1.1 Definition and scope of study
Vanilla refers to the fruit of the Vanilla planifolia orchid, commonly known as the vanilla tree, which is found in the undergrowth of tropical rainforests. It comes in the form of a pod that has an aromatic scent and flavor. The transition from a scentless fruit to a richly aromatic spice requires a long and methodical process called "preparation".
The vanilla industry is divided into several steps:
- The upstream part which comes down to the cultivation of the vanilla trees and the recovery of the fruit. It is carried out by tropical countries, in particular Madagascar, which accounts for about 80% of world exports of vanilla.
- The primary downstream part which includes the transformation of the fruit into a spice with a methodic process called the "preparation". It sometimes takes place directly on the production site but is often carried out by Western multinationals.
- The secondary downstream part, which refers to the production of finished products (pod, powder, paste, natural flavour, artificial flavour, syrup or sugar) distributed to end consumers who are mostly in developed countries.
Vanilla is mainly used in bakery products, but also as a perfume in cosmetics or in the manufacture of candles, beauty products, medical care products and home air fresheners for example.
The United States, France and Germany together account for about 80% of the global vanilla trade and are the main players in the downstream part of the value chain. Madagascar, on the other hand, provides the bulk of the world's vanilla supply, the upstream part.
Global players include Nielsen-Massey Vanillas, Heilala Vanilla Limited, Archer Daniels Midland, Givaudan, Sensient Flavors, Döhler, Lochhead Manufacturing, International Flavors & Fragrances.
While vanilla prices have exploded in recent years, the year 2020 seems to herald a fall in vanilla prices due to particularly high production. The global Covid-19 pandemic is also expected to strengthen this trend. Finally, while artificial vanilla is gaining ground, some vanilla-using domains remain faithful to the natural, supporting the development of more sustainable sources of supply with "organic" or "fair trade" products for example.
The United States continues to be an important market worldwide, placing itself’ in first spot for imports worldwide, and accounting for around 18% of demand.
These figures are directly related to key drivers, which include the levels of ice cream consumption and the launch of new products with vanilla flavor.
1.2 An Extremely Volatile Global Market
World Production of Vanilla World, **** - ****, tons Source: ****
In ****, world vanilla production reached *,*** tons, stabilizing after several years of steady decline. In fact, world vanilla production has fallen by nearly **% compared to ****, mainly due to the decline in exploitable land in the main producing countries, as well as several seasons of ...
1.3 USA, a Net Importer of Vanilla
Almost all of the vanilla imported into the U.S. historically comes from Vanilla planifolia Andrews (***). This species is native to southeastern Mexico, the West Indies, Central America, and the northern part of South America. Mexico, once the hub of vanilla production, now uses its land for other purposes. Therefore, today, ...
1.4 COVID-19 Impact
Since the COVID-** pandemic, people have started cooking more at home which has led to increased food and beverage sales, in particular for what concerns raw materials. With respect to this, McCormick, a global leader in flavor, seasonings and spices, has reported a ***% increase in vanilla extract sales in comparison to ...
2.1 Demand Characteristics
As we will analyze better in the following paragraph, an important characteristic of the demand for vanilla is that it is not absorbed by individuals directly, but by different industries which use this raw material to produce refined goods such as ice creams, yogurts, cakes, cookies, but also perfumes, deodorants, shampoos ...
2.2 Consumer Industries
Vanilla, in its raw form as well as in its pulverized or crushed form, has a very diversified use. Indeed, it is used on a large scale in the US:
By the food industry, in particular industrial chocolate makers (***); By the cosmetics industry, especially during the industrial processes of production of ...
2.3 Demand Drivers
Having established that the main customers for raw vanilla are the three industries mentioned in the section above, it becomes evident how the main demand drivers for this market are the performances of these industries in the United States.
Food and Beverages Industry
To have an idea of the performance of ...
2.4 Americans Demand Natural Vanilla
Recently, the quest for healthy eating has prompted consumers to demand greater amounts of natural vanilla. In response, some international spice companies, such as Symrise and International Flavors&Fragrances, have publicly committed to improving the quality of the products they sell by reducing the artificial component and increasing the natural component. ...
3.1 Market Structure and Value Chain
The global vanilla value chain is complex in that many actors of different sizes are involved. While production is mainly done by small producers in poor countries (***), many specialized companies position themselves between the small producers and the exporters, to ensure the import of vanilla beans and their distribution. Companies ...
In order to better understand the production process of vanilla, we will focus on the one put in place in Madagascar, the main supplier of the US.
In Madagascar, vanilla cultivation covers **,*** hectares of land and involves about ***,*** farmers, mostly distributed in small family farms.
Considering vanilla plants are lianas and ...
3.3 Profile of the Actors of the Market
Fair Food International conducted an interview in Madagascar to better understand the profiles of the actors of the Vanilla market, specifically focusing on farmers, collectors and export companies.
Have more than ** years of experience; Own * hectare of land for vanilla farming; Work * days a week during vanilla season and ...
4.1 Offer Typology
There are more than *** varieties of vanilla in the world. Nevertheless, three varieties of natural vanilla are commonly marketed, each distinguished by its characteristics and its place of plantation of origin:
Vanilla planifolia: this is the most widespread variety on the market today, it is produced in Madagascar, Indonesia and Mexico. ...
4.2 The Volatile Prices of Vanilla
Production of vanilla is struggling to meet the huge worldwide demand for berries, which is increasingly oriented towards "natural" vanilla as mentioned. For this reason, in just six years the global price of vanilla has increased significantly, from ** dollars per kg to the current *** dollars, passing through the peak of *** dollars ...
5.1 Rules and Regulations for Vanilla
High demand, limited availability, and significant price fluctuation all lead to quality differences and, unfortunately, encourage some suppliers to conceal poor quality or adulterated vanilla. This practice has led the US FDA to develop and adopt several definitions and requirements for vanilla, the only specific spice or flavor to have such ...
The specified name of the food is "Vanilla extract" or "Extract of vanilla" [***].
When the vanilla extract is made in whole or in part by dilution of vanilla oleoresin, concentrated vanilla extract, or concentrated vanilla flavoring, the label shall bear the statement "Made from ___" or "Made in part from ___", the blank ...
- McCormick & Company
- International Flavors & Fragrances
- Aust & Hachmann
- Nestlé Group
- Procter & Gamble
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