First-grade agarwood can cost as much as $100,000 per kilogram. Why is it so expensive? - Business Insider - Business Insider

• First-grade agarwood can cost as much as $100,000 per kilogram.
• In order for the aquilaria tree to produce any agarwood, it must first become infected.
• Agarwood chips also known as oud are carved out by hand.
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Following is a transcript of the video.

Narrator: For thousands of years, agarwood has been known as "The Wood of the Gods." First-grade agarwood can cost as much as $100,000 per kilogram, making it one of the most expensive raw materials in the world. But for this tree to produce any agarwood, it must first become infected with mold.

So, how does this infection process work? What is agarwood used for? And what makes it so valuable?

Aquilaria malaccensis is a tree native to the rainforests of southeast Asia. Prior to infection, the healthy heartwood inside Aquilaria trees is pale, odorless, and worthless. However, in the wild, damage to the tree by external forces, such as grazing animals, sporadically results in the growth of a specific type of fungal infection inside the tree called Phialophora parasitica.

The Aquilaria's defense to this attack is to produce a stress-induced aromatic resin called aloes, which is dark and moist. Over the course of several years, the aloes slowly embed into the heartwood to create agarwood.

Truong Thanh Khoan: For an experienced woodsman, they can look at an Aquilaria tree and predict whether it has agarwood inside or not. Ants bore into the tree trunk, causing a wound and bringing in the microorganisms, bacteria, fungus spores into the trunk of the tree. The ant secretes a fluid that damages the tree, and then the tree uses its own sap to cover the wounds, which will turn into agarwood after a long time.

Narrator: Once agarwood is harvested, it needs to be separated from the healthy Aquilaria wood around it. In a painstaking task that often takes hours, resin-infused chips, also known as oud, are carved out by hand. Oud chips are commonly used as incense, particularly in the Middle East, where they're burnt both as tokens of hospitality and infused into clothes and garments as a perfume.

Truong Thanh Khoan: When burning, we see the smoke first, then the aroma begins to emit. The typical aroma of agarwood, there is no other scent equal to it. Then it slowly begins to have a sweet smell. In a closed room it can last up to three to five hours.

Narrator: Oud is also distilled into an essential oil. And in its purest form, aged oud oil can cost up to $80,000 per liter, earning the nickname amongst traders of "liquid gold." As its popularity continues to grow in the West, oud has become a common ingredient in several high-value fragrances, adding a warm, musky aroma. But due to unsustainable production and poaching, all varieties of Aquilaria trees are now classified as critically endangered, with experts estimating the global population has declined by 80% over the last 150 years. Even for those surviving Aquilaria trees, the frequency of natural fungal infection is extremely low. Some estimates say only 2% of wild Aquilaria trees are adequately infected to produce agarwood naturally, meaning the hunt to find natural agarwood is extremely arduous.

Truong Thanh Khoan: A group of five to 10 people went to the forest for 15 to 20 days, but as soon as we found agarwood, we came back. Sometimes we could not find anything. Even if you spend up to 20 days in the forest, you could still come back empty handed. It's very dangerous — rain, mountains, wild animals — so it was normal that someone lost their life in the forest. Back then it was normal to die in the forest. Now there is no more agarwood in the forest. It's all gone. People exploited it all.

Narrator: With natural agarwood now bordering on extinction, in some forestries, like this one managed by Truong in Vietnam, trees are artificially inoculated with a microbial compound to induce the all-important resin.

Truong Thanh Khoan: Natural agarwood is rare, so people prefer to use it. But the truth is that the quality of artificial agarwood is not necessarily inferior to natural agarwood. Natural agarwood is now very valuable. It can be 100 times higher than artificial agarwood. Because there isn't any natural agarwood in nature, people can set any price for it. Artificial agarwood is known to be a human-made product, so the prices are lower.

Narrator: Agarwood was described as a fragrant product of wealth and luxury in one of the world's oldest written texts, the Sanskrit Vedas, dating back as early as 1,400 BC. The aroma produced from agarwood has been highly valued by many cultures and religions throughout history.

In the Nirvana Sutra, aloes is mentioned as a "heavenly wood" used in the cremation of Buddha. In the New Testament, Jesus' body was anointed with a mixture of myrrh and aloes following his crucifixion. And in the Sahih al-Bukhari Hadith, the description of Paradise by Allah's messenger includes the burning of agarwood as incense.

The global market for agarwood is estimated to be worth a staggering $32 billion. But where oud was once so common, high demand has not only increased the price, but also the rate of harvesting and artificial production. By the end of 2029, the market is expected to double to $64 billion.

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First-grade agarwood can cost as much as $100,000 per kilogram. Why is it so expensive? - Business Insider - Business Insider
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