Ocado faces £20m loss on vertical farming start-up

Telegraph

12 hours ago

Ocado is facing a potential £20m loss after a major UK farming start-up backed by the company fell into administration.
The logistics group, led by Tim Steiner, had been a major backer of Jones Food, which was hailed as a game-changer for Britain's farming industry, allowing vegetables to be picked next door to delivery depots.
But the farming venture fell into administration this year after Ocado signalled that it was not willing to provide more cash to the start-up and it failed to find a new backer.
Ocado risks losing £21.7m on the collapse, filings for Jones Food's administration now suggest, and the company is unlikely to recoup the millions of pounds it pumped into the start-up.
This includes £8.6m of initial investment in 2019 and a £3.7m cash injection in 2023.
Administrators for the start-up said funds from the sale of Jones's assets would go on paying off expenses and creditors.
The collapse of Jones Food is a fresh setback for Ocado, which has been battling to stem losses and churn out more cash in the face of higher debt costs.
Ocado has been making heavy cuts in its research team in an attempt to help it shift into profit and was hit by a tripling of its debt interest costs after it refinanced looming bonds last month.
Jones Food was among a series of investments made by Ocado into tech start-ups in an attempt to shrug off its image as an online grocer.
Ocado struck a deal with M&S in early 2019 to run the online grocer Ocado Retail as a joint venture. Since then, Ocado Group has been focused on its robotic warehouses, which it sells to other companies including Kroger in the US.
The collapse of Jones Food comes just over a year after the start-up opened its second vertical farm, which involves growing crops vertically in temperature controlled conditions rather than naturally on the ground.
At the time, Ocado claimed the farm was a 'coming-of-age for agricultural technology in the UK' and said Jones Food had 'cracked the code for accessible, sustainable, premium food being grown all-year-round, at a super-competitive price'.
The vertical farm, where fresh produce is grown indoors in shelves, provided herbs including basil, coriander and flat-leaf parsley for Ocado and Asda.
However, vertical farming start-ups have struggled to become profitable.
In filings for Jones Food, administrators said it was loss-making as soon as it was operational because it was running at around a third or half of its factories' capacity, and demand from customers was variable.
Other vertical farming start-ups have also collapsed, including US-based Aerofarms which filed for bankruptcy in 2023.
It has been seen as a sign of the bubble bursting for agricultural innovations, including cultivated meats.
At the time of the administration, Ocado said: 'Jones Food is an innovative business, and Ocado Group has been a supporter and shareholder of the company for a number of years. As we await the outcome of the administration process, our thoughts are with all those involved with Jones Food.'