Vanilla enjoys an innovation resurgence, but supply chain challenges mount

18 Sep 2017 --- The adjective “vanilla” may have unexciting connotations, but it could be argued that the world of products with vanilla flavoring is currently very exciting indeed. Even though supply challenges are being faced in sourcing natural vanilla, new and innovative products continue to be introduced to the market at an exhilarating pace.

Coming to terms with crop loss
In general, most world buyers are expecting a significant reduction in vanilla demand over 2017. This should help to rebalance the market over the course of 2018, according to Daphna Havkin-Frenkel, Director of Research and Development at Bakto Flavors, LLC, writing in the April/May 2017 issue of The World of Food Ingredients.

World demand loss is expected to be as much as 30 percent, if not more. On March 7, 2017, a very powerful category 4 cyclone (Enawo) struck the north of the town of Antalaha in the center of the vanilla region of Madagascar. As of April, it was estimated that 20 to 30 percent of the vanilla crop would be lost. The price of cured vanilla is over US$500/kg.

At this rate, Havkin-Frankel predicts that vanilla will become unaffordable in future. In addition, she says the situation is being aggravated by speculation and criminal acts.

“After the final assessment, our estimate of crop lost this year is roughly 20 percent,” reports Craig Nielsen, Vice President of Sustainability for supplier Nielsen-Massey Vanillas. “Because our company has been in business for 110 years, we have built solid long-term supplier relationships around the world that help us during these volatile periods. This 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.”

Nielsen-Massey has also seen the situation as an opportunity to help rebuild. “Of course, because Madagascar is the source of about 80 percent of the world’s vanilla production, it is of particular importance to us as a market,” says Nielsen. “That is why, following Cyclone Enawo, both Nielsen-Massey and the Nielsen-Massey Family Foundation made sizeable donations to a fund administered by CARE to help local farmers rebuild.”

There is also strong investment in the country itself, of course, to stave off the challenges. Earlier this year, Firmenich, together with Danone and Mars, through the Livelihoods Fund for Family Farming (Livelihoods 3F), started investing in a large-scale, innovative vanilla farming model in Madagascar. Together with Prova and NGOs, Firmenich, Danone and Mars are building a resilient vanilla supply chain in Madagascar involving 3,000 vanilla producers. The project aims to increase farmer’s food security and triple their revenues, while providing high-quality, sustainable and fully traceable vanilla over a 10-year span. 

Alessandra Ognibene-Lerouvillois, Chief Sustainability Officer of Prova comments: “Prova has for many years been supporting an economically viable approach to vanilla production that helps to improve producers’ livelihoods in Madagascar, while respecting resources and perpetuating good practices...We believe that the multi-stakeholder collaboration will drive a real impact on the ground, by bringing joint investments and knowledge while integrating a global approach.”

In a recent interview with The World of Food Ingredients, Heinrich Schaper, Executive Board Member & Global President Flavors, Symrise noted how the vanilla market was particularly successful for the company, as it has its operations on the ground in Madagascar and extensive farmer support programs. “We support about 7,000 partner farmers and their families in helping them in how they do their growing and ensuring that they do not harvest beans too early and cure them in the right way. This high level of engagement helps us achieve security of supply and a sound quality base, which our customers really appreciate,” he notes. 

“With the ups and downs of the vanilla market, we tend to stay away from the wheeling and dealing and establish longer-term partnerships with our customers. This ensures that we have business relationship stability and appropriately manage price fluctuations, in order to create the benefits for our customers of that kind of long-term business model,” Schaper adds.

Dealing with a finite supply
This year’s turbulence in the vanilla market has once again illustrated how finite an amount of vanilla there is, when the vast majority is sourced from Madagascar. “Consumer demands have driven consistent demand growth for certain fruits, botanicals and indeed vanilla. A key part of the Symrise strategy is working diligently to secure top-quality naturals in consistent and secure sourcing arrangements through backwards integration programs,” says Schaper. 

“With high vanilla prices, countries other than Madagascar such as Indonesia, India and Uganda step up their production, but there is always a delay between the demand growth and the supply growth. The only difference is that Madagascar, Reunion and Comoros can claim ‘Bourbon’ quality standard, whereas the other countries produce natural vanilla extracts,” he explains. “Madagascar currently accounts for around three-quarters of the natural vanilla bean production, so any interruption in supply produces challenges. Vanilla grows very slowly from the planting of the vines and it can take up to three years until the first harvest. Nevertheless, some of the increase in planting has already taken place two years ago…so we are waiting patiently,” he adds. 

This week, it was reported that Symrise had gained new perspectives on vanilla and how it could address the demands of millennials. Together with six taste experts and influencers from the millennial generation, the global supplier of flavors has developed new ideas of how an age-old flavor can be used in modern cuisine.

For Nielsen, expanding vanilla production around the world should be an important goal for everyone in the industry. “However, given continued strong global demand for pure and natural vanilla, it will take several years at best to get the supply/demand equation back in balance,” Nielsen admits. “As such, it’s likely that high vanilla prices will be with us for some time.”

This could lead to changes in “vanilla” products in the future. “This may mean that more manufacturers will move to lower cost natural vanilla products and blends using other plant-based products that also contain vanillin, rather than the pure vanilla produced from vanilla beans. However, we believe there will always be a market for pure vanilla, and an appetite among discerning customers to pay a premium price for it, given the unique richness of its flavor,” says Nielsen.

Killer vanilla products
Vanilla products around the world continue to show off an inventive, exciting streak that belies the substance’s reputation for no-frills flavoring. Whether it’s through combination with other flavors or inventive new applications on its own, the many different types of products that use the flavoring may come as a surprise, as a recent NPD trends report shows.

For Nielsen-Massey’s part, companies using savory applications has been a surprise recently. “We’ve seen a growing interest with foodservice professionals in using vanilla for savory applications – such as pairing vanilla with duck, roasting atop fish and mixing with vinaigrettes,” says Massey.

One example of both an inventive vehicle for vanilla flavoring and an interesting combination with another flavor is the Trident Twist Sugar-Free Chewing Gum with Mint and Vanilla Flavored Liquid Center, which has been put on sale in Mexico. While mint is a common flavor for chewing gum, vanilla is generally not, but this interesting product for the Mexican market combines the flavors to put a fresh spin on the classic gum.

When it comes to food, the Kookie Cat Vanilla Choco Chip Cashew and Oat Cookie from Belgium is an example of “wonderfully imperfect cookies” that are “handcrafted with high-quality ingredients.” The product promises old-fashioned cookies reinvented in “vegan awesomeness.”

Moreover, an interesting example in the beverage space is GoodDrink’s Hibiscus and Vanilla Mango Tea. It is an herbal tea that makes use of the unusual flavor combination of hibiscus and vanilla.

“Beyond flavors, we see growing interest in products that are certified organic and GMO-free,” says Nielsen. “That’s why, even though our products have always been GMO-free, we’re currently pursuing a GMO-free certification, which we expect to receive in the coming months. We’re also launching four new organic versions of our top performing flavor extracts – organic almond, lemon, orange and peppermint – to join our current Organic Fairtrade Madagascar Bourbon Pure Vanillas line.”

These are just some of the ways in which vanilla products are overcoming the flavoring’s bland reputation and showcasing what can really be done. There is no reason to think more interesting innovations and trends won’t happen in the vanilla space in the future.

By Paul Creasy