- Prices for vanilla beans have more than tripled in the last year as crop yields shrunk and bean quality suffered. This has limited the quantity of high-quality vanilla beans available to U.S. manufacturers.
- Many manufacturers have opted to replace natural vanilla with less costly synthetic alternatives, products blended with lower-quality beans, or natural products that mimic the vanilla flavor.
- Vanilla bean prices may settle down when production levels return this year, to an expected 2,000 metric tons as compared to about 1,200 to 1,600 metric tons in 2015.
After a prolonged period of vanilla bean price declines, global harvests grew smaller as farmers turned to different crops. Farmers in Madagascar, which produces about half of the global vanilla bean supply, took shortcuts that has degraded the limited crops' quality, such as harvesting too early. The immature beans have not fully developed vanillin, the compound that gives vanilla its aroma and flavor.
High vanilla bean prices could hinder manufacturers looking to switch their product ingredients to natural flavors. Synthetic vanilla is commonly used, but consumer demand for natural ingredients may force these manufacturers to increase prices for consumers to cover those costs and maintain profitability.
Of consumers who buy natural products, 87% have said they would be willing to pay higher prices for those products, according to a Consumer Reports survey.