FIJI VANILLA PROJECT INFORMATION MEMORANDUM - Addressing Vanilla Bean Scarcity Vanilla Plantations Fiji Pte Ltd
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Information Memorandum
FIJI VANILLA
PROJECT
INFORMATION
MEMORANDUM
Addressing Vanilla Bean Scarcity
© Vanilla Plantations Fiji Pte Ltd July 2021
1 of 63
Information Memorandum
CHAIRMAN’S MESSAGE
Dear Investor,
VANILLA PLANTATIONS FIJI PROJECT
I invite you to read the Information Memorandum and Snapshot in relation to an exciting area of
agriculture. The Information Memorandum is based on publicly available and verifiable industry material
as well as industry information prepared by the Food and Agriculture Organisation of the United Nations
(‘FAO’) and various university research bodies in India, France, Australia, Fiji, Israel and elsewhere.
Why invest? There are many reasons:
• Demand exceeds supply and vanilla is now called ‘Green Gold’.
• Big Food and it’s international flavouring and fragrance partners are seeking to diversify their
sources of supply for Vanilla. At the present time, 80% of the Vanilla comes from Madagascar.
With the growing demand for Vanilla worldwide, particularly with China and Brazil becoming
large consumers, concerns about the security and concentration of supply are coming into sharp
focus.
• A prudent risk management regime is embedded in the Business Plan.
• There is a high return on investment with net profit in the order of 58%.
• Laws in both Europe and America mean that “vanilla can only be used if it is 100% vanilla”.
Over the past decade, the owners of Vanilla Plantations Fiji Pte Ltd have accumulated a wealth of
knowledge and experience in developing and operating a commercial scale Vanilla Plantation. Various
vanilla regions in relevant countries were visited in this respect - India, Thailand and Indonesia.
Our experienced and credentialled team is focused on delivering quantifiable results and returns for
our investors utilising previous international client contacts including members of Big Food and the
international flavour and fragrance entities.
Vanilla Plantations provides its investors a complete life cycle solution for those seeking to directly own
their own vanilla bean assets.
The recent high profile introductions of vanilla such as Vanilla Coke and Vanilla Pepsi confirm the
popularity of natural vanilla flavour. Consumer preferences for natural products coupled with changes in
regulation are very positive factors.
For example, the US Food and Drug Administration has banned a number of synthetic vanilla flavours.
Its business plan is designed to meet prudential risk tolerances. Our team has the experience and
the skills to match. One of the directors developed a significant east coast of Australia agricultural
undertaking including major projects in the Northern Territory.
Our team will work diligently to produce quantifiable and sound returns.
Yours sincerely
Frederick T Gulson
Chairman
Managing Director
www.vanillaplantationsfiji.com
investor@vanillaplantationsfiji.com
+61 408 440 816
GPO Box 16348 Suva Fiji Islands Coy No. RCBS2019L4631
Information Memorandum THE VANILLA PROJECT What is the investment being offered? The Vanilla Plantation Project provides the opportunity for investors to participate in the business of commercially growing Vanilla Plantations in the Fiji Islands. The Vanilla produced on the plantations is expected to produce at source Grade A-1 quality cured vanilla beans to be sold principally to Big Food and their suppliers, the international fragrance and flavouring markets, where strong market demand exists. In addition, the new emerging consuming countries of China and Brazil are placing further pressure on demand. It is the consumers love of “all natural” that is causing vanilla scarcity world wide. The investment unit for the Vanilla Project is a vanilla garden, which is a single area of land over which the investor is granted a right to harvest. One vanilla garden comprises 6 vines. The project will be established and maintained by the Vanilla Plantations Fiji Pte Ltd on a collective basis for between 8 to 10 years. The yearly crop will be sold on a collective basis with net proceeds of sale distributed. Each investor must pay a fee of US $3,100 per investment unit upon application. No further ongoing out-of-pocket expenses will be payable by the investor. WHAT IS THE STRUCTURE OF THE VANILLA PROJECT? Each grower enters into a Vanilla Investor Agreement under which they contract with the Vanilla Manager to establish a vanilla plantation and carry on the future management and maintenance of their plantation until the end of the fruiting period of up to 8 to 10 years. WHAT IS THE INVESTMENT BEING OFFERED? The Vanilla Project (the “Vanilla Project”) has been established to provide investors the opportunity to participate in a business of commercially growing vanilla gardens in Fiji. It is expected to produce vanilla beans to be sold for use in Big Food, such as Nestle, Unilever, Danone, Mars, Hershey and McCormick etc. The unit of investment of the Vanilla Project is a vanilla garden. A vanilla garden comprises an area of 6 vines. Whilst all investors will be entitled to the net profits of their plantation, the Vanilla Project will be established and maintained by the Vanilla Manager on a collective basis and after establishment of growth the beans will be harvested annually and sold on a pooled basis and Net Proceeds of Sale distributed. It is the Vanilla Manager that undertakes the responsibilities of conducting the business at its cost as explained elsewhere in the Information Memorandum.
Information Memorandum
Our Mission Statement
Our mission is to create a benchmark single origin vanilla bean plantation in Fiji for the
benefit of our investors.
To provide our international clients with a superior product and a superior service.
To respect the environment and conduct our business in a sustainable manner.
To provide our employees with a rewarding working environment.
To always seek better ways to do things.
To contribute to the unique way of life of all Fijian Islanders.
To promote gender equality principles.
Restrictions on Offerees and Disclaimers
This Information Memorandum (IM) relates to the offer of Vanilla Gardens to be managed by Vanilla
Plantations Fiji Pte Limited (Coy No. RCBS2019L4631) (“the Vanilla Manager”).
This Information Memorandum is intended to provide investors with a guide to the principal features of
the investment offering prior to an investment decision being made.
You are encouraged to read this Information Memorandum in its entirety and to seek independent
professional advice where appropriate.
Applicants may apply for up to 300 vanilla gardens. For more than 300 gardens, please contact us. The
Information Memorandum contains sensitive, confidential and privileged information. The information
provided is highly confidential and remains proprietary information. No confidentiality or privilege is
waived or lost by any unintended or accidental discovery or receipt of this Information Memorandum or
part.
For Australian citizens only: a sophisticated, professional or experienced investor’s application will have
their application accepted.
Information Memorandum
Contents
Group Advisor Directory 7
Corporate Profile 8
Why Invest? 14
Origin, History and Uses of Vanilla 17
Four Commercial Imperatives to Invest 18
1. Investment Summary 19
2. Key Features of the Vanilla Bean Project 21
What is the structure of the Project? 21
What is the investment being offered? 21
Who is the Vanilla Manager? 21
How long is the investment? 21
What are the fees and expenses? 21
What are the main agricultural risks? 22
Are there any agricultural incentives available? 22
Market Dynamics of Vanilla & Vanilla Bean Supply 22
Vanilla Worldwide Usage 23
Truth in Labelling 24
Our Vanilla Marketing Strategy 24
Vanilla Scarcity Issue - what is happening in the vanilla market world? 25
3. The Vanilla Investment Project 26
The Offer 26
Structure of the Project 26
Acceptance of Applications 26
Group Structure 26
Why Fiji? 26
How does the Vanilla Bean Project work? 27
What happens after the Investment Agreement is entered into? 27
Your investment is solely self-funded. 27
What will the indicative yields of vanilla bean be? 27
Application of Vanilla Funds 28
When will my vanilla garden be established? 28
Will my vanilla garden be separately identifiable? 28
Can I sell or transfer my vanilla garden prior to the termination of the project? 28
Vanilla Bean Production pattern 28
Is there a vanilla plant stocking guarantee? 29
What does the Independent Horticulturist do? 29
Can the Vanilla Project contribute to carbon neutrality in Fiji? 29
Application Monies to be held on Trust 29
Information Memorandum
When will the vanilla beans be harvested and sold? 29
Vanilla Bean - Yields and Anticipated Returns 30
Vanilla Bean Prices - US$ per kg as at March 2021 31
Indicative Income and Expenditure 32
How will vanilla returns be calculated? 33
How will investors be kept informed? 33
Land secured 33
Sustainable agricultural practices 33
4. Independent Horticulturist’s Report 34
5. Fees and Expenses 44
Fees that apply to an Investment in the Vanilla Project (all self funding): 44
6. Risks and Risk Management 46
Environmental/Growing Risks: 46
Market/Commercial Risks: 47
Other Risks: 48
What is the country risk for Fiji? 49
7. Material Documents 50
Investment Agreement 50
Harvesting, Marketing and Sales Agreements for Vanilla Beans 50
8. Additional Information 51
Application Monies to be held on Trust 51
Certificates 51
Change in Circumstances 51
How to Apply 51
Applicant’s Acknowledgment and Acceptance 52
Vanilla Investor Agreement 53
Power of Attorney 54
Application Form and Payment Details 57
Vanilla Plantations Group of Companies 58
Glossary of Terms 59
9. ‘Vanilla Scarcity’ in the Media 63
Information Memorandum
Group Advisor Directory
FIJI AUSTRALIA
Legal Advisors
Cromptons Cordato Partners
Barristers and Solicitors Level 5
QBE Insurance Centre 49 York Street
Victoria Parade Sydney NSW 2000
Suva AUSTRALIA
FIJI ISLANDS
Accountants
Ernst & Young Bacchus Associates Pty Limited
Pacific House “The Cooperage” Level 2 Suite 9
7/1 Butt Street 56 Bowman Street
Suva Pyrmont Point
FIJI ISLANDS PO Box 630 Pyrmont NSW 2009
AUSTRALIA
Horticulturalist Orchid Specialists
Pacific Grow) Kultana Orchids
PO Box 1451 39/6 Nawongprachapatana Road
Sigatoka Khwang Sikan
FIJI ISLANDS Khet Donmuang
Bangkok 10210
THAILAND
Banker
Westpac Banking Corporation Westpac Banking Corporation
Westpac House Royal Exchange
1 Thompson Street 99 Pitt Street
Suva Sydney NSW 2000
FIJI ISLANDS AUSTRALIA
7 of 63Information Memorandum
Corporate Profile
The Chairman, Frederick Gulson, has been involved in Australia in large scale
agriculture for over two decades and is a fourth generation agriculturalist. His
controlling interest in an agricultural enterprise in Australia produced, amongst other
products, 200+ tons of essential oil. It was one of the world’s biggest producers and
was the driving force for the establishment of similarly structured agricultural projects
in Australia.
Mr Gulson’s companies live up to the vision that - “we will be fair and ethical in all we
do.”
We are committed in Fiji to providing a level of quality and service that is second to
none and to conduct our business in a sustainable and ethical manner, as we did
with our Australian operations. We believe in onsite management and as such, Mr
Gulson will be residing on the plantation and executing a ‘hands-on’ approach. This is
consistent with our ongoing management practices in Australia.
We strongly believe in giving back to the community and we give much importance to
providing fair compensation. This will encourage productivity. Continuous education is
a priority. This will allow for employees to continually develop and will also help foster a
strong relationship with the people of Fiji. Promoting gender equality is a priority.
As with all our Australian agricultural enterprises, we will be an ISO certified group and
will continually improve our systems and procedures.
Innovation is in our DNA and is a large part of our future.
In short, we believe that there is high potential to expand cultivation without in any
way affecting price.
Vanilla Manager
Vanilla Plantations Fiji Pte Limited
Coy No. RCBS2019L4631
GPO Box 16348
Suva
Fiji Islands
C/- Cromptons Barristers & Solicitors
QBE Insurance Centre
Victoria Parade
Suva
Fiji Islands
Website: www.vanillaplantationsfiji.com
Email: investor@vanillaplantationsfiji.com
Phone: +61 408 440 816
8 of 63Information Memorandum
Directors
Frederick gained his experience in growing vanilla
as an orchid grower from the age of 12. He has
now accumulated several decades of experience
with growing orchids.
Frederick has extensive experience in large scale
farming enterprises. His Australian company
was the driving force for 15 similar structured
agricultural projects in NSW, Victoria and the
Northern Territory. One of the groups in which
he was a substantial shareholder was a large
essential oil producer with over 149,000,000 trees
Frederick T Gulson under cultivation. The essential oil products were
sold to over 60 countries either direct to such
B.A. LL.M
manufacturers as the multinational companies
Chairman
Managing Director of Colgate Palmolive, SC Johnson, Boots
Pharmaceuticals and the like, as well as to large
food and flavouring ingredients suppliers.
His company generated over 500,000 cubic
metres per annum of sterile biomass which was
developed for the wholesale and retail nursery
market in South East Queensland and Northern
NSW.
In addition, his company ran two large cattle
herds; a timber production operation, grain
production and a live eel supply business.
Ultimately, a large publicly listed agribusiness
approached Frederick to sell his properties and
varied enterprises.
Frederick was then involved in the largest tobacco
damages case undertaken by the US Department
of Justice.
In short, Frederick has a strong understanding of
the disciplines in diverse agribusiness sectors and
importantly, in the supply of agricultural products
to the multinational flavour and fragrance
companies (IFF) and their intermediary suppliers
and has connections with those entities.
His driving values, in addition to increasing
investor returns, are expertise, innovation and
integrity.
9 of 63Information Memorandum
Mr Ryan has undertaken analyses of agricultural
and horticultural industries marketing and
assistance arrangements for the Australian and
New Zealand governments.
A former Senior Adviser to Deputy Prime Minister,
Commonwealth, State and Territory Ministers for
Agriculture, primarily covering commodity and
biosecurity issues.
Mr Ryan was previously the Policy Director of
the NSW Farmers Association, the largest farm
member organisation in Australia.
Terry Ryan
B.Ec He undertook the independent review of the NSW
Livestock Health and Pest Authorities which are
responsible for biosecurity for agriculture and
horticulture in NSW.
He has been retained by Commonwealth and
State governments on a consulting basis primarily
on biosecurity issues for various industries.
For private sector organisations, he has
undertaken studies in Europe of Irish, British
and French agricultural/horticultural production
and marketing arrangements. In South America,
he has undertaken studies of agricultural/
horticultural production in Argentina and
Uruguay.
He has undertaken major studies for agricultural
and horticultural inputs, supplying industries such
as the fertiliser industry in Australia.
Mr Ryan chaired the 2007 Apimondia (World
Honeybee) Congress in Melbourne and was the
Australian delegate to the Apimondia Congresses
at subsequent conferences in Montpellier in
France and Buenos Aries in Argentina.
Mr Ryan’s CV indicates his deep knowledge and
passion for horticulture and agriculture.
10 of 63Information Memorandum
Kartika has 13 years experience in the corporate
accounting profession in Fiji in industries as
diverse as transport, marketing and printing. She
has a strong understanding of the requirements
of working within the accounting regulations in
Fiji including payroll, FNPF as well as attending to
the immigration formalities for executive staff.
Additionally, she has attended to a number of
matters relating to foreign investment in Fiji.
Kartika has a keen sense of both professionalism
and timeliness. Being raised in the Fijian Islands
Kartika (Kitts) Devi she has deep and extensive experience in dealing
B.A.(major in Accounting with the various groups and a range of Fijian
& Economics) commercial and cultural issues.
She is very familiar with the various forms of
accounting software. Her knowledge and local
experience will prove invaluable in our project.
Her skill sets will be most valuable working within
the Fijian Islands context.
Key Plantation Personnel
Post Graduated Diploma Horticultural Science -
Massey Uni. NZ 2012
Bachelor in Agriculture - University of South
Pacific 2007
Diploma in Tropical Agriculture - Fiji College of
Agriculture
2004-2018 Various horticultural post graduate
studies
Marike has a passion for agriculture and has
Harry Sakiti commanded horticultural teams ensuring
teamwork both at the Research Station as well as
Vanilla Project Plantation in off station activities.
Manager
He will be assisting the directors in successfully
recruiting the following key plantation personnel
and managing the plantation. There will be two
teams of about 50 women per team each led by
two suitably qualified women reporting to Marike
Raduaiu.
11 of 63Information Memorandum
VANILLA PLANTATION STRUCTURE
VITI LEVU - FIJI ISLANDS
Chairman/Managing Director
Frederick Gulson
Fiji Resident
Independent Vanilla Fiji Financial Controller Vanilla Manager
Horticulturist
12 of 63Information Memorandum
Senior Management Functions
The Vanilla Project Management comprises one horticulturalist and a Vanilla
Plantation Manager. In addition, we have a back office function as well as sales and
marketing functions
We have a well experienced and credentialled horticulturalist who has qualifications in
both New Zealand and Fiji. The horticulturalist has sound experience with Vanilla and
Rare Spice cultivation and production in Fiji. These crops were exported and most with
a value added. The horticulturalist has a passion for agriculture and has commanded
large horticultural teams in Fiji.
The on-farm personnel will be overwhelmingly women. The work requires full time
employees who are dexterous and work with alacrity and consistent with gender
equality principles. As required, the Vanilla Manager will call upon various external
expertise to assist with particular issues from time to time.
The back office function will be responsible for all accounting functions, payroll matters
and shipping the vanilla product to overseas clients, Big Food and their suppliers, the
IFF multinationals; together with the remittance of profit to investors. The Managing
Director has a long history of working closely with these entities.
All financial reports and crop records will be “backed up” off site regularly.
The Board is keen to ensure that all staff have a variety of talents and skill sharing
abilities, particularly those working on the plantation. The Board believes that this will
galvanise the entire plantation and elevate this Vanilla Project beyond what is expected
of current vanilla plantations elsewhere.
“The amount of all the vanilla beans in the
world is not sufficient to flavour everything
that everyone wants to flavour with vanilla”
- Carol McBride, US Vanilla Category Manager at Symrise
(Symrise is one of the world’s most respected supplier of essence, flavours and ingredients.)
13 of 63Information Memorandum
Why Invest?
Vanilla Bean Scarcity - An Investment
Opportunity
“Our clients in Europe and North America are not switching: we see a
sustained demand for natural vanilla extract. The market dynamics are
still being driven by consumer preferences for natural vanilla.”
Yannick Leen, Global Competence Director for Vanilla, Symrise, March 2019
What has led to the continued price hikes in
vanilla since 2013?
There are a number of reasons.
The supply of vanilla is so in demand that Madagascan farmers guard their crops at
night. Global food and beverage companies enter into long term supply contracts with
the Madagascan Commerce Ministry to ensure their vanilla supply security.
Importantly, consumers world wide are demanding natural ingredients further
accelerating global demand.
In short, the world market is experiencing some significant and enduring supply
shortages. Put into context, the global demand is 3500 tons with global production
being around 2400 tons. There is a strategic vulnerability for Big Food. Big Food is in
effect dependent on Madagascar for their vanilla. Madagascar produces about 80% of
the world’s supply.
“Vanilla is in very short supply.”
Mintec (principal independent source of intelligence on
rare spice commodities such as vanilla)
Mintec’s observations are supported by Bloomberg, a financial publication which
sources its information from the leading US flavouring company and Madagascar
Commerce Ministry. Madagascar is the world’s leading producer of vanilla.
“Globally, demand for pure vanilla extract’s continues to grow….. the
global vanilla demand deficit needs to be addressed through vanilla
cultivation in new regions.”
Amy Loomis, Business Development Manager, Symrise Flavour
14 of 63Information Memorandum
As one food and flavouring US company put it:
“Vanilla is unique, as it is the only flavour to have a standard of identity.
It is also the only flavour that may be specifically identified on ingredient
legends. Such language as “pure vanilla extract”, “natural vanilla
flavour” or similar are allowed. All other natural flavours are simply
designated as ‘natural flavour’…. Globally, demand for pure vanilla
extract continues to grow……. This is in response to consumer preferences
for naturally flavoured products.”
Donna Berry, Food Business News
\
“Growing consumer expectations for pure and all natural foods and
ingredients have spurred global food manufacturers to embrace the
use of pure vanilla, this has driven up global demand dramatically and
resulted in massive price hikes.”
McCormick Spices
“The biggest issue will be quantity that is exerting more upward pressure
on prices given large food companies including Nestle and Hershey have
said they will use natural flavourings. This has led to a hurried search for
new sources of natural vanilla flavourings.”
Melanie Legris, Sales and Marketing Manager at Eurovanille
“Other brands weren’t going to do anything until a major player pushed
it. With Nestle being the biggest in the world, everyone had to follow.”
“When Nestle announced it would go all natural, that just opened the
floodgates,”
Observes John Leffingwell, Head of Flavour and Fragrance Market Research firm,
Leffingwell and Associates.
“The amount of all the vanilla beans in the world is not sufficient to
flavour everything that everyone wants to flavour with vanilla. No other
food product gets that level of government oversight.”
Carol McBride, US Vanilla Category Manager at Symrise.
(Symrise is one of the world’s suppliers of essence, flavours and ingredients).
15 of 63Information Memorandum
“That is exerting more upward pressure on prices given large food
companies including Nestle and Hershey have said they will use natural
flavourings. This has led to a hurried search for new sources of natural
vanilla flavourings.”
Emiko Terazono, Financial Times
“In 2016 as more food and beverage companies move toward natural
ingredients and ‘clean’ labels…. for example, Nestle SA in February 2015
said it planned to remove artificial flavours and FDA certified colours
from all of its chocolate candy products. Other companies such as
General Foods, Inc and The Kellogg Co have followed with their own
plans to remove such ingredients.”
Jeff Gelski, Food Business
16 of 63Information Memorandum
Origin, History and Uses of Vanilla
Vanilla was introduced to Fiji in 1881 and was planted around Suva. Interest in the
cultivation of vanilla in Fiji has increased in the last 30 years.
Indeed, at a recent meeting of the South Pacific Commission it has promoted vanilla as
a key crop for Fiji and as having a very promising future.
Vanilla is the only edible fruit of the orchid family. It is a tropical orchid and there are
more than 150 varieties of vanilla, though only three types - Bourbon, Planifolia and
Tahitian - are used commercially.
Vanilla planifolia (also known as fragrans) forms the basis of our project. It traditionally
grew wild on the Atlantic Gulf side of Mexico. The Totonaca people of the Gulf coast of
Mexico were probably the first people to domesticate vanilla. They continue to cultivate
the fruit that they consider was given to them by the gods. Vanilla is a sacred and very
important part of their culture and their lives.
Vanilla first left Mexico in the early 1500s on ships bound for Spain. It was valued as a
perfume and flavour.
Vanilla is the world’s most labour intensive agricultural crop, which is one reason why it
is so expensive. The fruits, which resemble large green beans, must remain on the vine
for nine months in order to completely develop their signature aroma. However, when
the beans are harvested, they are still partially green and therefore have neither flavour
nor fragrance. They develop three distinctive properties during the curing and drying
process.
When the beans are harvested, they can be sun dried or treated with hot water or heat
and are then placed in the sun every day for weeks to months until they have shrunk
to 20% of their original size. After this process is complete, the beans are sorted for
size and quality. Then they will “rest” for a month or two to finish developing their full
flavour and fragrance. By the time they are shipped around the world, their aroma is
intense.
The United States is the world’s largest consumer of vanilla, followed by Europe -
especially France.
Vanilla is not only used as a flavour in foods and beverages, but also in perfumes. It is
also used in many industrial applications such as a flavouring for medicines and as a
fragrance to conceal the strong smell of rubber tyres, paint and cleaning products.
The dairy industry uses a large percentage of the world’s vanilla in ice creams (the
largest manufacturers are Unilever and Nestle), yoghurt (fresh and frozen) and other
flavoured dairy products. The French company, Danone, is a large worldwide user.
17 of 63Information Memorandum
FOUR COMMERCIAL IMPERATIVES
TO INVEST
1. Demand exceeds supply
As Symrise, a substantial International Flavour and Fragrance Global Entity, notes:
“Demand continues to grow…the demand deficit needs cultivation in
new regions.”
Unsatisfied demand is substantial. As some commentators have put it:
“For the last several years supply of vanilla is down - way down.”
As a result,
“The consumers demand for ‘all natural’ is driving demand and prices.”
2. Vanilla is the second most valuable spice
in the world
Currently selling at US$250 per kilo at source for Grade A-1 beans.
3. A high return on investment
Refer to Investment Project Summary & Indicative Investor Returns on page 19.
4. Big Food seeks to diversify supply source
Big Food and it’s international flavouring and fragrance partners are seeking to
diversify their sources of supply for Vanilla. At the moment they are strategically
vulnerable.
At the present time, 80% of the Vanilla comes from Madagascar. With the growing
demand for Vanilla worldwide, particularly with China and Brazil recently becoming
large consumers, concerns about the security and concentration of supply are coming
into sharp focus for Big Food and their IFF partners.
18 of 63Information Memorandum
1. Investment Summary
This Information Memorandum offers the opportunity to invest in the Vanilla Investment
Project to be established in Fiji on the main island of Viti Levu where the Vanilla Manager
has determined is suitable for the commercial production of vanilla gardens.
Investors in the Vanilla Project will be granted a Vanilla Investor Agreement and will
be issued with a Certificate evidencing that the Vanilla Investor Agreement has been
entered into.
A summary of the terms of the investment n the Vanilla Project are set out in Section 2
Key Features (page 21). Further detailed information on the investments is contained in
the remainder of this Information Memorandum, as well as the Snapshot document.
Investment Project Summary and
Indicative Investor Returns for One Garden
SUBSCRIPTION FEE PER GARDEN
US $ 3,100
FOR UP TO A 10 YEAR PERIOD
PROJECTED YIELD DATA
Harvest Years Year 4 up to Year 10 annually*
Vanilla Planifolia 100%
Cured Beans per vine 3 kgs
Current World Price at source per kg US$250/kg
Our prudential (discounted by 20%)
Price at source per kg US$200/kg
Year 3 to 10
Indicative Net Returns
58%
Year 4 up to Year 10
Vines per plantation managed for life of project 6 vines**
Acres under cultivation 25 acres
19 of 63Information Memorandum
*SUMMARY OF COMPARABLE CROPPING TIMES
CROP FIRST HARVEST
Sandalwood 10 to 15 years
Truffles 5 years on average
Avocadoes 4-5 years
Macadamias 6-7 years
Table Grapes 3 years but variable depending upon a number of environmental factors
Wine Grapes Usually by the Year 3
Forestry 10 years+, a once off crop
**The care of the vanilla plantation includes all of the horticultural needs for a garden including
but not limited to the following: the selection of stock, planting, tending, mulching, looping, flower
initiation, pollination (by hand), thinning, harvesting, curing, ageing and selling of same at best
price.
NOTES
(i) Unlike other agricultural products, the “Green Gold” as Vanilla is known as, is not listed on any
exchange. The bulk of production is sold to Big Food and the IFF group. For our Information
Memorandum we have allowed for an estimate of US$250 being for Grade A-1 beans at source.
(ii) For current “at source” price we have used US$250 per kilo for Grade A-1 beans for our
benchmark pricing is US $200 (a 20% discount). Our provision of US$200 is prudent and takes
into account future natural, economic or logistical phenomena. These provisions are also
consistent with our normal agricultural budgeting practices.
(iii) Grade A-1 beans are the highest quality. There are several other (lower) grades of bean.
(iv) Our Grade A-1 beans will not be blended with lower grades. Blending with lower grades allows
for a lower price per kilo to be charged. This practice is being done at the moment in culinary
and baking markets.
(v) You may acquire up to 300 vanilla gardens and more by agreement.
(vi) In some seasons not all vanilla vines flower. Our enquiries in India, Uganda and PNG indicate
that this phenomena is quite common and up to 25%. An adjustment has been made in our
indicative financials to that effect. It is a further example of our conservative provisioning.
20 of 63Information Memorandum
2. K
ey Features of the Vanilla Bean Project
VANILLA PROJECT
WHAT IS THE STRUCTURE OF THE PROJECT?
Each grower enters into a Vanilla Investor Agreement under which they contract with the Vanilla
Manager to establish a vanilla plantation and carry on the future management and maintenance of
their plantation until the end of the fruiting period of up to 8 to 10 years.
WHAT IS THE INVESTMENT BEING OFFERED?
The Vanilla Project (the “Vanilla Project”) has been established to provide investors the opportunity
to participate in a business of commercially growing vanilla gardens in Fiji. It is expected to produce
vanilla beans to be sold for use in Big Food, Nestle, Unilever, Danone, Mars, Hershey and McCormick
etc. There are some 1800 uses for vanilla according to Symrise.
The unit of investment of the Vanilla Project is a vanilla garden. A vanilla garden comprises an area of
6 vines. Whilst all investors will be entitled to the net profits of their plantation, the Vanilla Project will
be established and maintained by the Vanilla Manager on a collective basis and after establishment
of growth the beans will be harvested annually and sold on a pooled basis and Net Proceeds of Sale
distributed. It is the Vanilla Manager that undertakes the responsibilities of conducting the business
at its cost as explained elsewhere in the Information Memorandum
WHO IS THE VANILLA MANAGER?
The Vanilla Manager is Vanilla Plantations Fiji Pte Limited (“VP”). The management team has
considerable experience in the acquisition, establishment and management of significant
agricultural endeavours.
The team possesses the key building blocks for successful long term Vanilla Plantation Project
management and development including:
• sound agricultural management capabilities
• proven capacity to source high quality land;
• management expertise to establish and manage the vanilla gardens according to industry best
practices;
• financial strength and resources to allow the adoption of best horticultural practices; and
• superior sales and marketing resources.
HOW LONG IS THE INVESTMENT?
The Vanilla Project is expected to run for a term of up to approximately 10 years from the
commencement date. The vanilla bean gardens will be harvested each year between 3 and up to 10
years after establishment.
WHAT ARE THE FEES AND EXPENSES?
Your investment will be fully self-funding once the vanilla garden is acquired by you. All costs will
be met from the proceeds of successive crops. The team has successfully adopted the same strategy
in many large agricultural projects in Australia.
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VANILLA PROJECT
WHAT ARE THE MAIN RISKS?
Participation in the Vanilla Investment Project is intended to be of a medium to long term nature
in commercial horticulture and is therefore subject to attendant agricultural risks and should be
considered as speculative for several reasons.
The Vanilla Manager considers the key risks to be:
• Weather extremes: Weather extremes can have detrimental effects on growth. Perhaps the
largest environmental risk is over rainfall (i.e. inundation conditions) which can reduce growth
rates and yields and in extreme conditions can cause vine death. One of the other major weather
risks are cyclones. The vanilla gardens may be damaged or destroyed by wind from a cyclonic
event. Should such an event occur, this may materially impact returns to investors.
Proven strategies are in place to mitigate such events.
• Failure to achieve expected yield: Vanilla gardens productivity will dictate the volumes to be
achieved from harvesting, which will significantly impact on the returns ultimately achieved.
Garden productivity can be affected dramatically by rainfall conditions, soil types, diseases and
pests. If garden productivity is less than anticipated, returns to investors from the Vanilla Project
will be affected.
• Increased costs and failure to achieve economic prices: Predicting the prices of vanilla to be
exported from 3-10 years time is difficult. The eventual price achieved will depend on a range of
factors, largely outside the control of the Vanilla Manager. The net return from the Vanilla Project
is also dependent on the costs of harvesting, cultivation, hand pollination, sweating, curing
and the world market. There is a risk that returns to investors could be affected by significant
increases in current costs.
• Another pandemic such as Covid-19.
ARE THERE ANY AGRICULTURAL INCENTIVES AVAILABLE?
Yes and they are generous. Under the Fijian Tax and Customs Incentive Scheme any new activity in
commercial agricultural farming, approved, can enjoy up to 13 years Fijian tax holiday - well in excess
of the 8 to 10 years that the investors require. There is also a VAT holiday (9%). This means all income
is tax free for the life of the Project. These tax savings will be passed onto investors in the form of a
higher distribution.
MARKET DYNAMICS OF VANILLA & VANILLA BEAN SUPPLY
For some years now the global vanilla market has been undergoing very sharp and important
changes. These can be best seen in the selected quotes that we have provided in both the Snapshot
document and this Information Memorandum. There are several reasons why industry commentators
have called it “vanilla fever”.
There are many reasons set out throughout this document for why there is a worldwide shortage. As
the respected magazine, The Economist, quips, “there is a reason why your favorite ice cream may be
costing a bit more”. Thanks to the rapidly growing Chinese demand and western consumers insisting
on natural flavors the world seems to have developed an insatiable appetite for this fragrance spice.
One consequence of this demand has been that Madagascan farmers have been harvesting the
crops before the beans are quite ripe. This means that the production of cured beans has fallen
in quality and volume. Rising prices have also made small farmers in Madagascar harvest early to
minimize theft.
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VANILLA PROJECT
These vanilla growers are now referred to in Madagascar as “Vanillaires”.
Madagascar has now legislated against the dealing in unripened vanilla beans (“vrac”).
VANILLA WORLDWIDE USAGE
Madagascar is the largest producer of vanilla (United Nations FAO).
Its nearest competitor is Indonesia.
Under the present conditions for growing, existing regions do not have the capacity to pick up the
shortfall. This presents an ideal opportunity for Fiji.
As Director of a Canadian based vanilla importing company, Mr David van der Walde of Aust &
Hachmann Canada, a company which is affiliated with the oldest vanilla importer in the world says,
“Nestle, Unilever and General Foods are the three companies that control about 80% of the
products on our supermarket shelves (North America) decided they wanted their mainstream
products to feature natural products and ingredients in place of artificial labeling. It was almost
a perfect storm to create an environment for higher prices.”
Through one of the Director’s contacts with Big Foods and IFFs, the project has a unique opportunity
to supply vanilla bean having undertaken to meet all International Standards. A very important
attribute which has been adopted in the past.
Big Food, flavoring and food companies have started a trend towards pure, natural and artisanal
ingredients. Others are now following.
Other reasons for pressure on prices include hoarding by dealers in the hope of further price increases
and also trading in unripened green beans. Madagascan farming traders have been doing this for
some years.
All of these factors have driven the increasing pressure on supply resulting in pricing increases. Vanilla
bean prices continue to rise. It is now in the order of US$250 per kilo at source for Grade A-1 beans.
One respected global flavoring company has noted:
“The large scale demand from big food manufacturers and grocery chains has increased
sharply as the food industry shifts towards pure, natural and artisanal (traditional food and
drink) ingredients.”
Nestle, as one example, has gone to “all natural flavours”.
“Growing consumer expectations for pure and all-natural foods and ingredients have spurred
global food manufacturers to embrace the use of pure vanilla in recent years, which has driven
up global demand dramatically and resulted in massive price hikes….”
Craig Nielsen, Nielsen-Massey VP of Sustainability
A growing imbalance between supply and demand is apparent and is unlikely to abate quickly.
The whole vanilla sector is aware of the global market price for vanilla. The rush to reduce the number
of intermediaries is quickly taking place. Wholesalers and traders are facing stiff competition whilst
large users, multinational American, Swiss or German companies, are looking to acquire closer
contacts with their source suppliers/growers. This means the opportunity arises for direct selling to
end users at higher prices. Direct selling is an important part of our business plan and a strategy
successfully used in our previous agricultural projects.
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TRUTH IN LABELLING
As the BBC recently noted, the rocketing price for vanilla can also be put down to food rules in
Europe and the United States. The label “Vanilla” can only be used when the product contains 100%
natural vanilla.
If the flavor comes in part from artificial sources the packaging must say “vanilla flavor” or “artificial
vanilla”.
The US Federal Drug Administration (FDA) has regulations as to the percentage of Grade A beans in
vanilla extract. Vanilla extract is largely made up of Grade B or lower grades.
Over the last few years the theft of vanilla beans by thieves in Madagascar due to scarcity has led
farmers to harvest their beans before they are ready to prevent theft leading to lower quality results.
There are three principal grades of vanilla beans. The major variations between grades of vanilla beans
stem from three key factors - vanillin content, moisture content and appearance.
The principal grades are:
1. Grade A-1: These beans are dark and pliable with the moisture content between 30 to 35%.
This grading is the most sought after.
2. Grade A-2: These beans have a similar coloration of Grade A-1 with the moisture content
being between 25 to 30%.
3. Grade B: These extract grade beans are still aromatic but drier with the moisture content
of 15 to 24%.
OUR VANILLA MARKETING STRATEGY
There is now a unique opportunity to invest in vanilla. At the present time this pricing is approximately
US$250 per kilo at source for Grade A-1.
80% of the world’s supply of vanilla is grown in Madagascar, a third world country off the coast of
Africa where approximately 8000 small scale farmers have a plantation size of up to 350 vanilla vines.
This makes production and the consistency of quality in vanilla beans very challenging. There is scant
capital for farmers to borrow in order to improve farming and production practices. A lot are squatters
in national parks. As a result, vanilla bean quality is variable. Any capital accumulated is often spent
largely on cars and houses.
Our planting areas for this project is 65,000 vines.
It is the industrial food market that we will be targeting - our budgets are prepared on the basis of the
industrial users (Big Food and IFF entities). One of our past European clients remarked “the project
enables people to invest in vanilla farming without owning a farm.”
In short, we have the expertise to produce consistent quality beans, single plantation based with the
ability to engage directly with the Big Food users and IFF directly.
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VANILLA PROJECT
VANILLA SCARCITY ISSUE - WHAT IS HAPPENING IN THE VANILLA MARKET
WORLD?
There has been a consistent increase in the price of vanilla over the last 10 years. Why? This is largely
due to the large multinational food and fragrance markets - Nestle, Hershey, Danone, Pepsi Cola and
Unilever.
These users and traders have corralled and otherwise tied up substantial important vanilla growing
areas.
It has become common to attribute or blame price rises to shortages as a result of cyclonic or other
adverse weather events. In fact, such events have always occurred regularly across the tropics, which
is where vanilla grows.
There is a lively demand for vanilla beans coupled with a relative flat production regime. The result
being price increases.
Prices for vanilla, which is not traded on any exchange, have already surged over the past year thanks
to speculative hoarding and rising demand as more consumers shun artificial flavourings and
ingredients as well as China and Brazil consuming more vanilla.
“The biggest issue will be quantity,” said Melanie Legris, sales and marketing manager at
Eurovanille. “that is exerting more upward pressure on prices given large food companies
including Nestle and Hershey have said they will use natural flavourings. This has led to a
hurried search for new sources of natural vanilla flavourings.”
Liz Castello-Mechael, Corporate Communications Director for Nestle stated, “Nestle along
with other multinationals are removing artificial additives from their products. From 2012
Nestle has engaged in a seven year research and development program which has led to more
than 80 artificial ingredients being replaced with alternatives.”
“The amount of all the vanilla beans in the world is not sufficient to flavour everything that
everyone wants to flavour with vanilla.”
Says Carol McBride, US Vanilla Category Manager at Symrise. (Symrise is one of the world’s
suppliers of essence, flavours and ingredients)
25 of 63Information Memorandum
3. The Vanilla Investment Project
The Offer
To carry on commercially growing vanilla vines on land where the Vanilla Manager
determines it to be suitable for the commercial production of vanilla beans.
This will occur on the island of Viti Levu - the largest island in the Fiji Islands group.
Structure of the Project
This project aims to capitalise on current worldwide vanilla bean scarcity. Once the
Vanilla Manager has accepted an application, the Vanilla Manager enters into a Vanilla
Investor Agreement with the applicant under which the applicant contracts with the
Investor Manager to establish and maintain his/her plantation. Under this Agreement,
the investors will be granted one or more of the vanilla gardens of the applicants’
entitlement. The Vanilla Manager will sell the cured beans from the plantations for the
best available price.
Acceptance of Applications
The acceptance of applications for the project is the sole province of the Vanilla
Manager to accept or reject any application at its own discretion.
Group Structure
The Group will also be a member of Fair Trade and Transparency International.
Why Fiji?
• Fiji has a competitive horticultural advantage with a sound supply of surface water
and additionally, artesian water.
• The soil, climate and “terroir” in Fiji is ideal.
• Moody’s, the International Risk Rating Agency, has re-rated Fiji country risk from B1
up to B1+.
• Fiji has very stable political and financial environments. Fiji has a first world
infrastructure.
• Labour costs, which are crucial for this crop, are very competitive with other vanilla
bean production regions. Employee loyalty with a very low turnover. 94% of the
population speak English and literacy is high.
• The area contains beautiful inland rainforests and mountain peaks.
26 of 63Information Memorandum
How does the Vanilla Bean Project work?
This offer relates to vanilla gardens of at least 6 vines at a cost of US$3,100. Each
Application must be for a minimum of one vanilla garden. The Vanilla Manager does
not in any way guarantee Applications will be accepted and has the right to accept or
reject an Application in its sole discretion.
Once the Vanilla Manager has accepted an Application, it will enter into a Vanilla
Investor Agreement with the Applicant under which the Applicant contracts with
the Vanilla Manager to establish and maintain the garden from the commencement
date up to ten years or until it is no long commercial, whichever first occurs and under
which a Vanilla Investor Agreement will be granted over one or more vanilla gardens
on which the Vanilla Project will be established.
The Vanilla Investor Agreement will be issued promptly to investors.
What happens after the Vanilla Investor Agreement is
entered into?
The Application Price is paid to the Vanilla Manager for the establishment,
management and maintenance carried out under each Vanilla Investor Agreement
for the relevant period (“Establishment Services”). The relevant period for the Vanilla
Project commences from the date after execution of the Vanilla Investor Agreement
(“Commencement Date”). Pursuant to the Vanilla Investor Agreement, the Vanilla
Manager may determine the most appropriate time to carry out the Establishment
Services.
After completion of the Establishment Services, the Vanilla Manager is solely
responsible for the costs of maintenance and for management of the ongoing Vanilla
Project.
The investor has no further financial obligations to contribute to the management
or maintenance of the vanilla garden.
Your investment is solely self-funded.
In other words, once your vanilla garden is acquired, future costs and expenses will be
met from the vanilla garden harvest proceeds.
What will the indicative yields of vanilla bean be?
The result of a vanilla harvest is largely determined by the level of the soil fertility, its
cultivation, fertilisation, weather and the plant’s variety. The optimum result of vanilla,
or vanilla planifolia type, with a good cultivation technique is 3kg of cured beans per
vine.
Our group has had extensive interests in intensive agriculture and recognises the risks
in yields and in selling prices.
27 of 63Information Memorandum
Accordingly, we have risk weighted vanilla from US$250+/kg to US$200/kg for our
budgets.
This discount, we believe, is prudent for agricultural investments. (Please note that our
kg yields are based on FAO, UNO instrumentality.)
Application of Vanilla Funds
Your funds will be placed in the Vanilla Manager’s separate Trust Account until such
time as the Vanilla Investor Agreement is signed by Vanilla Manager.
Thereafter, the funds will be released to the Vanilla Manager.
When will my vanilla garden be established?
The vanilla plantation will be established within 13 months of the issue of the Vanilla
Investor Agreement.
Will my vanilla garden be separately identifiable?
Yes, each investor will be granted an investor interest over one or more vanilla gardens
on which the Vanilla Project will be established. All investors will be granted a separate
vanilla garden, the Vanilla Project will be established and maintained by the Vanilla
Manager on a collective basis and the vanilla beans will be harvested and sold on a
pooled basis and Net Proceeds of Sale distributed.
Can I sell or transfer my vanilla garden prior to the
termination of the project?
Yes, subject to the Vanilla Manager’s right of first refusal, investors are able to sell or
transfer gardens at any time if they have a willing buyer.
All sales and transfers, except transfers to Associates, relatives or the trustee of a
superannuation fund of which the investor is a member or upon death, divorce or
disability, are subject to the Vanilla Manager’s right of first refusal to purchase the
plantations. If applicable, the investor wishing to transfer some or all of its gardens,
must serve a written notice to that effect on the Vanilla Manager setting out the sale
price and other information and the Vanilla Manager may then exercise his right to
purchase within 30 days.
A transfer fee of FJ$100 plus VAT will apply on all transfers.
Vanilla Bean Production pattern
The production pattern of vanilla plants can vary from year to year. The optimum
cropping years are those from 3 to 4 years from first harvest. After that production will
continue to decrease. The project ends at 10 years or earlier if the cropping becomes
uncommercial.
28 of 63Information Memorandum
Is there a vanilla plant stocking guarantee?
Yes. The Vanilla Manager guarantees that 12 months after the vines have been
established, a minimum of 85% of the original number of vines established in the
Vanilla Project will remain or be replanted at no cost to the affected investors.
The guaranteed stocking rate does not cover damage by major climatic events.
What does the Independent Horticulturist do?
An Independent Horticulturalist will inspect the Vanilla Plantations over the life of the
Vanilla Project. The Independent Horticulturalist will inspect all gardens as soon as
practicable after they have been established for 12 months and thereafter will inspect
at least one third of all plantations annually, such that all gardens are inspected on a
three year rolling period. Following inspection, the Independent Horticulturalist will
prepare an annual report to the Vanilla Manager one year after the first report, which
will give details of any significant changes in the Vanilla Manager’s policy relating to
horticultural activities and whether the Vanilla Manager has carried out Services under
the Vanilla Investor Agreement in a proper and efficient manner.
In addition, to the inspection and reporting role, the Independent Horticulturalist also
confirms the adequacy of stocking levels 12 months after establishment and provides
other advice and assistance as required.
Can the Vanilla Project contribute to carbon neutrality
in Fiji?
Fiji Vanilla proposes that once the Vanilla Gardens have become productive it will determine
whether the project can operate in a carbon neutral way with associated premiums.
Costa Rica leads the way in this endeavour for that country’s coffee. We can do the same for
vanilla.
Application Monies to be held on Trust
Until the Vanilla Manager executes the Vanilla Investor Agreement on its own behalf
and as attorney of the investor, the Vanilla Manager will hold all the Application monies
which relate to the Vanilla Investor Agreement in a separate designated account.
When will the vanilla beans be harvested and sold?
The vanilla beans will be harvested about 8 months after pollination each year from the
3rd year and for up to 10 years from the date of establishment (the commencement
date) of each garden.
The Vanilla Manager will arrange for the manual harvest from the investor plantations.
This exercise commences with hand pollination of the vanilla flower blooms.
29 of 63Information Memorandum
Investors will receive their proportionate share of the net proceeds from the sale of the
vanilla (i.e. gross proceeds less all relevant costs) from the Vanilla Project as arranged
by the Vanilla Manager. In this case, the returns from the Vanilla Project are averaged
over the Vanilla Project. Given the expected time periods over which each harvesting
event may occur, it is likely that a number of distributions of proceeds may occur
within each year.
The investors irrevocably appoint and for valuable consideration the Vanilla Manager
as the investors agent to negotiate and make sales of the investors project produce
at the maximum practicable price available (having regard to relevant factors such
as marketable volumes, terms of contract), including entering into a sale agreement
with a purchaser on such terms and conditions as the Vanilla Manager considers
appropriate.
Vanilla Bean - Yields and Anticipated Returns
Vanilla’s current world vanilla bean price is up to US$250/kg for Garde A-1 cured beans
at the plantation gate (at source).
As experienced agriculturalists, we have based all our financial projections on other
farming enterprises on a plantation at source price of US$200/kg for cured beans, a
prudent agricultural allowance.
The prevailing price is US$250/kg.
This 20% discount or allowance is made to our projections to take into account many
factors that may affect the production of any agricultural product. In this case, the
discount or allowance includes spillage, shipping loss, pests, inclement weather, theft,
spoilage or the market. The directors believe that this allowance is good judgement for
an agricultural product and in line with our past experience.
The vanilla plantation will comprise of up to 65,000 plants. The optimum result is that a
vanilla garden of 6 vines will yield 3kgs per vine of cured beans per year after the end of
Year 3.
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VANILLA BEAN PRICES - US$ PER KG AS NOTED AT
MARCH 2021
The price of vanilla has soared as its use in ice cream, chocolate, perfume and soft
drinks has risen. According to the US Vanilla and Flavouring Group, Nielsen Massey,
prices for vanilla had already surged over the past year thanks to the rising demand as
more consumers shun artificial ingredients and flavouring.
Vanilla Bean Scarcity
Price surged after several years of small Madagascar harvests eroded global supply,
while demand by Big Food increased.
INVESTMENT PROJECT SUMMARY AND INDICATIVE INVESTOR RETURNS FOR ONE GARDEN
SUBSCRIPTION FEE PER GARDEN
FOR UP TO A 10 YEAR PERIOD US $3,100
PROJECTED YIELD DATA
Harvest Years Year 4 up to Year 10 annually*
Vanilla Planifolia 100%
Cured Beans per vine 3 kgs
Current World Price (at source) per kg US$250/kg
Our prudential (discounted by 20%)
Price at source per kg US$200/kg
Year 3 to 10
Indicative Net Returns Year 4 up to Year 10 58%
Vines per garden managed for life of project 6 vines**
Acres under cultivation 25 acres
*SUMMARY OF COMPARABLE CROPPING TIMES
CROP FIRST HARVEST
Sandalwood 10 to 15 years
Truffles 5 years on average
Avocadoes 4-5 years
Macadamias 6-7 years
Table Grapes 3 years but variable depending upon a number of environmental factors
Wine Grapes Usually by the Year 3
Forestry 10 years+, a once off crop
Vanilla 3 years
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