Market sizing
Verdant Containers builds hydroponic container farms and must decide whether to enter the fresh-produce market as an operator running its own farms, and if so against which customer.
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Verdant Containers spent three years engineering a 40-foot hydroponic container farm: insulated shell, LED spectra tuned for leafy greens, recirculating water, and a remote agronomy dashboard. Each unit costs $135,000 to build and is warranted for eight years. The company sells containers to grocers and campus food services today, but the equipment business is lumpy and engineering-led, and the new CEO wants recurring revenue.
The proposal on the table: Verdant enters the produce market as an operator, running its own container fleet and selling harvests under the Verdant brand. Two routes exist. Wholesale: supplying leafy greens at $1.85 per head to distributors who serve restaurants and institutions. Direct premium: supplying chefs and quality-focused grocers at $2.60 per head with next-day delivery guarantees. The company can commit capital for at most 60 containers in two cities within 24 months, and the board wants the market sized and the operating model chosen before the first site lease is signed.
You advise the CEO. The decisions: is the addressable market big enough for the fleet the board would fund, and which route, wholesale or direct premium, does the unit economics actually support?
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