunity for indoor farming operations to take market share from field growers as a result of variables including shifting weather patterns, climate change, higher labor costs, distribution costs, as well as consumer demand for fresher, locally grown products.
We’re seeing more retailers make shelf space for indoor-grown products. Greenhouse-grown tomatoes, peppers and cucumbers have become the norm in the U.S. and we’re slowly seeing more greenhouse-grown greens thanks to the consistent flavor and quality they provide. More than 90% of leafy greens grown in the United States come from the open field in California and Arizona; many industry observers see a greater portion of this supply coming from greenhouses in the coming years.
Paul Sellew: The CEA lettuce movement stands in stark contrast to most lettuce on grocery store shelves today. Currently, around +90% of field-grown lettuce in the U.S. is grown on the West Coast, meaning it travels thousands of miles before reaching stores for consumers on the East Coast, sacrificing freshness and fuel in transport. At Little Leaf Farms, we employ practices such as utilizing the free power of the sun and captured rainwater, implementing biological controls that eliminate the need for chemical pesticides, herbicides, and fungicides, and growing our greens in a hands-free environment. All while achieving a cost of production that allows us to compete profitably in the market. We’ve also pioneered a peri-urban approach in CEA, which means that we’re building our greenhouses in the surrounding suburbs of major urban centers to minimize the amount our leafy greens must travel to reach the consumer.
By growing this way, we’re able to deliver fresher, uniquely long-lasting, delicious and sustainably grown leafy greens to consumers within 24 hours of harvesting, in turn raising consumers’ standards for lettuce. We also recognize that some consumers may not yet be aware of the higher-quality, long-lasting leafy green options available to them and we see that as an opportunity for further education on what sets us apart and the CEA industry.
CEAg World: How do you expect (or hope) to see the industry change in the next three to five years?
Viraj Puri: In the coming years, we expect that the greenhouse farming industry to continue to grow and become a bigger part of the produce supply chain. I think we will see more greenhouses (vs. other indoor farming technologies) since they are relatively more proven and financially sustainable models of growing. We also expect that both retailers and consumers will continue to support greenhouse-grown produce with their purchasing decisions due to the benefits.
Viraj Puri, CEO and Co-Founder of Gotham Greens
As part of that continued growth and leadership, Gotham Greens will continue to educate consumers about the benefits of indoor-grown produce in an effort to further grow our share of the overall produce market. Today, CEA only accounts for a small portion of total produce sales, but we see an opportunity to show consumers how indoor-grown produce meets them in ways that conventional and organic produce often does not.
Paul Sellew: I believe we will continue to see the benefits of CEA and more high-tech greenhouse operations popping up outside of major urban markets like we’re doing. The benefits will bring consumers better and fresher products and that’s becoming clearer. We also saw it happen with tomatoes about 30 years ago, and now we are starting to see it more with leafy greens. We’ve also seen more retailers begin to look for more options grown sustainably and through CEA, so we see more growth on the horizon for the entire industry.
CEAg World: Is there anything else you’d like to share about your business and its future for 2025 or beyond?
Viraj Puri: Gotham Greens has grown from a single rooftop greenhouse in 2011 to one of the largest producers of greenhouse-grown lettuce in North America with 13 greenhouse facilities in nine U.S. states totaling nearly 2 million square feet of greenhouse facilities. In early 2024, we announced the opening of our Texas greenhouse that allows us to better serve the South and Southwestern regions. We’re thrilled to have grown our footprint in a way that helps us bring more fresh, local and sustainably grown produce to consumers across the country. We look forward to furthering efforts in 2025 to reach our goal of delivering Gotham Greens’ fresh produce within a day’s drive from our greenhouses to 90% of consumers across the U.S.
Paul Sellew: We’ve grown as a company significantly since we started nearly a decade ago, becoming the fastest-growing packaged salad brand in the country. We’ve grown our lettuce portfolio and have introduced a line of salad kits, recently adding a third variety, our Sesame Ginger Salad Kit, to our lineup. We’ve had great success with the line thus far, with our Crispy Caesar Salad Kit now being the best-selling CEA salad kit in the Northeast, and look forward to further innovation in this category as we plan for additional varieties.
We’ve also opened and expanded a second campus in McAdoo, Pennsylvania, which is now the largest leafy greens CEA campus in North America and furthers our retail presence throughout the Northeast, Southeast and Midwest regions. As we continue to expand and seek potential new site opportunities in the Midwest and Southeast, we look forward to bringing our lettuce to even more consumers throughout the U.S. Last but certainly not least, anyone successful in this business is going to need to attract and retain great people. High-tech greenhouse production is relatively new in the U.S. and training the workforce is an essential ingredient.