West follows the scent of oud oil

The Life: It can be more expensive than gold and is as prized as precious gems. And now oud, a key ingredient of Middle East perfumes, is becoming increasingly popular with western fragrance houses.

Abdulla Ajmal, the general manager of Ajmal Perfumes, says 'you can make a lot money from oud as long as your overheads are very low'. Jaime Puebla / The National

It can be more expensive per ounce than gold and is prized as highly as precious gems.

Oud oil, which costs up to US$30,000 (Dh110,190) per kilogram, has been used in Middle East perfumes for centuries, but western fragrance houses are now venturing into the lucrative market.

Tom Ford, Armani and Jo Malone have launched their own oud lines in recent years and Estée Lauder is expected to follow suit soon.

"They want to cater towards the less recession-hit countries … and if they want to capture those markets they have to listen to the consumers," says Shahzad Haider, the chairman of The Fragrance Foundation Arabia.

"To my mind it's a very intelligent strategy by the international brands to adapt themselves to Middle Eastern consumers, and give them something in oud."

Oud is formed when the agar tree, which is found across South East Asia, becomes infected by a fungus. The tree secretes a resin - the oud - to protect itself. It is expensive because it is scarce and the process to extract and produce the oil is laborious.

Yet, it can also be lucrative for savvy business owners who are able to cut costs elsewhere.

"You can make a lot money from oud as long as your overheads are very low," says Abdulla Ajmal, the general manager of Ajmal Perfumes, which owns an agarwood plantation in India.

About 30 per cent of Ajmal's business is oud, but the company is hoping to get this down to 20 per cent.

"When you're a retailer of our size it eats into your margins," says Mr Ajmal.

"It's sort of a loss leader but we have to carry it because we're known for it. It adds to the top line but it doesn't do much for the bottom line." Oud oil occurs only in trees that are about 12 to 15 years old, although Ajmal holds a patent for a process that injects the fungus into younger agars.

"There's a lot of sustainable harvesting now but the problem is that it's not a cash crop. It takes years and years. The best quality of oud comes from a tree that is about 40 or 50 years old," says Mr Ajmal.

"In my grandfather's time there were amazing grades of oud, which you can't get as much anymore because people aren't willing to wait."

However, the quality varies and it can be difficult to tell the difference, making it possible for oud that is worth Dh500 to be on sale for Dh5,000.

"We have regular checks on all our products to make sure they're not mixtures or anything like that, says Mr Ajmal.

"It's very difficult to tell (the difference) if you put the right kind of mixture. You could mix a very high quality with a very low quality and most people can't tell."

At the moment, there is no way to test the quality of oud in the UAE, but that is about to change.

Delegates at the first Middle East Fragrance Summit, which was held earlier this week in Dubai, called for the establishment of a committee to develop standards for perfume produced in the Emirates. And one of the ingredients that will be monitored is oud.

"Oud that is 10 years old is more expensive than one year because it stays longer and better," says Mohamed Saleh Badri, the director general of the Emirates Authority for Standardisation and Metrology (ESMA).

"That's why it is very essential that the perfume that they create which is called oud is regulated right for the protection (of the consumers) and transparency of the process."

ESMA has received calls in the past from shoppers who suspect the oud they bought for Dh5,000 was worth a lot less.

"Once we regulate this a lot of the counterfeits will stop and fairness will be returned to the trade," says Mr Badri.