• Ocado has bought a majority stake in vertical farming firm Jones Food Company

• It has also entered into a JV to build new tech solutions for vertical farming

• Shares in Ocado rose 4.6%, making it the biggest riser on the FTSE 100 today

By CAMILLA CANOCCHI FOR THISISMONEY.CO.UK

PUBLISHED: 10 June 2019

Ocado has taken another step away from food delivery and towards technology as it unveiled plans to expand into food production with two major investments in vertical farming. 

The online grocer, which is focused on growing and diversifying its tech solutions arm, said it has splashed out £17million on a majority stake in Jones Food Company and a joint venture to build technology for vertical farming. 

Vertical farming is when food is grown at indoor facilities in multi-level vertical stacks. It allows growers to fit a lot of produce into a small space and make it available all-year round. 

This method has become more popular in recent years as it is often seen as an answer to provide local, fresh food to a growing urban population. 

It is also considered to be more sustainable, as it uses less water, less space and lower wastage than traditional agriculture methods.

Shares in Ocado were up 4.6 per cent to 1,165p towards the close, making it the biggest riser on the FTSE 100 today. 

Jones Food Company, which is based in Scunthorpe, is Europe's largest operating farm producing leafy salads and herbs like dill, chives and basil. 

The firm uses hydroponics, which means plants are grown in water or an inorganic fabricated substrate instead of soil as in traditional farming. 

Ocado has also entered into a three-way joint venture called Infinite Acres with US based 80 Acre Farms and Netherlands-based Priva Holdings. 

The collaboration is aimed at creating technology solutions for companies in the vertical farming industry. 

Ocado boss Tim Steiner said: 'We believe that our investments today in vertical farming will allow us to address fundamental consumer concerns on freshness and sustainability and build on new technologies that will revolutionise the way customers access fresh produce.

'Our hope ultimately is to co-locate vertical farms within or next to our Customer Fulfilment Centres (CFCs) and Ocado Zoom's microfulfilment centres so that we can offer the very freshest and most sustainable produce that could be delivered to a customer's kitchen within an hour of it being picked'.  

Less grocer, more tech: Ocado recently made a £4.75m investment in food robot firm Karakuri 

The deal is Ocado's first move into food production, but follows its £4.75million investment in food robot firm Karakuri last month.  

Jones Food Company boss James Lloyd-Jones said they were 'delighted' about the partnership with Ocado.  

'We are certain that the combination of their world-leading logistics and automation systems coupled with our advanced growing technology will transform the way customers experience fresh produce - delivered fresh to their door a matter of hours from ordering,' he added.

Why does Ocado think vertical farming is ripe for the plucking?

By This is Money business and markets reporter Emily Hardy  

Ocado Solutions: Ocado robots pack groceries in its warehouses

On a call with journalists on Monday, Ocado finance boss Duncan Tatton-Brown said that the move into vertical farming represented a chance for the delivery firm to ‘leverage its tech expertise’.

While staying close to the food and grocery sectors for now, it demonstrates how Ocado may put its warehouse robotics to use across a range of different industries in the future.

‘Our focus is delivering on Ocado Solutions, but this is an example of how we can use our know-how and put it to use across other areas. We think it works on many levels,’ Tatton-Brown said.

For shoppers, the finance boss said there were ‘many clear advantages’, including ‘fresher and tastier products all year round’.

‘We foresee a day when customers’ fresh produce is harvested just hours before they get it,’ he said.

He added that there were clear benefits for Ocado’s existing partners – which includes M&S, and Kroger in the US – as they may wish to try out this food production method and the Infinite Acres venture.

He also emphasised that this production method can be better for the environment, as it brings the crops closer to the end user therefore cutting down on shipping and flights. 

At Jones Food Company, 100 per cent of the water used is recycled and its LED lights are powered by renewable energy.