Growing up in California in a health-conscious family, Steve Magami was exposed to innovation, branding and food trends from a young age.
After studying Biology at the University of California, Santa Barbara, he began his career as a private equity investor, but says he always saw himself as less of a financial engineer and more of an entrepreneurial business builder.
Magami had his first foray into agriculture as an investor in a Peru-based biofuel company, and he was instantly intrigued by the industry. As he began evaluating various agricultural projects, he says he started to understand the distinct advantages Peru represented for a produce supplier such as land, water, labor and climate.
That’s when the idea for Agrovision materialized. The company, headquartered in Los Angeles, was established in 2012. It acquired 1000 hectares (2470 acres) of desert land in northern Peru each in 2014, 2016, and 2020, where it primarily planted blueberries. The first commercial harvest was in 2015. Magami says that back then the company was able to acquire a strong land and water asset base at reasonable prices.
The thesis for Agrovision was to overlay technology and genetics, creating a major, vertically integrated produce operation. He says the future opportunities were so enticing that he decided to put his private equity career to the side to focus on building Agrovision.
Founder-led and backed by a strong group of family offices and institutional investors with long-term committed capital, the company grew rapidly, becoming Peru’s No. 3 exporter and China’s No. 1 importer during their off-season within four years of its first commercial harvest. The company currently sells across the world’s largest consumer markets including North America, the UK, Europe and Asia.
In 2021, Agrovision expanded its growing operations into Mexico and Morocco, and in 2022 into the U.S. with further geographical expansion planned in the coming years. Since its inception, it has also added other products, including raspberries and blackberries.
In 2022, it announced further backing from leading sustainability investors – including responsAbility Investments and Avenue Capital Group – as well as a joint venture called Fruitist & Paradise between The Fruitist, its U.S. sales arm, and Berries Paradise, a leading Mexican grower-exporter.
Here Magami discusses the road ahead for Agrovision, the changes he sees in the ways blueberries are marketed, the increasingly important role of new genetics, and the rising interest from private equity in the produce sector.
The following interview has been edited for clarity and brevity.
What would you say have been the keys to Agrovision’s growth and success?
Our mission was to transform lives while we were transforming and developing land. There was so much desert land that had never been developed due to a lack of water access, fully remedied by the government-backed Olmos Irrigation Project bringing water from the Atlantic side to the Pacific side of the Andes via tunnel. Our commitment has always been very strong around social impact and sustainability. We were able to build a culture that was obsessed with quality, and we were able to build a strategy that was based on a 20-to-30-year horizon. And when you’re able to operate with that long of a horizon, you can make decisions differently than, for example, if you are private equity-controlled, dictating a five-or seven-year horizon.
So, we, as a founder-led organization, were able to make all the right decisions with that long-term vision, which was to develop products for the markets as we saw the markets themselves growing. And not only to capture the growth in the markets, but also to help bring the consumers a better eating experience.
We knew if we could deliver consistent products year-round, we would end up generating much greater consumption and penetration. Ultimately, this led to our vision to develop a business that could have 10% of the global industry over the long term, focused on delivering premium varietals 52 weeks a year in all key markets.
Taking a 10% share of the blueberry market is a very ambitious goal.
We clearly see the opportunity. It’s our goal to consistently deliver that better eating experience to consumers and to deliver value to all of our stakeholders, the communities in which we operate, our employees and our shareholders. We believe we can deliver on those important objectives and achieve 10% of the industry in a very integrated way.
What would you say are the main benefits of entering the produce industry from your investing background?
Agriculture is not an easy industry to get right. Even the most experienced players in the industry that we have a lot of respect for – whom we’ve watched and from whom we’ve learned carefully – have not been able to avoid challenges. As a financier, you really need to be an operator and an entrepreneur for a long period of time to get deep enough to get it right, and financiers rarely have that background. Having that combined background of investing and operating as an operator is really powerful. It’s allowed me to understand human and capital allocation at Agrovision at a different level than I could have had I come from agriculture originally, or had I stayed in finance and not gone deep into the industry.
What are some exciting things you are doing in terms of technology, and what plans do you have for the next several years?
There’s a lot of excitement around things we’re doing in intelligent agriculture, genetics, shelf-life extension, artificial intelligence and predictive analytics.
Given our scale, reach, and growth trajectory, we like to think of ourselves as an ideal commercialization partner to leaders in tech and genetics. On the genetics side, we’re commercializing some of these varieties at a speed that we have not seen before in the industry. Sekoya is one example of that. I think that as we evaluate opportunities globally across tech, IT and genetics, it does lead us to become excited about berries beyond blueberries and what we could do with those products. With all that being said, tech is not as meaningful until it can be deployed at scale. And I believe this is one of our advantages. We’ve become a very large company, but we still operate in a lot of ways like a startup.
And what are your plans with raspberries and blackberries?
The opportunities we’re seeing across these products are super interesting. And at the same time, we’re staying very disciplined around our core strategy of growing only the finest varietals that you can regrow at scale and for year-round supply. So, we’re optimistic, and we don’t see why we couldn’t do what we’ve done with blueberries with these other products.
What are your medium-to-long-term goals regarding your berry hectarage?
You can think about us as having more than 3,000 hectares of our own plantings in production and going into production. Long term – so seven to 10 years – we plan to potentially have 6,000 to 9,000 hectares across our core three berries globally.
Would that be all proprietary farms or also in partnerships with other farms?
To date it’s almost entirely our own. And we have grown entirely with our own farms. Over time as we see that level of scale, we absolutely will be doing it with partners, and we’ll continue to do it with our own farms. So, we’re not going to change our strategy – we’re going to complement our strategy.
What are your plans with the recently announced Fruitist & Paradise joint venture?
This JV between Agrovision and Berries Paradise is a sales and marketing partnership for berries — blueberries and raspberries in particular. And we’re bringing blackberries online, too. This partnership is targeting 52-week premium genetics at scale for North American customers entirely grown and controlled by us. This will be the first company that’s fully vertically integrated with premium genetics at scale, year-round across these berries.
This is a very long-term partnership. We expect that with the plantings we have made across the Americas and the plantings we have committed to we will be in the top three suppliers of blueberries and raspberries for the North American market. This is really enabled by the fact that we’re founder-led with strategic and committed shareholders.
What are the biggest changes you expect to see in the blueberry industry over the next decade?
We’re going to see a lot of consolidation. We’re seeing difficulties in the supply chain. It’s more important than ever to be fully vertically integrated at scale. And, having the ability to invest in R&D, in innovation, we see a very different industry a decade from now. We see a dominance of leading microclimates, and we see the industry exiting – for the most part – the old-world microclimates.
So, we believe, for example, Argentina will largely be out of the blueberry business. We see Chile as being much stronger in other products than blueberries, though we do think Chile has an opportunity to play an important role to complement Peru, particularly in organic premium genetics.
We also believe that the non-premium genetics in Chile will be going out of the business. We think the industry in 10 years will be much more driven by science and AI in addition to analytics and tech. And we think there’ll be a huge gap among a relatively small number of truly vertically integrated players that have differentiated product offerings at scale. Then again, we are investing with leading tech partners to lead in innovation. I believe across these areas, we will see the drivers of the future for the industry.
What do you see as the future for Peru as a global blueberry supplier?
The advantages we saw so many years ago are playing out how we expected. And the beauty of Peru is that it now supplies the entire world. Historically, the majority of Peru’s shipments went to the U.S. market. The future I see is a future where Peru will have only one-third at the most of its exports going to the U.S. market. And, in 10 years from now, maybe that’s only 25%. So, we see an enormous number of trends in Asia driving Peruvian exports to supply the eating experience that Asia wants. We see a lot of difficulties in other locations, and we think Peru can help to complement and fill gaps in other markets. Then, I think the future will also see Peru supplying its own region in South America.
However, I believe that this will be a very difficult business – even for Peru – in the long term, due to the relatively low penetration of proprietary genetics. Today, about 80% of the country’s volumes are still in the traditional varieties that are decades old. This will make exporting in the future a big challenge.
Do you think that the huge growth in blueberry volumes expected from Peru over the coming years will be in line with global demand?
We think the growth in new acreage is going to slow. And it’s going to be more of a focus on the replacement of varietals in existing acreage, which is what makes sense. And that will be pretty much in sync with the growth and demand. I believe the sooner we do that, the sooner we’re going to see a different growth rate in demand, consumption and penetration.
At the retail end of the supply chain, do you see blueberries eventually being marketed by variety, as has been the case with table grapes?
No, we don’t. We think that the berry category, the blueberry category in particular, should learn from the experience in other products that have been too quickly defined as “commodities.” We think the traits are a much more important driver, that there will be aromatic opportunities in terms of the label – not based on one varietal but based on multiple varietals.
So, we see an interesting kind of flywheel of opportunity — one that we are again focused on from a very long-term perspective.
But, there will be Jumbo, and then there will be Jumbo. What I mean by that is there will be the premium Jumbo that’s really delivering the better eating experience, and then there will be the Jumbo that is becoming commoditized because once again, a lot of growers are not focused on the consumer, they’re focused on the growing. We need to be focused on the consumer. And, for sweet varietals, for example, there is Driscoll’s doing a nice job with their own Sweetest Batch. That is a play on the sweetness of selected varietals they have.
What role do you see technology playing in achieving consistency?
A portfolio of the right varietals is key. Then the application of technology as an overlay is key. We already are seeing tools being used, and we’ll see them evolve and iterate faster and faster. And that will lead to some interesting opportunities in the future, not in the next couple of years, but in the next five to 10 years. We’re really focused on a five-to-10-year horizon delivering this offering on a global scale.
It sounds like a new chapter is opening up with new blueberry genetics.
We think we’re in the first inning of the ballgame where people are discovering this is a new blueberry. This is really special. While the color of the blueberry is the same, the eating experience is completely different. It’s almost like when the gold kiwi came out. I didn’t want to eat any more green kiwis, and it’s the same with our new blueberry genetics. That’s why we say “there are blueberries, and then there are blueberries.”
Blueberries seem to be in a transitory state between the older, more established varieties and the newer ones with a different eating experience.
It’s a really great point. We saw what was effectively a mature industry with commoditized, sub-standard varietals and a lot of mediocre eating experiences that the consumers were not excited about. And now we’re seeing a very immature industry of premium eating experience blueberries. This is disrupting the old commoditized, mature industry. I’m excited for consumers around the world during the next year or two to really see how consistent of an eating experience we can deliver, which we believe will motivate people to consume more and eventually view our berries as a standalone snack or dessert. The snack category is enormous, and I really enjoy watching my kids snack on healthy superfruit versus sugar-based snacks.
What effect do you see the higher interest rates having on the agricultural industry during the next few years?
We know that food is relatively stable, and we know that our industry is a safe haven in times like this. In recessionary times, it’s known as a defensive industry, the ag industry. We have a significant base of real assets that we own. We weathered Covid, and I think that was very difficult, particularly for a high-growth company like ours. That all being said, rates will be rising, and rising rates and the recession will be hard on the industry. We expect to see fewer entrants and many stranded assets. We also expect this to accelerate the path to consolidation. This will result in fewer winners, but it will accelerate the materialization of that long-term trend.
Do you see continued interest from private equity in the produce industry in the future?
We do, we believe that private equity will proceed very cautiously. We still see private equity as one of the few funding sources that understand the multidimensional dynamics and depths of our industry. Many are at a disadvantage from the standpoint of their investment horizon mandates given the time it takes to build these businesses correctly and the way capital must be deployed. However, we think there have been a lot of lessons learned, and that private equity firms are more cautious and smarter than ever. The smartest private equity players will ultimately be very good for the industry because they will take a very long-term outlook, because they know that’s the right way to approach this industry. And that will ultimately raise the tide to lift all boats, grow consumption and ultimately expand the industry.