Vertical Farming: What the Industry Shakeout Means for a USD 20 Billion Market
Executive summary. Vertical farming grows crops indoors in stacked layers under LED lights, with water, nutrients and climate controlled by software. It promised fresh produce near cities all year, using far less water and no pesticides. The first wave of venture-funded giants learned that the hard part is not growing lettuce but growing it at a profit. Several high-profile companies failed, and the survivors are rebuilding around energy efficiency, higher-value crops and partnerships with retailers. Strategic Revenue Insights projects the global vertical farming market to reach USD 20 billion by 2033, growing at a 24 percent compound annual growth rate from 2025. Population growth, shrinking arable land, water scarcity, LED and climate control advances and demand for pesticide-free produce are driving it. This article sets out five lessons from the growers, technology suppliers and retailers moving first, with takeaways for strategy, product, operations, channels and revenue.
The structure of the market shows where growth is concentrating. Strategic Revenue Insights' Vertical Farming Market research finds that building-based farms are gaining ground over container farms, that leafy greens and herbs dominate crop types, that hydroponics holds a significant share of growing methods and that Asia Pacific leads the market with the fastest stated regional growth rate of 26 percent. The research names high initial investment, significant operating costs and a lack of standard regulation and certification as challenges, and lists AeroFarms, Plenty, Bowery Farming, Infarm, BrightFarms, Gotham Greens, Sky Greens, Spread, Vertical Harvest and Iron Ox among the key companies.
The sector has been through a hard reset. Bowery Farming, once valued at USD 2 billion, ceased operations in November 2024, and Plenty, which raised close to USD 1 billion from investors including SoftBank and Walmart, filed for Chapter 11 bankruptcy in March 2025, according to TechCrunch and Bloomberg reporting.
Why the Vertical Farming Market Is Entering a New Phase
Three structural forces are converging.
Unit economics have replaced growth at any cost. Investors now fund farms that can show a path to profit per kilogram, not just capacity. Energy, labour and capital costs decide survival, and SRI's research names high initial investment and operating costs as the main restraints.
Technology keeps getting cheaper and smarter. More efficient LEDs, better climate control and AI-driven growing recipes lower the cost of each harvest. SRI's research identifies LED, climate control, IoT and AI advances as drivers. Automation linked to the rise of agricultural robots is entering indoor farms too.
Food security and water scarcity raise the stakes. Cities in dry or land-scarce regions, from the Gulf to Singapore and Japan, value local, reliable production. SRI's research names water scarcity, urban expansion and climate change among the drivers.
These forces explain SRI's forecast of rapid growth to 2033, with value concentrating in efficient building-based farms, leafy greens and herbs and Asia Pacific.
Five Lessons From the Companies Moving First
The growers and suppliers turning these forces into advantage share a recognisable pattern. We have distilled it into five lessons, each followed by a takeaway for a specific leadership function.
Lesson 1: Profit Per Kilogram Beats Square Metres
The failures of the first wave show that building the largest farm is not a strategy. The companies moving first measure cost and margin per kilogram from the first harvest, build in phases and expand only when each site is profitable.
They also choose locations carefully: cheap renewable power, proximity to retail distribution centers and local incentives matter more than a headline location.
"In vertical farming, the winners will be decided by the electricity bill, not the size of the press release."
Takeaway on strategy. Build in phases, prove profit per kilogram at each site before expanding, and choose locations for power cost and distribution access.
Lesson 2: Grow What Pays
SRI's research finds that leafy greens and herbs dominate crop types. They grow fast and suit stacked systems, but they sell at low prices. The companies moving first add higher-value crops such as strawberries, specialty herbs, microgreens, seedlings and plants for pharmaceutical or cosmetic ingredients, and they sell on freshness, flavour and consistency.
Takeaway on product. Combine fast-turning greens with higher-value crops such as berries, specialty herbs and seedlings, and market freshness, flavour and consistency.
Lesson 3: Energy and Automation Decide Margins
Lighting and climate control are the largest operating costs. The companies moving first use the latest LEDs, recover heat, run lights when power is cheapest, sign long-term renewable power contracts and automate seeding, transplanting and harvesting.
They also treat growing recipes as intellectual property. Data on light, nutrients and climate for each crop becomes a competitive asset, much like the data platforms described in why precision is the only profitable acre in smart farming.
"Every kilowatt-hour saved in a vertical farm drops straight to the bottom line."
Takeaway on operations. Cut energy per kilogram through efficient lighting, heat recovery and smart scheduling, secure long-term renewable power, and automate repetitive tasks.
Lesson 4: Partner With Retailers, Do Not Fight Them
Selling fresh produce means winning shelf space and managing waste. The companies moving first sign long-term supply agreements with supermarkets, build farms next to retail distribution centers or inside stores, and supply restaurants and food service. SRI's research notes that partnerships with retailers and expansion of greenhouse networks are common strategies.
Hybrid models also matter. Some growers combine vertical farms with high-tech greenhouses to balance cost and control.
Takeaway on channels. Sign long-term offtake agreements with retailers and food service, co-locate farms with distribution, and consider hybrid greenhouse models.
Lesson 5: Asia Pacific Leads Growth
SRI's research identifies Asia Pacific as the leading region, with a 26 percent CAGR, ahead of North America at 22 percent and Europe at 20 percent. Dense cities, limited farmland, food import dependence and government support for food security make the region attractive. The Middle East is another priority, with farms built to reduce reliance on imported produce.
The capabilities that decide who captures this demand are specific:
Phased builds that prove profit per kilogram.
A crop mix that includes higher-value produce.
Low energy use, renewable power and automation.
Long-term retailer and food service partnerships.
Local presence in Asia Pacific and the Gulf.
Companies evaluating these competitive dynamics in greater detail can use SRI's Vertical Farming Market analysis to assess structure, component, crop and growing method segments and the positioning of the leading growers.
Takeaway on market development. Prioritise land-scarce and import-dependent markets in Asia Pacific and the Gulf, and partner with governments on food security programmes.
Where the Opportunity Is Concentrating
Value is moving toward efficient building-based farms, higher-value crops and Asia Pacific.
By structure, building-based farms are gaining ground over container farms.
By crop, leafy greens and herbs dominate, while higher-value crops add margin.
By growing method, hydroponics holds a significant share.
By geography, Asia Pacific leads and grows fastest among the regions SRI quantifies.
At the Horizon: What to Watch Over the Next Three Years
Energy cost per kilogram. Falling LED and power costs will decide whether vertical farms compete with field and greenhouse produce.
Consolidation. Buyers of failed farms' assets and technology will shape the next generation of operators.
Standards and certification. Common rules for indoor farming claims would help retailers and consumers compare products.
"The next phase of vertical farming will be won by operators who make indoor produce as reliable in profit as it is in quality."
The Strategic Revenue Opportunity
For growers, the task is to prove site-level profitability. For technology suppliers, the opportunity lies in efficient lighting, climate control, automation and growing software. For retailers, the priority is reliable local supply with less waste. For investors, the signal is cost per kilogram, offtake contracts and energy deals.
Market intelligence turns these questions into decisions. Segment-level sizing shows where structure, crop and method demand is concentrating, competitive analysis shows which operators are positioned to survive, and regional analysis shows where food security will pull growth first. This is the path from market signals to strategic insight to revenue impact.
Takeaway on revenue. Treat the vertical farming market as four revenue pools: leafy greens and herbs sold to retailers, higher-value crops sold on flavour and freshness, technology and systems sold to growers, and farm-as-a-service models sold to retailers and governments. Each needs its own pricing model.
The Next Leg: Preparing for the Journey Ahead
The defining shift in vertical farming is that the industry is moving from hype to hard economics. That changes how farms are financed, designed and run. The companies moving first are not the ones with the biggest buildings; they are the ones proving profit per kilogram, growing what pays, cutting energy, partnering with retailers and expanding where food security matters most.
The next three years will decide which operators and suppliers define a durable indoor farming industry. Decision-makers should invest in efficiency, crop mix and retail partnerships and track energy costs, consolidation and standards. Companies evaluating growth opportunities in this market can use Strategic Revenue Insights' Vertical Farming Market report to assess market size, competitive dynamics, regional opportunities and strategic growth priorities.
Sources: Strategic Revenue Insights, Vertical Farming Market report (2026); TechCrunch and Bloomberg reporting on Bowery Farming (2024) and Plenty (2025).
Frequently Asked Questions
How big is the vertical farming market?
Strategic Revenue Insights projects the global vertical farming market to reach USD 20 billion by 2033, growing at a 24 percent compound annual growth rate from 2025. Asia Pacific leads the market with a 26 percent regional growth rate, ahead of North America and Europe.
What is driving growth in vertical farming?
Population growth and food demand, urban expansion that reduces farmland, water scarcity, lower pesticide use, advances in LED lighting and climate control, IoT and AI integration, climate concerns and consumer demand for pesticide-free produce are the main drivers of vertical farming growth.
Why did some vertical farming companies fail?
High initial investment and operating costs, especially energy, made it hard for early companies to reach profitability. Bowery Farming ceased operations in 2024 and Plenty filed for bankruptcy in 2025. Survivors are focusing on energy efficiency, higher-value crops and retailer partnerships.
Which crops are grown most in vertical farms?
Leafy greens and herbs dominate vertical farming crop types, according to Strategic Revenue Insights, because they grow quickly and suit stacked systems. Operators are adding higher-value crops such as berries, specialty herbs and seedlings to improve margins.
About the authors: This article was prepared by the Strategic Revenue Insights research team, which combines market intelligence, competitive analysis and strategic advisory for growth-stage, mid-market and enterprise organisations across the agriculture sector.
Sector analyst: Sandeepa Kulkarni, Research Analyst. Our market estimates combine primary research (interviews, surveys and expert panels) with secondary data (industry reports, databases and public disclosures); read more about how Strategic Revenue Insights works. To discuss this market with our analysts, contact our team.
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