Last week, Village Farms completed a deal to form a new company to become a major player in the greenhouse-grown fresh produce industry.
This move privatizes its fresh produce operations and adds the financial backing of investment firms Kennedy Lewis and Sweat Equities under the name Vanguard Food.
While news broke of the company’s move to privatize and spin off fresh produce and focus on cannabis production in Canada, one thing Michael DeGiglio, CEO of Village Farms, wants to make clear is “Village Farms is not getting out of fresh produce; we’re going to try to make it much bigger and better.”
DeGiglio said Village Farms added cannabis production in Canada once the country legalized its sale to capitalize on the opportunity, but that this new entity is designed to meet the demand of the modern-day produce industry and the key figures in produce retail.
“You just have to be bigger and more diversified in order to fulfill the needs of the changing landscape with retailers,” he said.
Charlie Sweat, chairman of Vanguard and founder of Sweat Equities, said Vanguard Food has some ambitious goals for the immediate future.
“We will continue to look to add very-high-quality, good produce companies to the platform of Vanguard,” he said. “The goal is to try to get to $2 to $3 billion of top-line revenue through M&A over the next 36 months. We just think there’s an opportunity for consolidation and some roll-up plays, both in CEA and other produce companies, to create a larger operating-scale produce company.”
DeGiglio said Village Farms started down this path about three years ago when the company realized that to reach a multibillion-dollar diversified fresh produce business would take investment and acquisition. Which is where Kennedy Lewis and Sweat Equities come in.
“In order to really drive future innovations, including with technology and capabilities, and greater offerings for our customers, how can we get to that level?” DeGiglio said. “We saw that this kind of partnership could be a catalyst for future growth and expansion.”
And strong financial backing of Kennedy Lewis.
“We see ourselves growing two, three, four, five, six times in the next two years, going forward,” DeGiglio said. “M&A is a big part of that. Consider it chapter two. Village Farms will remain the center of controlled environmental growing.”
Sweat said Vanguard Foods will look to research and development to ensure the produce grown offers that high-quality eating experience and flavor profile consumers seek.
“We will look to deploy those more sustainable, better for the environment, approaches to food production, but ultimately, you have to be in a position to produce a good-tasting, high-quality product at a price point that works for consumers,” he said.
DeGiglio said Village Farms will be a division of Vanguard Food as the company expands its CEA capabilities. And those within the Village Farms produce operation will transition to Vanguard Food. And Village Farms’ Canadian assets will grow for Vanguard Food.
Sweat also said the future of Vanguard Food is about size and scale.
“What we really see is an opportunity to create operating scale versus a lot of small, fragmented players in the space, to allow the production methods to achieve economies of scale to bring the product to the consumers at a price point that hits the masses, not to a small niche consumer population,” he said.
