LONDON (Reuters) - Britain's Ocado is plowing 17 million pounds ($22 million) into the emerging "vertical farming" industry, further diversifying the online grocer and technology group's business.
Vertical farming involves producing food indoors, with crops grown on a series of stacked levels in a controlled environment.
"We foresee a day where customers’ vegetables are harvested hours before they are packed, meters from where they are shipped," Ocado said in a statement on Monday.
Ocado said it has formed a joint venture called Infinite Acres with vertical farming participants 80 Acres Farms and Priva Holding, with each holding a third of the equity.
Priva is a Netherlands-based industrial systems provider to the horticultural industry, with a wide range of products and solutions for climate control and process automation.
U.S.-based 80 Acres provides plant science knowledge and operations management, while Ocado will contribute its software and hardware systems, including robotics, automation and AI.
Ocado said it has also acquired a 58% stake in Jones Food Company (JFC), Europe’s largest operating vertical farm, which is based in Scunthorpe, northern England.
JFC’s plant produces leafy greens and herbs for British customers with its capacity expected to grow to 420 tonnes a year.
Ocado, which said its equity investments in the joint venture and JFC will total 17 million pounds, added that the density of vertical farms allows them to be placed much closer to customers, potentially co-located next to its partners' distribution centers, supermarkets and near population centers.
Ocado has only a 1 percent share of Britain's grocery market. However its 7.9 billion pound stock market valuation has been driven by its technology.
This provides international retailers with the infrastructure and software to develop their own online grocery businesses to compete with the likes of Amazon.
Ocado shares were up 3% at 0809 GMT.
($1 = 0.7871 pounds)
(Reporting by James Davey; editing by Kate Holton and Alexander Smith)
