20130619 risi higher value timberland investments teak indian sandalwood and agarwood

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Higher Value Timberland Investments: Agarwood by Dr. Andrew Steel, CEO of the Treedom Group. …

Higher Value Timberland Investments: Agarwood by Dr. Andrew Steel, CEO of the Treedom Group.

The presentation is for RISI Global Timberland Investments Seminar in Shanghai, China on 19 June 2013.

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  • Global Industry Analysts, Inc. (GIA) predicts that global perfume and fragrance sales will climb to $36 billion by 2017.Global Industry Analysts, Inc. (GIA) a well known company database provider
  • Global Industry Analysts, Inc. (GIA) predicts that global perfume and fragrance sales will climb to $36 billion by 2017.Global Industry Analysts, Inc. (GIA) a well known company database provider


  • 1. ANDREW G . STEELChief Executive OfficerTREEDOM GROUPandrew.steel@treedom.comHigher Value Timberland Investments: AgarwoodRISI Global Timberland Investments SeminarShanghai, China19 June 2013
  • 2. Investment Advisor to the Asia Renewable Resources FundForestry Consultancy & Project ManagementPlantation Management & Luxury Aromatic OilManufacturerPATT Foundation: Reforestation & Environmental EducationThe Treedom Group
  • 3.  Founded in 2006 2nd largest “legal” Oudoil production facility inThailand Aiming to be theleading manufacturer ofluxury Oud oil inSoutheast AsiaAsia ForestryManagement/Distillery
  • 4. • Agarwood is a precious resinous wood forming inAquilaria trees• The dark resin is formed as an antibody for healing afterinjury or fungus infection.• Agarwood trees are registered as an endangeredspecies by CITES due to its precious value, causing illegalwood smuggling• Commonly called Agarwood• Agar – India & Pakistan• Gaharu - Indonesia,Malay or PNG• Jinko – Japanese• Mai Krissana – Thailand• Chénxiāng (沉香) in China or "Cham Heong" in Cantonese• Aloeswood/EagleswoodWhat is AGARWOOD?
  • 5. Intellectual property!!“The Secret Ingredient”
  • 6. The following species of Aquilaria produce agarwood:• Aquilaria khasiana, India.• Aquilaria apiculina, Philippines• Aquilaria acuminata, Papua New Guinea, Indonesia &Philippines• Aquilaria baillonil, Thailand and Cambodia• Aquilaria baneonsis, Vietnam• Aquilaria beccariana, Indonesia• Aquilaria brachyantha, Malaysia• Aquilariacrassna, Cambodia, Malaysia, Thailand, and Vietnam• Aquilaria cumingiana, Indonesia and Malaysia• Aquilaria filaria, NewGuinea, the Moluccas, and Mindanao (Philippines)• Aquilaria grandiflora, China• Aquilaria hirta, Thailand, Indonesia and Malaysia• Aquilaria malaccensis, Malaysia, Thailand, and India• Aquilaria microcapa, Indonesia and Malaysia• Aquilaria rostrata, Malaysia• Aquilaria sinensis, China• Aquilaria subintegra, ThailandAquilaria Species &Locations
  • 7. 11.History of Oud oilUses of Oud & Dehn Al OudReligiousCosmeticsPerfumes & FragrancesHome FragrancesMedicinal
  • 8. 11.History of Oud oilReligious
  • 9. 11.History of Oud oilCosmetics – Body CareBodyCream BodyScrubPerfumeBalmBodyLotionShowergelMassage Oil
  • 10. 11.History of Oud oilPerfumes & Fragrances
  • 11. 11.History of Oud oilHome Fragrances
  • 12. 11.History of Oud oilMedicinalOud Tea/Oil: Detoxification, Insomnia, hyper-activity,disturbed sleep and difficulties in winding when usedin aromatherapy helps treat anxiety, stress, depressionand other nervous system disorders.In Chinese traditional medicine agar oil is used to treatcirrhosis of the liver, kidney problems and lung andstomach tumors.*HIV Research underway
  • 13. Agar wood - ChipsAgarwood chips can be categories as sinkingand non sinking.Agarwood chips grade for sinking chips can besuper AAAA, AAA, half sinking AA, A, B, and C.For non-sinking agarwood chips, it can reachsuper grade A. Most grade A, AB, B, BC, D“Its very subjective”Average Prices range from $1,000 -$2,500/Kg“Illegal Sources”: $350/gram ............
  • 14. Agar wood/Aloeswood -BeadsBracelets: Average Prices range from $90 -$4,500Aloeswood: 108 beads malasChinese Arts & Crafts in HK RRP $45,000108 is a multiple of 9Heart Chakra: The chakras are the intersections ofenergy lines, and there are said to be a total of 108energy lines converging to form the heart chakra.One of them, sushumna leads to the crownchakra, and is said to be the path to Self-realization.
  • 15. The value of Oud Oil compared with the value of gold:*Today’s gold price is US $ 1,402.05 per ounce.*(06/6/13)1 kilogram equal 32.15 ounces.Gold per kilogram US $ 45,076Grade A – 1kg Agar Oil (retail) is US $ 32,000+Arabian Oud – retail price $73,800/KgThe most expensive essential oil in the world!OUD - Liquid Gold
  • 16. The Middle East market is the main market for Oudh Oil, mainly the Muslimcommunity, as this is the world’s most popular region for using oudh.The needs of the target group can be divided into different parts:• Religious: The needs of the Muslim community are related to religiousaspects. They highly cherish the oudh and use it for ceremony purposes.• Cultural: oudh oil is often used as special gifts and as a welcomingfragrance in their houses.• Esthetical reasons: Oudh oil is has a very strong and distinct smell and ishardly used anywhere outside the Arabian Peninsula. This distinct smell isadored by both men and women and stands for wealth.The Middle East market uses Oudh oil for thefollowing end products:22.The Middle East MarketThe Middle EastMarket Perfumes Incense Medicines
  • 17. World MuslimPopulation - Growth• In 2006, countries with a Muslimmajority had an average populationgrowth rate of 1.8% per year (whenweighted by percentage Muslim andpopulation size).• This compares with a worldpopulation growth rate of 1.12% peryear.As of 2011, it is predicted thatthe worlds Muslim population willgrow twice as fast as non-Muslimsover the next 20 years.• By 2030, Muslims will make up morethan a quarter of the globalpopulationSource: Wikipedia
  • 18. Global Perfume &Fragrance Sales*Global Industry Analysts, Inc. (GIA) predicts that global perfumeand fragrance sales will climb to $36 billion by 2017.2012 US$30 billion
  • 19. Financial MetricsThailand Approx Establishment Costs (Ha): $3,540 …….. (High cost of land and irrigation)Revenue - 2000 trees (Ha)Oud Oil Sales: Avg: 16 ml oil per tree wholesale price $10,500 /kg = $336,000/HaWoodchip: 12% = 240 trees with 1% Avg tree weight 65kg = 156Kg/Ha = $156,000/HaTOTAL: $492,000/Ha
  • 20. Market IssuesLack ofInternationalGrading StructureFragrance Industry- MarketRegulation(EU/USA)Low productionCapacity (SE Asia)Numerous smallholders – NoMarket PenetrationAdulteration ofproducts – GCAnalysisLack of Knowledge
  • 21. 1• Expand operations across SE Asia• Become preferred supplier to theperfume industry2• Extend the Value Chain• Direct supply to buyers3• Consistent Quality & Quantity• Secure long term supply contracts• Attract Institutional investmentStrategy
  • 22. THANK YOUANDREW G . STEELChief Executive OfficerThe TREEDOM Groupandrew.steel@treedom.biz