How unique is sandalwood and what are the substitutes for each of the uses?
Very valuable, only certain regions in the world are capable of growing and most are limited by sovereign risks. 47% of perfumes made since 1790 contain sandalwood notes. It is used among religious ceremonies in India, Taiwan and Asia and can’t be substituted. It contains anti-inflammatory and anti-bacterial properties that other woods don’t possess. In terms of furniture, it isn’t any more practical than other woods but is used only in fine crafted furniture due to the cost. It also contains aromatic properties that other woods lack.
It is also used in skin care treatments and subsequently, TFC have the only pharmaceutical-grade indian sandalwood, which is used in their product Benzac (Acne treatment).
Who are the other big sandalwood producers and how do they compare?
No other big sandalwood producer that compare in Australia. Certainly none that own all parts of the supply chain. TFS own and manage the largest plantation of commercially-grown Indian Sandalwood in the world.
Some competitors exist globally but do not compare in size and are restricted by sovereign risks and government legislation.
What is the volatility in prices for each of the end uses?
Indian Sandalwood grown in India is more expensive than Australian-grown sandalwood, as it has a higher oil content. Australian grown sandalwood has increased in price year on year, by approx. 10% pa due to an inability to satisfy demand, while supply also diminishes globally and the price of Indian-grown sandalwood increases to crazy highs.
What are the disease or other crop failure risks?
Fire, grazing and most importantly exploitation of the wood for fine furniture and carving and also oil are threatening the species. Smuggling has assumed alarming proportions. This isn’t all bad for TFC, as places like India have banned export in order to conserve the species, giving us greater market share.
TFC Price at posting:
$1.49 Sentiment: Buy Disclosure: Held
