April has been a month of much promise.

First, we have opened the Royal Spice Café.  We opened it slowly, cautiously, with no marketing, and barely half a dozen covers.

Bit by bit, friends came.  Some of them posted reviews.  Have a look on Google Maps.  All 5 star, but look what they have to say about the food!  Sam, the chef and manager, and I absolutely click when it comes to devising recipes that can be produced in a restaurant kitchen.  And guests love them, slightly torn between telling us off for having the recipes too low priced compared to similar, and coming back for more before we increase them…  Yesterday, one of our earlier guests returned, not with the promised 6 guests but a dozen.  We were overwhelmed.  This was what I had feared and why we are slow to promote the café.

For the original idea was a café.  But one thing is forcing us to transform into a high-class restaurant.

Vanilla.

We put it in everything.  Not the smidgen that is usual in recipes, but lots!  We are using the vanilla that I deemed too poor to sell and affect our brand.  Our Crème Caramel transported a French guest into his childhood and he ate 4 portions, sufficient for him to immediately invest in us.  There is maybe ten times as much as the recipe calls for.

We have learnt significant features about vanilla.  It is not just for sweets and desserts.  No, it transforms everything, acting as a flavour catalyst and enhancer.  Our steak from local meat, despised by one and all, is soft, tender and delicious, with a red wine, onion and vanilla sauce.  We sell it for $12 and are told it should be over $100.

Further, vanilla is not just a flavour enhancer, but you require less food and one is less hungry for longer.

We are developing thoughts that we shall have a chain of these cafes, also used as a shop for our products, that will serve to force other restaurants to use more vanilla in their recipes.  Which will expand the worldwide demand for vanilla.  Which will speed up and increase the limit of the vanilla division of the company.

On the subject of the worldwide demand for vanilla, you may have read about the storms which hit Madagascar last month.  The main vanilla producing area was badly flooded and many vines destroyed.  This is a tragedy for Madagascar, yet again, and we don’t know how much of the crop will be affected.  It looks like a great deal.  Now Madagascar exports 40% of the world’s vanilla, of the highest quality, although certain actions by the government has seen the quality diminish, despite some excellent companies managing to continue to have high standards.  This will certainly affect the world vanilla price, currently in the doldrums.  By how much, we do not know.   It could be back up to $500 a kilo by the endo of the year. Perhaps more.  It will certainly go up.

What this means for us is that we are going to hold our stocks, not try to sell them, and buy as much green vanilla as we can from other farmers.  The season is just starting.  With our current slow processing method, we are succeeding in producing some very, very fine vanilla.  The very finest vanilla has a vanillin content over 3% and a moisture content of around 20%.  At this point, it will start to exude vanillin crystals.  It is considered the very finest vanilla.  I have never seen crystallised vanilla in Indonesia.

We find that when we get the vanilla to about 2.5% vanillin content, mould can no longer grow on it.  We think we have vanilla with a vanillin content over 3%, but because we have a higher moisture content, it won’t crystallise yet.  My ambition is to get first, crystallised vanilla.  Then to get it to crystallise at 25% moisture and the Holy Grail is at 30% moisture.  That will require a lot of vanillin.  We don’t vacuum pack our vanilla, for this creates an anaerobic environment and stops the production of vanillin, otherwise the vanilla keeps improving and maturing, which is what we do.

We have a shop in the cafe, and there we display our vanilla.  The lowest quality, which I am calling, rather naughtily, American Extraction Grade, is not for sale.  Demeans our brand.  However, yesterday an Australian buyer said that was the grade he wanted for extraction.  He said it is better than he gets in Australia and he will pay A$150 a kilo for it.  We will take this offer.  I had been worried about what to do with the lower grades, one reason for opening the café…  We are using the worst beans as coffee stirrers…

Currently, in the shop we are selling the best grade for Rp 400,000 per 50g and Rp 750,000 per 100g, in teak or cempaka wood boxes with a glass sliding lid.  We shall offer a kilo in a woven split bamboo basket for Rp 6,000,000.  Lower grades at reduced prices, but we find everyone wants the best grade.  It’s been massaged!  I’d like to say by virgins, but tattooed Karyo would scowl at me.  Frightening!

Seriously, we are trialling massaging the beans.  This seems to spread the vanillin throughout the bean and does appear to have benefits.

The second and third grade beans, mainly graded by size and colour, we shall sell for a lower price to restaurants and manufacturers.  We are waiting for Gelato Secrets, the largest ice cream manufacturer in Bali, to make some trials after which we shall confirm prices.

When we manage to expand the Royal Spice Café into other locations, we expect to sell most of our vanilla at retail prices through these.  In due course, this will be our export method, to our own shops in other countries.  First stop Singapore, second Dubai.

In the café shop, we are selling other products on consignment.  Bali Honey has uplifted its range.  We met 4 years ago, and I suggested at the time he should have separate honeys for separate flowers on which the bees have been feeding.  He has done it!  I am so pleased.  The Kaliandra honey is just fabulous.  The range will be in our shop on consignment.  And they want to sell our Flower Nectar as Vegan Honey, so we shall do a deal there.

What is our Flower Nectar?  It is the sap of the sugar tree, usually used to make arak, but we turn it into syrup, both pouring and spooning.  Quite delicious, pure fructose unless the temperature of the process produces sucrose, but we shall have it tested before claiming any health benefits.  I cannot believe anything so delicious and sweet can possibly be healthy.  It is what we use as sugar in the Café.

I love this project, because the farmers are impoverished hill villagers with little income.  We are creating a new industry for them and year-round steady income.  They shin up the tree in the morning and attach a bag to a flower stem.  They cut off all the flowers, and each morning peel off the scab that formed overnight.  In the evening, they retrieve the filled bag, much like rubber tappers.  We buy the sap from them in the evening and process it into syrup immediately before it can start to ferment into alcohol.  The taste is sensational, the market enormous.  People are paying $15 a 250ml jar without a thought.

As you know, we plan to change agriculture here in Bali and one of the most important things is to stop the toxic hydroponic growing of Chinese short-term rice, which poisons the environment and the farmers, while keeping them in perpetual bondage because of the miniscule returns.  Vanilla is great in the mountains, but not much use at sea-level.  We are considering growing blue lotus in these padi fields, for there is a huge demand for the extract.  We need to build the extraction plant first, alongside the vanilla extraction.  This appears to be the first viable option for the lowlands after the lobsters.

The lobsters, incidentally, are selling very well in the café.  We are having to increase production and cannot possibly sell to anyone else.  We have overcome the problem of losing 10% a month, but the downside is that we cannot do a monthly stock take, so it is hard to know where we are…  It is the stress of the stock take that was killing them.  Now the breeding season is just starting.

Meanwhile, we are in need of the rest of our capital requirements.  We have been working on this as well as the café, though Paul is malingering in hospital.  The bolts holding his shoulder together have come loose, and the operation to tighten them has not gone well, because they severed an artery which won’t close and he bleeds continuously. As soon as he comes out, he seems to go back in again.  I told him he should have let me do it with a Swiss Army knife.  Just needs a bit of cauterising.  We need to review the Business Plan, but we need more information first on sales.

We continue to provide shares in exchange for investment to small investors, and the café is very helpful for this, because investors are able to see what we are doing.  We are in negotiations for larger investment with both Jakarta investors and a Swiss Impact Investment firm with whom we are at the stage of due diligence.  After our previous experiences, we are not taking anything as done until the money arrives, but both companies are very interested.  Plus there is potential that to reward us for assisting them, a large operation be able to divert some funds to us.

Currently, our Phase II operation of buying from local farmers is showing a 600% profit.  We need to increase this operation to ensure we make a good dividend next year, and the amount of dividend will depend on the amount we can invest right now in green vanilla.  However, don’t think that we can invest a million dollars in green vanilla and get six million back.  First, we don’t yet have access to a million dollars’ worth of green vanilla, and that will take infrastructure planned for next year, and secondly, we don’t have the market yet for that much vanilla.  We can invest half a million…

You may worry that we are exploiting the farmers.  We aren’t.  We are offering them the opportunity to become partners, and of course they want to see more.  So, we are buying green vanilla from them at slightly better than market price, processing and selling it for a 600 profit.  We shall show them the price difference, and offer them the opportunity to take part.  Without the evidence, they won’t participate.  So, Phase II is where we start to make serious money and bring on the farmers for Phase III.  Which is where they start to make serious money.  And we leverage our operation into serious volumes.

With the failure of the Madagascan crop, we do expect the price of vanilla to rise to the point where we can sell every bit of vanilla we can process.  However, if it does not rise, it doesn’t matter as our vanilla is stored in such a manner that it improves each month, thus the value improves.  We could store it for two years if necessary, or even longer we believe.  Serious vanilla people continue to be astounded at the quality, and we are expecting visitors from Europe to see for themselves.

Investment for last month was 120 million rupiah, and we are still confirming the figures for the café.  It has been a soft opening, so we are still refining the reporting procedures and debating to which department expenses belong.  For example, this is the only sales outlet for the lobsters, so should that entire cost be laid to the café, as we build it up to larger quantities?  Do we immediately make the shop a separate outlet, or should it be part of the cafe?

STOP PRESS

We have conducted an experiment with the vanilla, how much of each grade is required to take half a kilo of sugar to the intense flavour we require:

Grade A                        5 beans

Grade B                        5 beans

Grade C                        5 beans

Grade D                        20 beans

Extraction Grade          20 beans

Grade D and Extraction Grade sell for about $100 a kilo.  Which would imply we can sell B&C for $400 and A for $1200…

Of course, it doesn’t work like that.  Grade D is almost certainly overpriced, but we can definitely create a base from which to sell the top 3 grades, but probably turn B&C into one grade.

Next experiment is to see how much caviar we can get from 250g of each grade.

Rex Sumner