Why Edible Garden’s Revenue Growth Is All About Efficiency and Relationships
March 22, 2024 
Jim Kras of Edible Garden Inc.
Jim Kras of Edible Garden
CEAg World spoke with Jim Kras, CEO of Edible Garden Ag Incorporated, (Nasdaq: EDBL) a leader in controlled environment agriculture, locally grown, organic and sustainable produce, including lettuces and herbs, and processed products like gourmet sauces and vitamin protein powders.
Edible Garden operates its own state-of-the-art greenhouse and processing facilities in Belvidere, NJ, and Grand Rapids, MI, in addition to working with a network of contract growers throughout the U.S. Edible Garden’s produce and products are offered at more than 4,000 retail stores, according to their website.
In this interview, Kras describes how its customized greenhouse analytics software, diversified portfolios, and dedicated staff propelled the company’s launch in March 2020, in the midst of COVID, to 19.4% YOY revenue growth for the third quarter of 2023.
You launched Edible Garden in March of 2020, right in the middle of COVID-19 shutdowns. How did your company manage to get through that?
Jim Kras: We managed our way through it because we had great people that were committed to our vision. We had strong retailers that had a consumer demand for our products at their retail locations. The circumstances put a lot of pressure on us to excel. Our Belvidere, New Jersey greenhouse was close to major distribution centers, so we were able to have a nice tight supply chain, and we were in controlled environments allowing us to manage production very closely; that is why we were able to succeed. I give all the credit to the people who are working in the greenhouses and on the pack lines that allowed us to deliver during a difficult time. We had some interruptions, we were able to work through them but I don’t want to have to do it again, that’s for sure.
It sounds like you’ve got buy-in from your employees. Is there anything that Edible Garden does specifically to help inspire that commitment?
Jim Kras: We are focused on creating a nice workplace, providing a livable wage, and hiring locally. We offer some substantial benefits like health coverage for the employees that is paid completely by the company. It’s an expense for us, but one less thing that people have to worry about. I think we do a good job of supporting our employees and providing them with training and proper support so they can go in every day, focus on their job, and succeed. We believe that we do a good job in looking to develop our employees for the long term.
What checks and balances do you have with your employees that help them to keep production consistent and dependable?
Jim Kras: We have a thorough inspection and quality assurance process that we’ve established. As the business continues to grow, we’ve had to continue to make sure that the checks and balances are still appropriate to make sure that the quality of our products meets specifications. For us, our patented GreenThumb software has allowed us to do that. Our employees have tablets that allow them to either accept or reject product as it comes through the various stages of the growing process. It’s really taking this manufacturing and quality control approach to everything that we do and marrying it with the great relationships with our distribution partners and a strong distribution platform that has allowed us to execute as successfully as we have. We also have established appropriate standards of practice (SOPs) to make sure that people understand the expectations for the products and plants.
Can you tell me a little bit about the process of coming up with the GreenThumb patented analytics software?
Jim Kras: The process started when I saw that the greenhouse business was kind of stuck in the Stone Age. It was still very much crop-based and I realized that there were a lot of competitors coming into the industry that were focusing on “what could be” versus “what is, what you know, or what’s happening now.” I felt like there was a real opportunity to grab market share and believed we could execute on the one greenhouse that we had in Belvidere, New Jersey. Initially, the operation was very manual, and I realized there was no way in which we were going to be able to ship the kind of units that we ship now out of the greenhouse if we didn’t introduce automation and a better process for monitoring production.
There were other environmental controls for greenhouses, which was fine, but for us, it was more about manufacturing excellence as well as the ability to be somewhat agnostic as it related to what was feeding into the distribution platform. The first thing we needed to get was an enterprise resource planning (ERP) system, which is what we did. It then became apparent that we were going to need to customize our own, proprietary software and marry it with that ERP system so it could provide the specific information that Edible Garden needed to maximize our operations. I was a big driver of the push to get this proprietary software because I believe in the technology. We were able to bring in Scott Prendergrast, Chief Data Officer, who came in and helped us with the development of the software package. He was an aerospace engineer who had worked in aviation and on nuclear power plants – things that really didn’t have much to do with greenhouses. When we spoke, he understood flow and drag in relation to a nuclear power plant and its relationship with water, as well as what it took to get a plane up in the air and what drag meant. We had a conversation about the flow of products going into our retail partners and the drag in our industry, namely the waste, and how we could address these issues with customized software. I just conceptually understood that if we can run an operation that would help us minimize the losses, then we’re going to be running a lot more efficiently. And if we can own that software, then we should be positioned for some unique results. And frankly, it’s been a few years, but it’s been happening, which is pretty cool.
What do you think is the biggest concern in the industry right now?
Jim Kras: Scaling is really the biggest concern on both the greenhouse side and for vertical growers. I know that the vertical growers are suffering from the scale issue as money is drying up and the power needs are huge. There is a need to capitalize on volume and run efficiently in order to scale this business.
I appreciate everything that’s done on the vertical side, but it may still be years away for them. The greenhouses, or the more traditional controlled environment growers, are already in place and ready to go. Now the question is, how do you fully optimize your facility and make sure that every square foot that you have in the greenhouse is not only accounted for, but you’re maximizing what you can do from a dollar perspective, understanding that people aren’t going to spend $8 for a head of lettuce. You still have to work within the confines of the pricing dynamic that you have coming in from the West Coast, while maintaining an eye on profitability.
I think the traditional greenhouse businesses have a better chance to scale their business because they’ve already been executing, however the question is: Can they do it profitably? Are they employing the right technology in these greenhouses for their growers to succeed? You’re going to have the growers who are focused on yield, but you may never get a return on that. Then you have people like me who are more of a marketer who are looking to go to market based on price, driving volume, and most importantly, execution. I think that right now the real opportunities are in traditional greenhouses and focusing on execution, supply chain efficiency, quality of goods, and reducing waste for the retailer.
How is your company building new retailer and distribution relationships so successfully?
Jim Kras: I think where we’ve succeeded, where many in this space have not, and I’m talking specifically about the controlled environment agriculture space, is that we make sure that we’re providing the value and products customers want. A big piece of that is also execution, being able to ship on time and complete orders in full. I think that’s why we have the relationships we have with Meijer and Walmart and some of the other big box retailers across the country that expect volume and dependability. Their model is built on having availability of product and we have been able to grow a lot of plants, or produce a lot of product, making sure it’s on spec, at the right price, and as promised. That’s where I think we’ve really excelled as a company, focusing on both sustainability as well as technology. I think we’ve done a pretty good job as a company to build strong, lasting relationships with retailers by basically delivering on what we promise.
From your analytics, what kind of information do you pull to communicate with customers?
Jim Kras: We’ve positioned the company to be Zero-Waste Inspired®, which is our tagline, providing the marching orders for the whole company. Innovations like our patented self-watering displays, allow us to extend the shelf-life of the plant and when you sell a better, higher quality plant, less gets thrown out by the retailer or consumer. We’ve been able to reduce our cardboard usage by using compostable materials in some of our pots. We’ve continued to optimize the whole supply chain to sort of manifest itself into our Zero-Waste Inspired® mission. In addition, we include this information on all of our communications.
It looks like you’ve diversified your portfolio and are producing products like the Pulp gourmet sauces. Was this a part of your origins of the company when you started in 2020? Or is this a recent strategy to increase profitability?
Jim Kras: Diversifying our product line serves a few purposes. First and foremost, if you’re not diversified, you run the risk of having one single point of failure, right? When you’re in a perishable business, I don’t think it’s great to just be in herbs, you should be in other products as well. My background is brand marketing and I saw the opportunity to take what we were doing with sustainability, and that there was a good marriage with this line of sustainable sauces and chili-based products. We acquired the business from a chef who had the recipes but didn’t have the ability to scale the business. What we really liked was not only was it a great product, but it was the right fit for us. It allowed us to take advantage of some true white space in produce and be able to market these to the buyers that we were already working with. We have them take it into their produce set as a value add. The additional benefit is that it ships in the same trucks that are already going to retailers that are refrigerated and going into the produce department. For us, it’s just a nice add-on with a strong margin and more shelf stability, a good strategic fit for us, and I’m glad we did it.
Are you open to new greenhouse growers joining your company?
Jim Kras: Yes, absolutely. That’s the heart and soul of the company. We’ve got a strong growing staff. We’ve got a senior grower, who came out of floral, who was the driving force behind quality as well as the USDA organic certifications. We work closely with universities, such as Auburn University, University of Michigan, Rutgers University, and other leading universities that allow us to hopefully be out in front of what’s next. We try to hire the next generation of growers that’s bringing in technology and understands the vision of sustainability. In addition, we are always looking to add contract growers to supplement the products that we grow on our own where a contract grower might have a special expertise to grow a particular product as we continue to add some top-notch growers.