The big news this month is that we have produced our first product, Vanilla Extract, which is ten times stronger than most extract. We are selling 30ml for Rp 150,000 RRP, which is pretty much the same as single fold…
We aren’t positioning it as extract solely, because vanilla has so many benefits. Instead, it’s a perfume/after shave that also deters mosquitoes… attract men/women, detract mosquitoes. Oh, and you can spray on your food to improve the taste!
The obvious question is, any good? Well, we have a verbal order for 5,000 bottles per month starting in November, with 1,000 in October. We have raised the invoice for the first 96 bottles, and we’ll take it as it comes. We also have strong interest from other retailers, one of whom has taken it to be shown at the Jakarta Expo.
This is particularly exciting, because it will mean that we do not have to seek further investment, although that will hurry us along the way. 5,000 bottles is worth 500 million rupiah to us.
Growing vanilla intensively is not working. There just isn’t enough nutrition for the vines. In my experimental garden, I have one vine that is sprawling across 4 trees. It is fascinating to see which trees it does and does not like. Really not impressed by Gliricidia and Dadap, a large leaved local tree popular with growers. Mulberry, the dwarf black mulberry of Bali, is tolerated, but it loves mango. Sadly, mango does not like this climate… We’ve found that ‘dirty’ trees, shaggy ones with lots of crevices in the trunk which should be perfect, are not appreciated. Vanilla doesn’t seem too impressed by our fixing coconut husk to a trunk, either. We think the roots are evolved to have water streaming down the trunk and quickly drying. This makes sense, because other orchids are like that.
We are allowing the gardens to thin out and bit by bit replacing the Gliricidia with our new trees, further apart.
We have two new gardens being built. We are planting cacao, Moringa, butternut tree, coffee and avocado at present. We are now rooting new vanilla into pots made from coconut husk, which can be simply placed against a tree rather than being dug in. We think this will reduce transplanting shock.
The vanilla is well into flowering, with about 3 or 4 times as many flowers this year as last. The first flowers are the biggest and strongest, we are not pollinating small flowers. This season, we want more big beans and we think we know how to do this.
No new farmers, and not expecting any till next year, when we expect a flux, because we will have a better idea on pricing and can pay more.
As above.
We now have about 100kg of grades A and B vanilla, plus 300kg of lower grades that we do not wish to sell. What is the difference between grades? Well, really there is little except for the amount of vanillin and other bio-constituents that make up the wonderful taste and smell. In other words, same same but you need more of it. So, we sell the top grades and people are impressed with the quality of our vanilla. The lower grades we make into extract and caviar (not fish roe but the seeds of vanilla). We can make identical extract from Grade E as from Grade A – we just need more of it! This makes something of a mockery of the traditional grading of Fold – single is 100g in 1L of alcohol. Ours is more like 10-fold anyway. As we are aiming for strength, and we are selling it at the same price as single, we’re not worried about this for now.
The 100kg of beans we expect to bring us about 500 million rupiah when sold to visitors to the café. However, we wish to build up trust and loyalty with an export clientele plus restaurants and hotels. To this end, we are supplying small quantities at much lower prices. We have already exported to Hawaii and Japan. Japan is taking our split beans, high quality but price reduced. The client is a chocolate manufacturer. We have promised continued supply, so will keep beans back for them till next years crop is upon us.
The 300kg of lower grades will make us about 50,000 bottles of extract, worth about 5 billion rupiah to us. Ten times as much as the whole beans. Which demonstrates how much money other countries make from buying the beans, making extract and shipping it back to other countries… including Indonesia. Admittedly, they use modern techniques, but in our opinion, these are fast methods that produce an inferior quality. We prefer to let the extract mature and mellow over time, like a good Scotch whiskey.
Galungan, the Balinese New Year, will be over in another week after which we expect to progress the factory.
This month we have harvested 75 lobsters for sale in the Café. Not much financially, but a start! The breeding quarters are working, we now need to expand them. We are only using 10% of capacity at present. Going slow and sure.
Seeds are growing well, but we are deeply suspicious we have been sold the wrong species!
On the 1st October we start to tap our own trees, to handle expansion. We are confident on this one, given the reaction of people to tasting it in the Café and the size of the market.
This is very much on the back burner. However, the success of extract as perfume will hurry up the processing.
Results from August show that we broke even, with an income of around Rp 25,000,000, and September is going much better. At the same time, it is functioning as our production centre where we trial methods before we move to larger facilities, our experimental kitchen. It has also been responsible for bringing in the investment over the past 5 months.
Investment for September was Rp 238,423,360 making a total of all investment Rp 11,723,973,210.
Vanilla, 5kg, total Rp 24,000,000.
Shipping, 2, Rp 2,000,000.
Vanilla Extract, 96 bottles, Rp 10,080,000.
Please note, these figures do not include the sales from the Shop in the café. Accounted separately.
Actual saleable assets at present are 100kg of high-quality vanilla, worth USD 20,000 and sufficient raw materials to make 50,000 bottles of extract, worth USD 500,000. Of course, we still have the gardens. We have verbal orders for 5,000 bottles of extract per month. We have the ability to ramp up production with a lead time of a couple of months, meaning that our current order book should enable us to grow steadily without needing further investment. Nevertheless, we shall accept a certain degree of further investment because that will speed up your returns. We will not stop accepting investment, but we shall put up the price of investment considerably. Which means that should you wish to sell your shares, it will become very much easier for you to do so. I expect that at the end of October, we shall raise the price of investment shares to Rp 3 million each, more than twice the original investment sum. If you wish to sell you shares, it means that you can sell at a discount from our price and still make a profit. Because our focus is on growing the company, we have no immediate plans to make a market where the shares can be traded. We don’t actually have a license to do so. I understand there is an unlisted market in Jakarta of some sort, and when time permits we shall investigate this on your behalf. If any of you have any knowledge of this subject, please share with us.
The likelihood of a dividend being paid next year has increased, even though we failed to get the investment needed to make that definite. At the beginning of next year, when the accounts for this year are complete, we shall ask the shareholders what you wish to do and the directors will abstain from the vote.
Future years, providing all goes according to plan and the world doesn’t erupt, should see a much better return than forecast. The original financial projections made no account of the profit to be made from extract.
I know this is a subject dear to many of you, as indeed it is to all of us here. I have been wondering how we could speed this up, because frankly we cannot even start planning until we are in profit. Somebody suggested that we could seek sponsorship, and it was as if a light went off. I still wasn’t certain, because this is a long way from the experience of any of us.
However, somebody else has stepped forward to push this, and is in encouraging talks which could see us start the Royal Reserves years ahead of schedule and somebody else is interested in helping us promote the Royal Shows, to help local artists. We cannot do more than supervise these, and in each instance, we need people to run the events.
Our search for suitable sales people continues, and we are almost ready to employ a suitable person.
Royal Spice Gardens is an Indonesian Foreign Investment Company, in Indonesia known as a Perusahaan Modal Asing (PMA).
NIB Licence number 0220100502286. NPWP: 94.830.504.0- 905.000.
PT Royal Spice Gardens Indonesia, Alamanda Office 5th floor, Jl. By Pass Ngurah Rai, Br. Kerthayasa No. 67, Kedonganan, Kuta, Bali 80361, Indonesia
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