Back to the Roots co-CEOS Nikhil Arora (right) and Alejandro Velez stand next to a large seed display in a retail store.
Back to the Roots co-CEOS Nikhil Arora (right) and Alejandro Velez stand next to a large seed display in a retail store.Back to The Roots
  • Organic gardening brand Back to the Roots expects to generate $100 million in sales in 2022.
  • The company sells popular growing kits, seeds, and potting soil to millennials and their kids.
  • It recently raised $15 million to help ramp up retail distribution and new product development.

Organic garden brand Back to the Roots has grown a lot in 12 years. The company was co-founded by co-CEOs Nikhil Arora and Alejandro Velez in 2009 as an urban mushroom farm. Two years ago, Back to the Roots expanded its product scope to outdoor gardening products, which are now stocked in major retailers across the US.

The US lawn and garden industry is dominated by Scotts Miracle-Gro, but Back to the Roots believes it has the momentum to become the go-to brand for a rising number of millennial gardeners much more likely to prioritize sustainability and organic products.

"It accelerated the entrance of a whole generation of millennials into this category of probably five to 10 years," Arora said in reference to COVID-19's impact. "It happened overnight."

Funds to fertilize the future

In mid-November, Back to the Roots said it had raised $15 million in a round of funding known as a Series D. The financing will be used to accelerate product innovation and support greater distribution among retail stores. Prior investors in Back to the Roots include actress and cookbook author Ayesha Curry, professional basketball player Carmelo Anthony, and motivational speaker Tony Robbins. 

Industry leader Scotts Miracle-Gro generated more than $9 billion in revenue for the past two fiscal years, ending on September 30, 2021. Consumer purchases for the company were up 21% for the same period, suggesting "a level of consumer enthusiasm" for next year, according to a November 3 press release from the company.

Velez said these figures supported his outlook on how much Back to the Roots can expand. "Scotts built the garden brand for the baby boomer," he said. "And we are building the garden brand for the next generation."

Rapid sales growth through product diversification

The company offers products aimed at beginners, including seed kits and potting soil. Its outdoor gardening products are sold in thousands of Target, Walmart, Lowes, HEB, Costco, and Home Depot locations. Back to The Roots' photogenic oyster mushroom kit is currently the number one seller in Amazon's home and garden category. The company also has more than 93,000 followers on Instagram, where it promises to donate a grow kit and STEM curriculum to an elementary school if users share photos of their Back to Roots garden. 

Back to Roots has been on an upward trajectory by doubling its sales in the last three years. It aims to keep building on that growth by reaching $100 million in online and in-store sales next year.

"None of this funding round now would be there if we weren't seeing the consumers demanding this and pulling it through from the shelves," said Arora, noting that the company is already plotting 2023 with their farmers because products will go into the ground in the next few weeks.  "There's just so much whitespace ahead of us that we feel like ample room to grow."

A larger cultural shift beyond gardening

Arora and Velez said there are several other factors that supported their company's growth. These include the young average age of Back to the Roots' customers; plus the focus on sustainability among Gen Z consumers and companies that have signed an Amazon-backed initiative to achieve net-zero carbon emissions by 2040. There's also a greater willingness among consumers to pay more for organic products—sales in this category jumped 12.4% to $61.9 billion in the US last year. 

"I think gardening was a decade behind produce in terms of organic awareness," Arora said, pointing to the examples of organic grocer Whole Foods and the eco-friendly cleaning product company Method. "People were willing to pay a premium for a cleaner label that they thought was safer for their family and the planet. I think we're no longer like, 'this is an anomaly'."

A new effort to scale-up sustainability

Back to the Roots wants to revamp its stance on peat, which is partially decayed organic matter typically found in wetlands. The wetlands are an incredibly effective storer of carbon, but they have often been drained, cleared, turned over, or mined as a cheap medium for growing crops. All of these actions release an estimated at least 2 billion tonnes of carbon dioxide each year— roughly 5% of anthropogenic greenhouse-gas emissions.

Arora said Back to the Roots launched the first nationwide peat-free potting mix, and the company plans to offer a peat-free seed-starting mix in the spring. "To us, that's the kind of impact that we can continue to make and want to invest in scaling it up," he told Insider.

"We are just scratching the surface," Velez said. "We're just getting started." 

Read the original article on Business Insider