Fresh-picked fruits and vegetables taste so much better than those shipped cross country, so it’s easy to understand why the buy local movement is big with foodies. And Circle Fresh Farms is capitalizing on the opportunity.
In the last three years, the operation has built its growing network to 20 acres of greenhouse space, serving up local, organic, hydroponic vegetables to high-end grocers like Whole Foods and upscale restaurants in Colorado. Circle Fresh Farms is well on its way toward fulfilling an ambitious expansion plan, to supply local markets in cities nationwide.
Inspiring Passion For Fresh Produce
When Circle Fresh Farms CEO Rich Naha took his family to live in Costa Rica, he noticed something about his three young boys’ eating habits: they voraciously consumed the locally grown, fresh fruit and vegetables there because, just-picked, they were delicious and fresh. But when the family would travel back to their native Denver, Colo., the boys snubbed strawberries for cookies, because they found the fruit and veggies in Colorado less tasty.
Naha immediately drew his own conclusion that locally grown, organic produce is more nutritious and therefore tastes better. That’s where his mission to teach others about the value of locally grown, organic produce — and Circle Fresh Farms — began.
“Demand for local and organic has been growing steadily and more increasingly every year, and I think that is because the consumer is becoming more educated about their food, and what they’re seeing is concerning them,” Naha says. “Consumers feel like they can trust the local farmer more, and when they see that a product is grown in their state, they take pride and want to support the local guy.”
Naha, with his background in real estate, joined together with Zach Frisch and Jordan Scharg as principals of Raindrop Partners LLC, a small business investment firm. One of the group’s projects was developing a wellness center and sustainable retirement community in Manual Antonio, Costa Rica, in conjunction with the Chopra Center For Wellbeing, started by the famous Dr. Deepak Chopra.
But in 2008, the market crashed and the effort halted, so Raindrop Partners set its sights on developing Circle Fresh Farms.
“We met John Nicholas down in Pueblo, Colo., who had been selling his tomatoes to Whole Foods for about three years,” Frisch says. “Even though the store there was one-third the size of Whole Foods’ stores in the rest of the Rocky Mountain region, it was selling more tomatoes than any other store, because the produce was so delicious, nutritious, local and fresh. Right then and there, he told us, ‘Guys, I’m really good at growing and really bad at business.’ We said, ‘We’re really good at business, we don’t know anything about growing,’ and that was the nexus of our relationship with him. We’ve grown the business about 40-fold since then.”
Growing A Network Of Local Produce Availability
Fast forward three years. Circle Fresh Farms currently has a total of 200,000 square feet of growing space in the region, co-located as closely to urban populations as possible. In Southern Colorado, all vine crops are sold to stores in Colorado Springs; the greenhouses in Northern Colorado sell to retailers in Boulder; and urban greenhouses around Denver sell to stores there.
“There is insatiable demand,” Frisch says. “Our customers say they would buy 10 times the volume if we had it. Our issue is we can’t secure greenhouse space fast enough for us to grow to the scale that our customers want. For example, there are 17 Whole Foods stores in the Rocky Mountain region and we can hardly supply two to three stores at a time.”
Circle Fresh Farms is raising $5 million to retrofit the Fort Lupton, Colo., greenhouses it bought from Color Star Growers in December and get them ready for transplants by July, Frisch says.
The business is also under contract with another 300,000 square feet of growing space to help fuel its growth in four other cities — Kansas City, Missouri, Chicago, Ill. and Austin and Houston, Texas. The expansion plan includes partnering with growers, as well as eventually acquiring or building new greenhouses in those new markets.
Circle Fresh Farms has plans to begin its network expansion to these cities within the next 12 months. Ultimately, the goal is to build 20 acres of greenhouses in six different markets within the next four years, to become a $120 million topline company, Frisch says.
“It’s ambitious, but the math works out pretty well,” he says. “It’s about $1 million an acre of sales growth and if we can do 20 acres in six cities, that’s $120 million. It’s achievable and we’re well on our way in contract so far, with 20 acres in the state of Colorado.”
Building Growing Relationships
Though it does own greenhouses in Colorado currently, a big part of the operation’s business plan is partnering with established growers with their own operations, in a cooperative format. Growers can agree to sell produce under the Circle Fresh Farms label for a fixed percentage of 20 percent of the sales to retail. Circle Fresh handles sales, marketing and distribution, and will also manage the greenhouse on behalf of the owner if they choose that option.
Circle Fresh Farms Head Grower Alberto Aceves manages the greenhouses the operation owns, and provides consultation for the network farmers on plant nutrition and management, IPM, irrigation, climate control, variety selection and quality control.
“The best part about the cooperative is that each grower keeps its identity and growing systems, allowing them the freedom of doing things their way,” Aceves says. “The access to help and advice provided by Circle Fresh Farms is a great help as a grower.”
With an established brand that draws a premium from high-end retailers like Whole Foods, the locally grown, organic produce yields higher margins for everyone involved, Naha says.
Transparency Is Imperative
With a state-of-the-art traceability system in place, designed by Circle Fresh Farms in cooperation with a software company, the operation not only remains completely accountable to the growers in its network, but also can be 100-percent transparent about its growing practices for consumers.
Each case of product has a QR code on it, which, when scanned, will provide information on where it was grown, when it was harvested and how far it traveled from harvest to retail. The software is scaleable, too, so it can be programmed to include more information, right down to the employee who harvested a head of lettuce and more. PTIPRINT is now being marketed separately through the software company to other growers.
“When a farm in our network drops off 1,000 cases to us, as soon as we scan it, they can log in to this software and see those 1,000 cases are at our Wheat Ridge distribution center,” Naha explains. “As soon as we sell 500 cases to Whole Foods, they see that transaction and the price per box, so they know how much their check will be.”
This is a vast improvement over the typical produce-buying situation, in which distributors buy grower product at the lowest possible price and sell at the highest possible price, usually marking up produce by 40 percent or more, he says.
“We just take a flat percentage (20 percent) and then our incentives are aligned because we are trying to sell that product at the highest price possible for everybody’s benefit.”
Raising The Standards Of Quality
Local, organic produce is all about quality, freshness and nutrition, and that’s what Circle Fresh plans to deliver with its line of products including several varieties of tomatoes, greens, cucumbers and peppers. With the new facilities, the operation will begin trialing bell peppers and different types of greens, like tatsoi, bok choy, chard and watercress, Aceves says.
“We value nutrition and letting food ripen fully on the plant,” Naha says. “A large percentage of nutrition is developed in the last 48 hours of ripening, so if you pick a tomato green a week before it was going to ripen, then it will never develop that nutrition. Then, once you disconnect it from that plant, it starts to deteriorate. For greens, within 24 hours of disconnecting it from the root, it has half the nutrition as it did the day before.”
Circle Fresh Farms’ Living Lettuce is sold live with roots still attached, so consumers can take it home, put it in a vase and keep it growing. New packaging is under patent review to keep the plants alive at retail and in transit. Thirty-two more varieties of greens the operation produces can be grown this way, as well.
The many varieties of tomatoes Circle Fresh Farms produces are noted for high Brix count, including a plum zebra variety from Israel with a Brix of 14, Frisch says. That attention to taste and nutrition doesn’t go unappreciated by the operation’s newest clientele — the chefs of several high-end Denver restaurants. Two acres of the new Fort Lupton greenhouses will be grown under a private label for restaurants that plan to market menus of farm-to-table meals with ingredients “grown at their own greenhouse.”
“The high-end restaurants understand that with high nutrition comes supreme taste,” Naha says. “The sucrose and beta carotene and all the nutritional elements are what give food its taste. So when you harvest it early and ship it a long distance, you lose that. So they are avid customers of higher quality product.”
For restaurants to be able to say that the food is grown from their own farm will make customers come back, Naha says.
“Just the fact that they make the effort to grow their own food is impressive, because growing food is hard, and that’s why the average restaurants don’t do it.”
Above all, Circle Fresh Farms wants to educate consumers about the food they eat and inspire change in their buying habits.
“When consumers learn what’s wrong with their food, it gets them passionate about making a change,” he says. “As consumers demand change, retailers will change, and then that will allow farmers to grow healthier, more responsible products.”