Root’s Italian distributor sets multi-million dollar sales targets
Italy is in the top three European countries for agricultural production, with fruit and vegetables. It is also Europe’s main supplier of vegetables.
It makes for a perfect market for Roots Sustainable Agricultural Technologies Limited (ASX:ROO) to take an ag-tech stronghold as it looks to boost sales of its Root Zone Temperature Optimization (RZTO) technology in this region.
RZTO technology helps companies improve crop quality and increase yields.
Roots entered the market in October 2019, when it signed a 12-month Letter of Intent (LOI) with leading Italian ag-tech producer and nursery Cairo & Doutcher.
Cairo & Doutcher has been using the technology with great success after Roots installed its hybrid ground source heat exchange system combined with a heat pump to improve crop quality and increase yields for herbs and flowers at Cairo & Doutcher’s growing facilities in Southern Italy.
The Italian producer is an early adopter of agricultural technology, utilising innovative cultivation techniques to improve the quality of its pomegranate, mango, avocado, herb and flower crops. Its satisfaction with the effects of the RZTO system has led to a further agreement between the companies that could have mutual benefits.
This week Cairo & Doutcher signed an exclusive binding agreement to sell a minimum of five Root Zone Temperature Optimization (RZTO) systems during 2020.
To maintain exclusivity in relation to selling the RZTO system Cairo & Doutcher must build up sales of the RZTO system over a three year period, with incremental growth expected each year.
Over the course of the following three years, Cairo Doutcher has also agreed to increase sales of the RZTO systems by 100% per year from €500,000 during 2021, to €1 million in 2022 and €2 million in 2023.
Putting that in an Australian context, Italy could be a lucrative market for Roots worth A$3.2 million annually in as little as three years’ time.
Boaz Wachtel, ROOT's CEO and Chairman said, "With this agreement we are confident we will be able to secure a strong foothold in the very important Italian market and produce significant sales."
Italy holds great potential for roots RZTO’s technology, with the company confident it can produce significant sales and expand its footprint in this territory and throughout Europe.
Dr. Sharon Devir, Roots co-founder and director said, "This binding distribution agreement is testimony to the viability of RZTO technology and the interest it generates around the world. Italy is an important agricultural producer for the EU and it’s a versatile market with great potential for roots RZTO’s technology.”