markyscott
Imperial Masterpiece
Akadama is a volcanic soil - an andosol, to be specific. Over 110 million hectares of the earths surface are covered with andosols - they are common and widespread in the Pacific NW. You can find a map in this reference. But unless bonsai becomes much more popular in the US or they find another industrial application, I doubt anyone could make a commercial go of it. Mining operations are extremely expensive as are all the environmental permitting and labor costs. What’s the market? Maybe 5000 bonsai enthusiasts in North America, perhaps 1/2 of whom use akadama. Of that 2500, maybe a few more that will try a domestic version of akadama offset by others that will stick with their tried-and-true brands.
Let’s try a thought experiment:
Expenses:
Startup costs. Land purchase, equipment purchase, environmental permitting, construction etc. $5M
Annual expenses
Labor costs. 5 employees at $30K + payroll taxes and benefits ~ $500K
Equipment maintenance and repair. $50K
Operational costs (gas and power, consumables). $25K
Marketing. $5K
Packaging and Shipping $50K
Inventory maintenance $5K
Let’s call break-even $650K, optimistically, excluding retirement of any debt from the startup costs.
Current market is roughly 2500 people. Let’s assume that all of the other bonsai enthusiasts currently using pine bark also switch to the domestic akadama and all these folks purchase 3 bags per year. That’s a sales potential of 15,000 bags per year. So to break even we’ll need to price each bag at:
$650K/15K = $43 per bag
So even with these very optimistic numbers, you’ll need to price the domestic akadama close to $50/bag to break even - probably higher to retire the startup debt and turn a profit. Sounds like a very shaky business proposition to me.
Now - If you can double or triple your sales by finding other horiticultral or industrial applications, perhaps then we have a going concern and can cut prices to compete with Japanese brands.
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