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The Vanilla market: Key Points

Vanilla is popular taste with consumers worldwide, and the global market has seen significant fluctuations in recent years. A few months after the 2016 harvest, Karine Costes, Purchasing Manager at METAROM France, brings us up to speed on the topic.

Where do vanilla pods come from?

Madagascar is currently the world’s largest producer, providing 75% of global supply of Vanilla, (Bourbon Vanilla cultivated from the Vanilla planifolia plant in the Indian Ocean region). The remaining 25% of supply comes mainly from Indonesia, India, Uganda, and Papua New Guinea, and in limited quantities from Mexico and French Polynesia.

Why have buyers been keeping such a close eye on the vanilla market in recent years?

Around the year 2000, vanilla prices were particularly low, which meant that certain countries became disinterested in vanilla production. The emergence of new consumer markets (especially in China) placed an additional strain on the market. Demand outgrew supply, which led to further volatility; between 2014 and 2016, the price of vanilla pods had increased by 400%.

Is increased demand the only reason for these market tensions?

The gap between supply and demand also caused a spike in speculation from various operators in the supply chain. However, there were other reasons behind the fall in supply that contributed to the wild price rise.

As with every form of agricultural produce, climate plays a major role in vanilla production. Madagascar is often hit by tropical storms, and the 2015 harvest suffered as a result. The introduction of lower-quality pods to the marketplace also led to inflation. The fact that vanilla has become a “premium” substance has led to an increase in thefts; to protect their produce, farmers had taken to harvesting the pods before they were ripe. The harvest officially begins in June, during the Malagasy national festival, but was sometimes being carried out in April, which led to green, unripe pods containing low levels of vanillin appearing on the market. We must also note that the traditional vanilla production process is a long one, taking 6 months from harvest to shipping, 4 of which are required for drying. In order to circumvent this process, some suppliers were limiting the drying time and packaging the pods in vacuum packs. Humidity levels in the bags were too high, impeding preservation of the pods and causing mould problems. 

How can these issues be remedied?

In March 2016, the Malagasy government took steps to ban the sale of unripe pods and the practice of vacuum packaging. In our role as a buyer, we only purchase pods produced using the traditional method. When the pods arrive, we carry out a number of physicochemical checks in order to ensure the quality of the raw material that we’ll be using to create our flavouring extracts.

What are the prospects for the vanilla market in 2017?

The 2016 harvest obtained promising quantities, but the early picking will undoubtedly affect the quality of pods being placed on the market over the coming months.

For 2017, the vines began to flower at the beginning of September 2016, and early indicators are positive for the pod quantities expected for next year. Nevertheless, we will have to wait a few more months (particularly to see what occurs during the cyclone season in January – March) to get a clearer picture of what to expect from the coming harvest.

Finally, the emergence of new producer countries will likely lead to a less volatile marketplace in the future.

Did you know?

Vanilla flowers are pollinated by hand; flower by flower, the male and female reproductive organs are placed in contact with one another. The flower is very fragile and wilts rapidly, so the pollination is a highly delicate process that must be carried out over a very short timeframe in the month of September.

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