Note from Infarm’s founders: Strategy Shift and Profitability at Infarm
Please find below the email sent to all Infarm employees on November 28, 2022 from Erez Galonska, co-founder and CEO, Osnat Michaeli, co-founder and Chief Brand Officer, and Guy Galonska, co-founder and CTO at Infarm.
This document has been updated, see updated information at the end.
over the past weeks we have worked to determine the path forward for Infarm through the challenging business environment that we are currently facing. In the Global Business Update earlier today, I announced the difficult decisions that we need to take.
In our current setup, we recognise that Infarm cannot withstand the challenging market conditions, particularly with regards to escalating energy prices and tough financial markets. We have to adapt our ambitious growth targets and increase our efficiencies to make our business profitable, and continue the pursuit of our long-term mission.
As a result, Infarm is making a significant strategy shift and accelerating its drive towards profitability. We are focusing on Growing Centres where we have a clear path to profitability in 2023 and consolidating those where this cannot be achieved in the near term.
The tough reality is that this shift and the reduction of our production sites will have a significant impact on people. Exact numbers are still to be determined, but current proposals mean that over half the workforce (around 500 employees) will leave the company.
For colleagues whose roles are potentially impacted by the change, you’ll be invited to a conversation with your manager today. For colleagues who will remain at Infarm, your manager or department leader will invite you to a meeting to provide more context and answer any questions you may have.
All those leaving Infarm will be compensated for their notice period and receive a severance payment. Any colleague placed on notice will be supported by their manager and HR representative throughout the transition.
We will communicate with colleagues as quickly as possible while recognizing that we are a distributed team across many countries and locations.
We are proud of what we have built together as a team and of the exceptionally talented people who joined our mission - saying goodbye to so many of you is extremely painful. We want to thank you for your unique contribution over the months and years.
Reasons for the changes
Recently, some critical market factors have worsened, these directly affect our industry and our operations. Energy prices have escalated (doubled across Europe), which puts a lot of additional pressure on our business and seriously impacts our cost of production in affected markets. This is in addition to inflation, supply chain disruptions and rising material costs. Economically, this is a difficult period across the globe and many people and businesses are impacted.
As you know, we have already been adjusting our operations this year, including consolidating production sites, inStore farm clusters, and reducing our workforce. However, these measures assumed a quick market recovery, and we must admit that our assessment was too optimistic. We take full responsibility for that. Based on the data we have today, we are forecasting slower growth caused by a significant downturn. We grew our teams to support a global growth strategy, but today, it is clear that a consolidation and focused growth mindset is required to overcome the challenges.
Infarm’s revised plan
Consequently, we need to follow an even more rigorous path to profitability to achieve financial self-sufficiency and secure long-term business stability in the next 18 months. Our leadership, with the support of expert advisors and our board, have therefore developed the revised plan to enable exactly that.
As part of this strategy shift:
- We are consolidating our farming capacity to our Growing Centres in core markets: Frankfurt (Germany), Copenhagen (Denmark), and Toronto (Canada). In these markets, we have established strong retailer relationships and secured contracts of significant volume and can therefore achieve profitability in 2023. In addition, we will open our Growing Centre in Baltimore (Maryland, US) to serve the tri-state area.
- We are proposing to downsize our operations in the UK, France and the Netherlands.
- We will optimise our InStore farming network to key clusters.
- Further, by prioritising our high-yield industrial scale farming units (ACREs) we will continue to reduce production costs and resource use resulting in better-priced and more sustainable produce for consumers. We have already achieved yields of more than 100 kg/ m2/year for herbs, 150 kg for lettuce and have record breaking harvest performance of more than 95%.
- We will relocate our modular ACRE farming units to the newly defined core markets.
- In Japan, we are reviewing our operations.
The coming days & weeks
While these changes will bring greater focus and reduced business complexity, it also means that we will go through a painful and sad period as we say goodbye to many valued colleagues and friends.
Our leadership team's immediate focus will be on supporting those leaving Infarm, and we will also align closely with all of you staying at Infarm to work through the changes impacting your roles and priorities. Together with other senior leaders, I will travel to the markets in the coming weeks to visit the teams, present our new strategy and discuss your feedback and concerns.
As leaders, we will spend time reflecting and learning how to move forward with greater focus and conviction and to execute our new plan successfully. We truly believe that vertical farming has the potential to provide food security in a warming world beset by climate shocks and instability and we, as Infarm, have a critical role to play in the future of food.
Lastly, we want to assure you that Infarm remains committed to its sustainability, climate and food security goals:
- We will continue to pursue our road to net zero, in line with our SBTi emission targets that we recently submitted.
- We have just received our B-Corp certification and will continue to uphold our high standards with regard to transparency, responsibility and sustainability.
- We have successfully demonstrated the ability to grow wheat indoors towards our goal to address the food security challenge.
We have accomplished so much pioneering work together and we thank you for being part of the Infarm journey.
Erez, Osnat and Guy
- Update from February 9, 2023: We have closed our operations in the UK, France, the Netherlands and Japan.
- Update from April 6, 2023: We have closed our operations in Frankfurt (Germany).
- Update from April 14, 2023: We will close our operations in Copenhagen (Denmark). The facility in Toronto continues unaffected.