Kahlbetzer family-backed Sprout Stack expanding ahead of talks with supermarket retailers

Sprout Stack, backed by the billionaire Kahlbetzer family, is looking to grow its operations ahead of talks with major supermarket retailers.

Sprout Stack, backed by the billionaire Kahlbetzer family, is looking to supercharge its operations ahead of talks with major supermarket retailers. Picture: Tim Pascoe

The nation’s largest commercial-scale vertical farming group – backed by the billionaire Kahlbetzer family – is scaling up its operations ahead of discussions with major supermarket retailers to bring its products to more consumers nationally.

Sprout Stack grows salad greens in transportable shipping container-sized farms in Sydney and Brisbane without soil. The firm’s urban farms use 95 per cent less water than market gardens.

Ideal growing conditions are simulated within the vertical farm buildings using LED lighting and a specially created computer-based management system.

Greens from the buildings can be on supermarket shelves within 16 hours, as opposed to an average six days for produce grown via traditional growing methods.

Sprout Stack, which currently sells the majority of its produce to retailers Harris Farm and Harbord Growers as well as the Manly Food Co-op, is backed by the Markus Kahlbetzer-led venture capital firm BridgeLane Capital, which has so far provided it with millions of dollars of funding.

“We are funding the business in house at this point in time and really demonstrating that it is a sustainable business … we are big believers that we are going to get to that point,” Mr Kahlbetzer said. “When we have the ability to be able to scale, we will have conversations with the supermarkets. We will get to that point when we are ready and comfortable.”

He also said the business would be prepared to take on external capital at some point in the future.

“But it is less about the capital and more about networking and bringing the ability to have advisers in the company to help you break down bridges, bring new ideas and have accountability when you are trying to execute on the plan,” he said.

Since its inception BridgeLane has invested in companies typically in technology, sustainable food and agricultural robotics sectors.

Mr Kahlbetzer said the firm’s future investments in agriculture would be focused on delivering labour efficiencies, especially in an environment of rising labour costs and reduced availability which has impacted food supply chains across the nation.

“Labour efficiencies is one area that we can continue to improve on significantly, whether it’s with robotics or whether it’s with software platforms to improve the ability to track, monitor and benchmark. I think there’s a lot of opportunities there,” he said.

“Two of the biggest technology providers in agriculture are John Deere, which is a technology provider and Bayer-Monsanto, which is a technology provider. I still think that those are the two areas, even if you are small, to aspire to continue to develop genetics and robotics.”

BridgeLane also owns 80,000 hectares of cropping and livestock country in Argentina, which was purchased by Markus’s father, Kahlbetzer family patriarch John Kahlbetzer, decades ago.

Mr Kahlbetzer was a German immigrant who came to Australia in 1954 and built his Twynam Agricultural Group into one of the nation’s most famed rural landholders before the family sold the majority of its farm assets in 2009.

Twynam, now run by John’s older son Johnny, is backing a range of businesses involved in green technologies, sustainable farming and renewables.

These include converting waste cotton fabrics into new fibres for clothes, recycling organic waste through insects, recycling CO2 into chemicals and fuels, and supporting the production of alternative protein sources. It also funds the World Wildlife Foundation’s program to eliminate plastic in Australia and is working on ocean clean-ups across the globe.

Markus Kahlbetzer said the family’s Argentinian assets “couldn’t be in better shape”. He has just returned from his first visit to the operations since the onset of the Covid-19 pandemic.

“You’ve got obviously very intense cropping rotation. You can do things that we just can’t do in Australia, just from the product point of view … It’s a great time to be a farmer,” he said.

He said the future of the Argentinian assets was about driving efficiency.

“We think that farmers are innovators. We’ve always been innovative as a business. Everybody who works for us are the best guys coming out of university,’’ he said.

“We continue to drive efficiency gains, whether it’s through soil management or a lot of people are talking about regenerative and sustainable agriculture. But the reality is it is just about the best management. We care for our soil. That’s not to say we didn’t 20 years ago, it’s just we’ve improved the way we do it.“