Vanilla. After saffron, it’s the second most expensive spice in the world. Discovered by the Totonacs on the eastern coast of Mexico, the only fruit-bearing member of the orchid family eventually made its way to Europe via Hernando Cortez, the Spanish conquistador.
Vanilla was among one of the various tributes Cortez brought back to Spain after conquering the Aztecs, who had developed a taste for the spice after their conquest of the Totonacs. Initially it was only used to flavor the bitter chocolate drink from the New World that only the rich and noble were able to afford.
News of the new spice spread, but it wasn’t until 1602 that Hugh Morgan, an apothecary to Queen Elizabeth I, had the brilliant idea to use vanilla as a flavoring by itself. That proved to be the first step toward near ubiquity.
Its appearance in the Bourbon Islands (Réunion, Madagascar, Mauritius, Comoro and Seychelles make up the Bourbon Islands, which are just east of the southern portion of Africa) in 1793 — a vine was smuggled from Mexico — proved to be a key step in fostering its global growth. That, followed by the discovery of hand pollination by Edmond Albious, a Réunion island native, in 1841, eventually led to the dominant position vanilla now holds today.
That also focused production of the crop onto Madagascar, where nearly 80 percent is grown, harvested and cured. As goes Madagascar, so goes the price of vanilla.
But things didn’t go so well in Madagascar this year. Cyclone Enawo devastated nearly 20 percent of the year’s crop. To complicate matters, a pattern of harvesting green vanilla pods to shorten the curing cycle has had a negative effect on quality.
Growing demand for natural ingredients among consumers has only stimulated price volatility onto an already tinder-box market. Is there no end in sight regarding price increases?
Possibly. As Kip Murphy, marketing manager for Virginia Dare points out, the harvest in Madagascar typically runs from mid-June to mid-August, which means it is essentially over for 2017.
“As of now, prices have come off their highs and should continue to decline,” he says. “Early indications are for a 2000 MT 2017 crop in Madagascar. That figure, combined with crops in other producing countries such as Indonesia and India should be enough to exceed worldwide demand for the coming year. Beyond that, record high prices have reduced natural vanilla consumption significantly and we would expect supply to exceed demand for the foreseeable future.”
Craig Nielsen, v.p. of sustainability for Nielsen-Massey, agrees. “We do not anticipate additional upside pressures on vanilla pricing. The industry remains highly volatile, however, with world inventories of vanilla from all regions severely depleted following the cyclone that wiped out a significant portion of this year’s harvest in Madagascar, as purchasers looked elsewhere to meet their requirements,” he says.
Moreover, Nielsen notes that there continues to be strong demand among large global food manufacturers for pure and natural ingredients versus artificial, which will continue to support prices in the near term.
Aside from Mother Nature, the problem with vanilla today is man-made. As Murphy explains, efforts to modernize the farming and harvesting of vanilla beans have lowered quality.
“Some manufacturers have implemented accelerated curing processes and even attempted to make extracts from uncured, green vanilla beans,” says Murphy. “This has put tremendous pricing pressure on vanilla as green beans have a very short shelf life. The quality of extracts made from these accelerated curing processes is poor relative to traditional curing, so it is likely that these alternative curing processes will be largely abandoned allowing pricing stability to return.”
That’s the hope, at least. And then there’s the response by vanilla users. Given that the price of the spice, even at poor quality, has soared 25 times over what it cost five years ago, food manufacturers have been seeking alternatives.
“Demand for pure and natural vanilla has grown significantly in recent years as consumers have increasingly demanded that artificial ingredients be eliminated from manufactured food products,” Nielsen says. “Because of the significant price hikes in vanilla, we have seen increased interest among food manufacturers in lower-cost natural vanilla alternative products and blends using other natural flavors. Regardless of price, consumers are reaching for real ingredients and avoiding the artificial.”
Murphy also points out that many manufacturers had multiyear supply contracts for vanilla which protected them from price escalation during the first few years of the vanilla crisis.
“But, in the last year or two we have seen a reduction in overall demand for natural vanilla as manufacturers have sought to lower costs by substituting artificial vanilla flavors,” he says. “The fall in demand is a key driver in halting the upward spiral of vanilla bean prices. We believe that prices have recently peaked and will begin to decline this fall.”
Where does that leave confectioners besides playing the waiting game? Unfortunately, there’s not much wiggle room with the exception of moderating use and, as Nielsen says, integrating other flavors with the spice. Although he believes that “Earthy flavors like cardamom and curry are gaining ground – these heat-released spices are enhanced by cooking and often include a splash of lemon, orange or rose water to make the flavors pop.”
Still, as the vice president of sustainability notes, the spicy and sweet flavor combination continues to remain popular.
“Mexican vanilla marries sweet and woody notes with a deep, spicy character, similar to clove or nutmeg, making this vanilla ideal for pairing with chocolate, citrus and warm spices,” he says.
Healthy confectionary snack bars is also a growing market for natural vanilla – either added directly or as an ingredient in the inclusions, adds Murphy.
And clean label demand remains unabated. As a result, Nielsen-Massey is pursuing a formal GMO-free certification, which we expect to receive in the coming weeks.
Although vanilla has had the connotation of being somewhat bland and ubiquitous, it’s clear that neither of those apply to its current state.