Increasing customer awareness about the near extinction of the wildly growing Indian sandalwood tree in its natural habitat in India is driving increased demand for traceable and sustainable supplies of Indian sandalwood.
As a result of increased customer awareness, producers of Indian sandalwood based products are increasingly under pressure to source their Indian sandalwood from high-quality traceable and sustainable sources. As a direct consequence of this changed end-customer behaviour, Indian sandalwood prices have increased substantially. Prices for the tree’s heartwood have increased 16.28% p.a. since 1991.
Parallel to the above described decade-long price rises witnessed for the tree’s heartwood, customers are also increasingly willing to pay meaningful premiums for sustainably and legally produced and sourced Indian sandalwood oil.
The legally and sustainably produced Indian sandalwood oil from our Australian asset partner Quintis commands a premium of almost 100%, compared to illegally and non-sustainably produced supplies of Indian sandalwood oil (see chart).
In direct contrast with producers of other forestry and agricultural products, who typically are exposed to strong market competition, Quintis is able to largely set its own prices for both Indian sandalwood and the oil derived from it, owing to its position as a de-facto monopoly supplier. There are currently no other suppliers of legal Indian sandalwood in commercially relevant quantities.