Nielsen-Massey targets new vanilla applications as raw material prices hit record levels

Craig Nielsen is a third-generation owner and manager of Nielsen-Massey Vanillas, serving as Vice President of Sustainability. FoodIngredientsFirst caught up with him to discuss the recent launches and the future of the vanilla market. “We rolled out a No-Sugar Added version of our Madagascar Bourbon Pure Vanilla Extract in response to increasing demand from our consumers for no sugar products. As well as two no sugar added vanillas we also recently introduced four organic flavor extracts: Peppermint, Almond, Lemon and Orange extracts, which are the organic version of our conventional flavor extracts. Like all of our products, these new additions are clean label, all natural and pure.”

 

As vanilla continues to be in demand and proves to be a global flavor of the century, the conversation quickly shifted to the challenges on the supply side for the vanilla bean. “As an industry, the price of vanilla is at an all-time high,” says Nielsen. “Prices have been high for the last couple of years and will probably remain so for at least this year and potentially into 2019, depending on the demand and the quality of the crop.”

 

“Every ten to fifteen years, we have some crisis around supply and pricing of vanilla. The last one occurred from 1999 to 2014-5. After that, we did have a period of stability with good quality and supply from 2006-2014. Since 2015, we have seen an increased demand for natural vanilla and a lot of that was created by the CPG’s announcing they were taking the artificial flavors out of their products,” he explains.

“Increased demand can create a shortage. Vanilla vines need three to four years to be planted and to grow before they produce anything. Madagascar supplies 80 percent of the vanilla to the market, but there has been some progress in other vanilla-growing regions, such as Uganda and Indonesia. We source most of our vanilla from Madagascar, but we also do buy from Mexico and Tahiti.”
 

“You have the major areas producing vanilla, but we see some smaller production starting in different areas, such as Tanzania, Costa Rica and Guatemala. This is a way of potentially looking at newer sources and their supply potential,” Nielsen adds.

According to Nielsen, the industry right now is “still stagnant,” and when vanilla gets expensive, it can negatively affect the quality of the vanilla. “Farmers are afraid of the beans being stolen and they tend to pick them when they aren’t fully developed and don’t have the full flavor potential,” he notes.  “Normally when you pick green vanilla beans on a good year, you get about 5-6 pounds of uncured beans to 1 pound of cured beans. With the diminishing quality lately, the ratios have been high – sometimes 8, 9, and even 10 pounds of uncured beans to 1 pound cured beans, which then reinforces the shortage.”

When it comes to supply, Nielsen Massey knows they must keep up with demand. “We have developed our supply chain within the countries we source from, so we are dealing with people directly on the ground. We are also a member of The Sustainable Vanilla Initiative (SVI), which is a group of 25 companies – CPGs, traders and flavor houses – that work together on a pre-competitive basis to make the vanilla bean trade more sustainable,” he says.

The company knows that in this instance, it’s not just about the planting of vanilla, it’s also about crop diversity, and supporting the farmers and families during those times that vanilla doesn’t bring in any money.

Regarding innovation, Nielsen-Massey is planning to launch several new products, either this year or early 2019, trading on their long-time expertise in paste. “We are also working on some new flavors based on demand and interest that we have received from our customers and chefs. We have found that culinary chefs are the trendsetters for new flavors,” Nielsen claims. “We then work to produce the best vanilla and flavor products, keeping in mind every aspect of supply chain issues and sustainability to capacity and demand.”

There is a lot of pressure coming from the industry to produce good quality vanilla extracts and Nielsen-Massey is on a mission to be successful and do the best for their customers during these challenging times. “We realize that prices are very high and we expect them to stay high for the foreseeable future. When the market corrects, we will be among the first to adjust, but in the meantime, because of the efforts that we have put in place within our supply chains, we are positioned to offer very high quality in different varieties to all our customers,” he confirms. 

Currently, the majority of vanilla is used in sweet applications, for example, in dairy, yogurt, kefir and baked goods. Nielsen notes there has been increasing use of vanilla in beverages: “Not just for its unique flavor, but as a flavor note and enhancer, vanilla brings out the depth and characteristics of whatever it is used in,” he says.  We are also doing some experimentation and using our vanilla not just in sweets but also in savory applications, such as sauces that pair very nicely with shellfish and lobster.”

With vanilla being the number one flavor in some products, Nielsen also noted increasing interest in almond and rose water: “One of our most popular flavors is almond, which you would expect, and rose water has also become a trendy flavor. For those products, we are not expecting any supply issues or major price increases as of this point,” he notes. 

On the whole, consumers are demanding cleaner labels, they want to know what is in their food, and they want to be able to understand how products are made and whether or not they are sustainable. “Sustainable products have become more and more important in today's consumer world, and we are working hard to ensure that all our vanillas and flavors do just that,” Nielsen concludes.