It’s Tuesday, and today we’re discussing Grove, an agritech startup from Saudi Arabia. Founded by Mohammed bin Ghanam and Ayman AlFifi in 2024, the company raised a $5 million seed round in January from Outliers VC, as well as several angel investors.

Due to its climate, Saudi Arabia depends on imports for 70-80% of its food consumption. Most of the challenges this creates we’ve already discussed in the Arable article, a company focused on hydroponic farming in Saudi Arabia. The three issues that matter for us today are:

What we focused on less in that article are the less tangible factors.

First, even if produce survives, tomatoes may be firm and strawberries may lack sweetness. So the consumer ends up with inconsistent quality, or simply poor taste. If either condition holds, the buyer may cut back on purchases, be it tomatoes or strawberries.

Second, the structure of the supply chain, centered on storage and long-distance transport, constrains variety. Which makes sense from the supply chain perspective: the less variety there is, the easier it is to control stable and predictable supply. But from the customer’s perspective, even if their basket remains consistent week to week, they still want to know that alternatives are available. It gives a sense of control. And some, of course, want variety and crave products they don’t have access to.

All of the issues could be addressed by one solution: local production of fruits and vegetables.

The good news is that it’s expanding. In many products the country has achieved high levels of self-sufficiency: 105% for eggplant, 102% for okra, 101% for cucumbers, and 100% for zucchini. Moreover, self-sufficiency levels are increasing: for instance, between 2023 and 2024 that ratio for onions grew by 41% and for tomatoes by 9%.

In absolute numbers, in 2024 Saudi Arabia produced about 2.745 million tons of open-field vegetables and 797 thousand tons of greenhouse vegetables, with greenhouse output up 10.6% year on year. And there are more than 121,000 vegetable greenhouses operating today.

The bad news is twofold. One problem is that local wholesalers and retailers aren’t taking advantage of that: it’s much easier to retain the status quo and not destabilize your own supply chain.

But I would argue the bigger one is that local agriculture still struggles with inefficiency, mainly due to information asymmetry and the challenges brought by a tough climate.

Oftentimes farmers lack the information on what to grow, in what quantities, and when. They just don’t have enough insight into what the market needs. And even when they do, growing the products is harder than in most places.

That shows up in things like irrigation efficiency. While the global standard is 85%, in Saudi Arabia it’s 50%.

All the while the government targets a 50% decrease in food waste.

Grove wants to help achieve this goal while reducing reliance on imports and improving both the quality and variety available to consumers.

Grove directly connects Saudi farmers to consumers through a demand-driven supply chain. It’s building a system where customers get access to the freshest fruits and vegetables, while farmers have a more direct connection to end buyers and can deliver a better product.

The company exerts tight control over the assortment, working only with selected farmers that can meet the quality customers expect.

Now, let’s dive deeper into what Grove delivers to each side of the equation.

Again, at the core it’s access to the freshest product possible, coming directly from farms without spending time in multiple warehouses and sorting facilities. Through its app, the company offers 250 agricultural products available year-round. Products are picked daily to ensure ripeness. While the focus is on local produce, the company also lists imported and “exotic” products.

Aside from freshness, Grove is pushing several additional value points.

One is packaging. It’s designed to allow ventilation for moisture control, is easy to store in the refrigerator, and protects the contents during handling.

Next is delivery. When a customer places an order, Grove picks produce directly from farms and delivers it within 24 hours. The delivery is silent, meaning the box is left at the customer’s doorstep. The product is designed for customers who consume fruits and vegetables on a weekly or biweekly basis. While delivery happens within 24 hours, ordering typically follows that one- to two-week cadence.

Finally, Grove provides what it calls “Golden Guarantees.” It issues full refunds if a customer experiences any issues. If something goes wrong, the customer contacts support and gets an instant refund.

Value for farmers starts with access to information. Today, farmers don’t have clear visibility into customer demand: what to grow, in what quantities, what specifications are expected, and how demand changes throughout the year. Beyond that, Grove helps farmers understand which sales channels will work best. That’s the planning layer.

Next is what the company calls agri-ops part: Grove helps farmers choose the right crops and align planting and harvesting schedules. The goal is to use farm resources more efficiently while aligning with observed market demand patterns. Throughout the process, Grove monitors growing conditions to ensure consistent quality. Farmers also don’t have to deal with distribution and logistics, as Grove manages that itself.

If everything goes well, the more orders a farmer handles, the more data Grove collects on that farmer. Over time, this helps plan future harvests better and reduces mistakes.

Grove is a vertically integrated business that cuts out the middleman and acts as both wholesaler and retailer, while also supporting farmers. To make the model viable, the company starts with analyzing the market: what types of customers buy which products. That data is then translated into specific production plans for farmers, covering what to plant, when to harvest, and what quality is expected.

When the time comes to collect the harvest, the company grades it on-site into different quality tiers. This allows Grove to direct each batch into the most appropriate sales channel, increasing the overall value of the harvest compared to traditional supply chains.

From the moment the harvest is collected, Grove ensures cold chain integrity, so products remain chilled from collection until they reach the customer. By controlling last-mile logistics, the company also minimizes the time products spend outside controlled conditions after leaving the greenhouse.

This approach unlocks two features that are unique to the model:

Grove sells products directly through the app. Additionally, there’s a B2B component to the business, but it’s less clear how monetization works there.

The company is only just starting to scale, so there aren’t many numbers on the business. Grove, however, does note that its repeat purchase rates are at 48% and it only wastes 5% of the food grown.

The bear case for the company is this combination of an operationally tough business and a potentially limited market.

On the operations side, it may be challenging to forecast demand correctly, control sorting, packing, and delivery costs at low volumes, and build a large enough delivery system. And do all of that while keeping the business sustainable from a unit economics perspective. Food delivery businesses are notoriously difficult economically. When 100% of your offering is perishable food, the difficulty increases even further.

On the market side, how many people care enough about how ripe their tomatoes are to pay more for them and order them separately from the rest of their groceries? If the answer is some version of “not many,” that creates challenges for customer acquisition, retention, and ultimately caps how large the business can get.

But if you’re optimistic about the business, you believe that enough people do care about tomato ripeness. If that’s the case, price sensitivity is lower, which both increases margins for Grove and attracts more farmers. The more high-quality farmers Grove brings on, the more reliable its supply becomes, which in turn improves customer retention.

There’s also an expansion angle. As I’ve mentioned in previous articles on the region, it’s easier to expand within the GCC than in most other regions. That’s especially useful given how urbanized these countries are.

Finally, and this part is unfortunate, the current war may indirectly benefit a business like Grove. The Saudi government and other Gulf countries may push even harder toward food self-sufficiency. That would increase local farming activity and, as a result, expand supply available to Grove.

What’s the one lesson investors and founders can take away from Grove?

There is a path to differentiation even in commodity products. I don’t know whether Grove itself has fully solved that yet, but they are clearly trying: through communication, by working directly with farmers, and by controlling delivery. Obviously, the more commoditized the product, the harder differentiation becomes, but it’s still possible.