It smells funky, costs as much as precious metals and has an insatiable word market …

It smells funky, costs as much as precious metals and has an insatiable word market …

THE EXOTIC DELICIOUSNESS OF BLACK PERIGORD TRUFFLES

A small shaving of truffle can change the flavor of a dish from just tasty to insanely delicious.

What is it about these misshaped, pungent, “moldy” fungi that resonate so much with our taste buds?

They are sought after by world-class chefs and sell across the world like international currency, price controlled only by supply and demand — and of course, quality. Truffles are big money — according to National Geographic, the global market could grow to over 6 billion US dollars within ten years!

ENTER THOMAS THE TRUFFLE FARMER

Earlier this year, I met Thomas, a truffle farmer who is farming Black Perigord truffles in Spain, where he’d found the perfect terroir.  Thomas is a large man with a huge personality and a commanding voice — when he walks into a room, it vibrates with his charisma. I enjoyed talking to him — or maybe Thomas was talking and I was enjoying listening, as his mind moves at meteoric speed and it is difficult to keep up with him.

Born in Scotland he grew up poor — no silver spoons (or truffles) in his mouth.   Through hard work, he decided early on to break the cycle of poverty and change his destiny — originally he had wanted to become a brilliant criminal barrister (or attorney in England), such as the British TV character Rumpole of the Bailey, but circumstances prevented this dream with an even better one.

Thomas’s career instead began in engineering sales at the age of 16, and he moved to agency advertising in the late 80s early 90s.  He rose to the top of his firm, but the company was sold and in the reshuffle, he lost this job.  Deciding this would never happen again, he went back to university, studied for a law degree and trained further for the bar, intending to practice as a barrister (lawyer in England). Instead, he became an intellectual property specialist, moving on to managing investment funds that empowered commercialized university research.

By 1998, Thomas was able to retire and took his wife and four young children to live in the South of France.  It was here that he began to think about developing a business around slow and sustainable wealth development and investments based on natural resources.

This, of course, led to his interest in truffles. But I suspect his interest in truffles was also fueled by living in France where truffles are part of the gastronomy.

THE TERROIR

Like good wine and the best coffee, truffles are dependent on the terroir. Thomas’ current truffle plantations in Spain feature a climate ideal for truffles: mild dry winters with no frost, good spring rains, warm summers (though not too hot) with a little rain. This, combined with soft, well-drained loamy soil with a high limestone content, is where truffles are most likely to thrive. There’s another important element — oak trees. 

Truffles grow underground attaching themselves to the fine roots of these oak trees in their first year, setting up a symbiosis between the young host and the truffle. The truffle gets nourishment from the tree roots and reciprocates by giving soil nutrients back into the tree. Even with scientific techniques, only one-fifth of the germinated acorns will actually grow roots capable of sustaining truffles.

GETTING INTO TRUFFLE FARMING

Presently, Thomas’ company owns 156,000 Mediterranean Oak trees that are between 1-7 years old. Their roots are necessary because they become the host for the truffle spores.  Once the roots are inoculated with the spores, the trees begin to yield truffles in their third year  — although some of trees have actually “truffled” in year 2 under scientific cultivation.

After arriving in France, Thomas tried to buy a small truffle farm for his family, thinking they would eat some truffles and sell the rest. After getting to know the market better, he saw the potential in truffles and the investment began to grow.

There were and are a lot of small companies in the field, but the market is far from developed. Thomas’ background allowed him to take a more scientific approach, developing their own truffle forests working under strict researched principals researching — and already, his trees are seeing yields earlier in their lives as well as longer lives over all due to careful nurturing.

The company represents the world’s leading truffle tree science company and the world’s most successful panel of tree inoculation experts. Presently, the firm is not selling truffles yet as they need all the inventory they can produce to inoculate the nascent tree roots with the truffle spores. This greatly increases the potential for future gains.

MILLIONAIRES 

Speaking of mushrooming figures, it is estimated there are now about 2,500 new millionaires each year worldwide, a number that has grown exponentially with new millionaires from the tech world and the Asian countries. These are people buying priceless art, valuable coins, vintage wines … and truffles. They have been fully made into luxury items, with huge bragging rights attached. Price is no consideration, as is the case with all luxury items. 

This luxury item comes with a short shelf life and a shorter growing season. In Europe, each truffle begins life in April, growing between November and the next March when the truffle opens and is ready to come out of the ground.  It is then cleaned, graded and shipped out. This has to be done quickly — as the truffle’s funky smell, so essential to its value, dissipates starting immediately from the time it comes out of the ground.  

NOT A TRIFLE

With the help of scientific backing, Thomas’ company is planning to buy land in other parts of the world, like Australia, and circumvent seasonality, taking advantage of the different climates to ensure a more continuous supply of truffles throughout the year.

It is estimated that one healthy tree will yield up to ten kilos of Black Perigord truffles per year. Thomas’ company owns the land and the water rights on all over 156,000 trees. Getting your calculators out?

The truffle market is already ripe with demand. Returns are up to over thirty years with an IRR of 16%, with an average wholesale price of truffles from December 2018 to March 2019 being 950 Euros per kilo! In American English: $480 per pound!

Here’s the thing: this blog is not monetized and has not offered any product of mine for sale, ever.  However, I have spoken about this to a few people in private who have expressed interest and asked for more information about how to potentially invest in Thomas’ firm, and I figured I may as well make that information available to my readers. So here’s the pitch:

Usually, Thomas’ company offers investors blocks of 100 trees for US $51,563. These monies go towards purchasing new lands for truffle grove development.  Because I met Thomas and indicated I may have an interested audience, his firm is graciously offering my readers parcels of 50 trees for US $30,655.

In American English and measurements, and assuming truffle production and the price of truffles remains optimum: that’s potentially 500 kilos of truffles per year with a possible return of $528,549 over thirty years. Thomas’ firm anticipates a projected ROI of 867% with an IRR of 15% for investors, based on a more conservative estimate of 756 grams per tree per annum and wholesale “all season” sales price of €500p per kilogram. Additionally, the more trees you purchase, the lower the per-tree rate and the greater your potential returns.

I am not a truffle expert, outside of how good they taste. The figures are well documented in the company’s prospectus which is available from Thomas’ company. You can also read more in-depth which gives the history of the company as well as all the relevant facts of his company’s approach.

This struck me as a unique way to invest in sustainable agriculture while potentially gaining some tidy dividends. Currently, global demand is estimated at 1,000 to 2,000 tonnes per annum — with current supply averaging 40 tonnes.

Feel free to learn more by clicking here.

Only 8% of the entire number of trees is being made available for sale – the rest of the trees will remain in the Company.  Please note also, only the trees are sold, not the land.

Thomas’ company now has a valuation of US $66,810,000, owning 156,000 trees that will yield truffles after their third year. 

 

 

 

2 Replies to “It smells funky, costs as much as precious metals and has an insatiable word market …”

Leave a comment