Last March, when a vicious cyclone hit Madagascar, experts feared one-third of the country's vanilla crop was destroyed. With the island nation off the coast of southeast Africa producing 80-85 percent of the world's vanilla, speculation shot up prices and tightened supplies.
Ten months later, it's apparent Cyclone Enawo, which hit with fury equivalent to a category 4 hurricane, did not have the disastrous impact that many predicted, according to Aust & Hachmann (www.austhachcanada.com), a Quebec vanilla bean broker. Price and supply of the precious ingredient were stabilizing as the new year began. But this is a market that has been notoriously unstable.
"There is a significant quantity of very immature cyclone vanilla (these are green beans that were blown of the vines 3-4 months before full maturity and immediately cured)," the trading company reports, but it represents a small portion of the tonnage. "We had suggested 2017 could produce one of the worst quality vanilla crops ever.
However, against all expectations, even those of the most seasoned vanilla exporters in Madagascar," both the quantity and quality of the 2017 crop is coming in above expectations.
Vanilla is the only fruit-bearing orchid out of hundreds in the orchid species, and takes about three years for a new plant to begin flowering. Each flower produces just one vanilla pod, which is full of seeds in an oily liquid.
As vanilla prices skyrocketed, some growers took shortcuts, harvesting beans early or skimping on the labor-intensive, three-to-six-month-long curing process, not to mention the manual harvesting. Both practices contribute to the difficulty of sourcing high-quality beans.
All of this dealt a major blow to suppliers and ultimately to food and beverage processors – especially bakers and confectioners – for whom pure vanilla extract is a key product component with a complicated chemistry, one with several precarious flavor compounds. Not only is it a favorite flavor, it's a flavor enhancer, can minimize the needed quantity of other flavors, adds dimension and a hint of sweetness without sugar. It's also a much-used scent.
"Vanilla is a unique flavor that simply cannot be replicated with imitation products," says Craig Nielsen, vice president of sustainability at Nielsen-Massey Vanillas (www.nielsenmassey.com). "The good news is that a small amount of vanilla can deliver a huge flavor punch."
On one hand, food companies face growing pressure to replace artificial ingredients (like synthetic vanillin) with real, more "natural" ones to achieve clean labels. On the other hand, the price jumps are causing many vanilla users to look at replacements or to carefully optimize (reduce) the vanilla used in their products.
"The trend in recent years among food manufacturers has been to source natural vanilla produced from vanilla beans, which is partly what precipitated such an increase in global demand and helped drive up prices," Nielsen says.
Even with improving supply, vanilla prices remain stubbornly high. In the summer of 2017, market prices reportedly hit $600/kg, then fell slightly. The 2002 market crash left premium pods selling for $20 a kilo. Vanilla at $100 a kilo used to be a fair to average price.
Immature harvesting is becoming rampant, as is poaching of vanilla vines. And when a kilo of vanilla beans represents a year or more of wages for the average Malagasy, theft becomes a nightmare, according to flavor supplier Cook's Vanilla (www.cooksvanilla.com).
"Loathe to risk leaving their vanilla beans on the vine one day longer than they absolutely must, farmers are picking them way early," Cook's says. "We are not buying 'cuts,' 'quick-cured' or immature vanilla beans. For those who cannot stomach current prices, we recommend our natural vanilla blends."
Aust & Hachmann in December predicted 1,300-1,600 tons for the 2017 Madagascar crop, actually an improvement over 2016's estimated 1,200 tons. In some years, the country's crop surpassed 2,000 tons. Poor crops, including low vanillin contents and aroma profiles, the past three years have been instrumental in escalating prices.
The high prices forced one high-end London gelato chain, Oddono’s, to pull its vanilla ice cream off the menu, reported Financial Times.
According to the same report, large companies like Nestlé say they manage ingredient cost volatility through “adapted procurement strategies, innovation and, as a last option, raising their own prices.”
Processors who asked not to be identified tell us they've switched to less expensive vanillas or blends of vanillas and "other natural flavors" as a way to achieve the desired taste – although, in some cases, the resulting vanilla flavor wasn't as pronounced.
McCormick & Co. (www.mccormick.com) is coping with what it calls the unprecedented, limited supply of quality vanilla beans in the marketplace. CEO Lawrence Kurzius says he sees the high vanilla pricing continuing well into 2018.
"Prices have escalated more than 400 percent since 2014," states Laurie Harrsen, senior director of consumer communications. Despite the shortage, "There's a growing demand for pure vanilla throughout the food industry. Due to this extreme vanilla shortage and because McCormick will not sacrifice on quality, we have had to raise the prices several times on pure vanilla products. Consumers saw this as they shopped for their holiday ingredients."
Looking for alternatives
Offering a large range of vanilla products, McCormick suggests its imitation vanilla and premium vanilla flavor as less expensive options.
Synthetic vanillin is a much less expensive alternative, but may or may not create desired results or unique flavor. Some suppliers, such as France's Prova (www.prova.fr), have developed versions that withstand high baking temperatures and high-fat systems in chocolate, coatings, biscuit dough, fillings and other applications.
Some food and beverage processors were willing to use vanilla from a quick-cure process. The quick-cure process can vary, and the flavor deviates from the vanilla produced using traditional curing processes, which afford beans with an intricate, fragrant flavor that blends well in both sweet and savory products.
There are vanillas from other countries, although their quantity and quality are far behind Madagascar's. Vanilla grown in Tahiti has a sweet, floral and tropical flavor, more delicate than that from Madagascar's traditional French vanilla flavor, according to The Spice House (www.thespicehouse.com). Vanilla with differing flavor profiles is also produced in Indonesia, Uganda, Mexico, New Guinea and Africa's Comoros Islands.
"We can offer single-origin [vanilla] products as well as blends produced from beans sourced from Madagascar, Tahiti, Mexico, Indonesia, India, New Guinea or Uganda," Nielsen explains. "For manufacturers considering blended vanillas, we can connect them with our in-house blending specialists to discuss the best options. A bourbon-Mexican blend, for instance, balances the depth and richness of Madagascar bourbon vanilla with the spiciness of Mexican vanilla."
Nielsen notes his firm is active in the Sustainable Vanilla Initiative (SVI), an industry coalition of more than 20 member companies representing more than 70 percent of worldwide vanilla bean purchasers who work to ensure the ingredient's sustainability. "The SVI promotes sustainable environmental practices and helps farmers earn a successful living in countries where poverty is common," he says. "The supplier network helps us ensure access to high-quality beans during periods of tight supply so we can continue to meet the needs of customers."
Over the summer of 2017, Mars, Dannon and Firmenich invested in large-scale, innovative vanilla farming in Madagascar to improve vanilla quality and reduce poverty among farmers there. Involving 3,000 producers and the Livelihoods Fund for Family Farming, the project aims to enable farmers to regain control of their vanilla production (and vanilla users of their sourcing) and to triple farmer revenues while providing sustainable, traceable vanilla.
"In light of the recent rising vanilla prices and today's market scarcity, it is critical for us to invest in innovative solutions if we are to continue protecting the best that nature has to offer," explains Eric Nicolas, Firmenich's chief financial offer and board member of Livelihoods Family Farming.
Meanwhile, cyclone season in Madagascar's part of the world is just getting under way for 2018. Local growers and U.S. importers are keeping their fingers crossed.