- The price of top-quality Madagascar vanilla beans has fallen to between $475 and $500 per kilogram from a high last year of $600, resulting in an overall 10% to 15% drop across all grades of the product, according to Food Business News.
- Still the current price decline may not be coming fast enough for food and beverage manufacturers who have the option of using less-expensive natural flavor alternatives to reduce or replace vanilla, the publication noted.
- "We continue to see new product launches that highlight vanilla extract as an ingredient, both in North America and globally, likely because vanilla extract is a familiar ingredient and a staple in most U.S. pantries,” Jenna Baker, marketing manager at ADM, told Food Business News. “It fits perfectly with the movement to clean and clear labels.”
The price drop for vanilla beans from Madagascar stems from higher yields, according to one importer of the commodity cited by the publication, as well as an improvement in quality. Growers were previously picking beans a month or two early to keep them from being stolen or because they wanted to get them to market more quickly.
Growing vanilla beans is very labor-intensive because, among many other requirements, the plant has to be pollinated by hand. While it's possible that lower costs could prompt the increased use of natural vanilla in some products — such as ice cream, baked goods and candy — flavor companies have increasingly been developing alternatives, marketing synthetic vanilla, or blending the real thing with lower-quality beans.
It's a delicate balance for manufacturers since many of today's consumers want natural products and clean labels and are willing to pay more for them. Still, some food makers may find that the volatility in real vanilla makes the price predictability of substitutes more attractive.
Vanilla continues to be one of the most popular flavors in the U.S., but, like all commodities, the supply and price of vanilla beans impact the choices manufacturers and consumers make. According to Business Insider, more than 95% of the vanilla flavoring used in ice cream, cereal and other foods comes from synthetic vanillin. However, its presence must be labeled as "artificial" or "imitation" vanilla, the publication noted, which could be a turnoff for some consumers.
Given the current situation, food and beverage makers may take a wait-and-see attitude toward using more real vanilla in their products in case the price falls even more during the next few years. Because of poor harvests, they have been particularly unstable recently. For example, prices skyrocketed from $20 per kg in 2011 to nearly $500 per kg in 2017. But if, as some predict, the price falls below $100 per kg, it could be a significant impetus for manufacturers to reformulate — as long as consumer demand for real vanilla remains high.