What Vanilla Actually Is, and Why It Now Costs More Than Silver

When do you choose vanilla flavor?

Vanilla is everywhere in desserts, and yet its taste is oddly hard to describe.

This spice, common in ice cream, lattes, and yogurt, is more or less the "plain" flavor of the dessert world. The English word vanilla is even used to mean boring, or bland.

But so much of the spice behind that familiar, unremarkable flavor is now being eaten that its price has climbed from $65 a kilogram in 2012 to $600 — above silver, at $530 a kilogram.

"Vanilla is basically gold now." In growing regions like Mexico and Madagascar, a farmer can be murdered over a few kilograms of it. After this run-up, vanilla has become the second most expensive spice in the world, behind only saffron ($6,670 a kilogram). Both are labor-intensive crops, and both are grown in a handful of places.

As vanilla prices rise, small dessert makers either charge more or drop products altogether.

Unable to absorb the cost, the New York bakery Butter & Scotch has cut the amount of vanilla in each serving of ice cream. It dropped its house-made vanilla soda, which took a whole vanilla bean per batch, and plans to raise the price of its vanilla cake from $60 to $72.

Fany Gerson, head chef at a New York pastry shop, plans to stretch the expensive spice: after using a vanilla bean, she soaks it to draw off a second round of vanilla liquid, then dries the spent bean and grinds it into vanilla sugar.

Big companies like Nestlé have more buying power and can absorb more risk, and on the whole they are not raising prices. A spokesperson told Bloomberg: "Our products are not tied to short-term swings in commodity prices. Nor will we change our formulas in response to price changes." At the same time, Nestlé raised the price of the vanilla flavor of its premium ice cream brand Mövenpick by 2.5% in the Swiss market.

Coffee is Nestlé's biggest source of revenue, but milk products and ice cream, plus confectionery, together account for about 23.5% of total sales at the world's largest packaged food company. Vanilla probably goes into all of them. In 2017, Nestlé bought 692 tons of vanilla from Madagascar.

Why has such an ordinary-seeming spice become so costly? The answer is in how it is grown.

In May 2017, the strongest tropical cyclone to hit Madagascar in 13 years destroyed 30% of the vanilla crop in a country that grows more than 70% of the world's supply. With vanilla scarce, some saw an opening and hoarded it to push prices up.

Vanilla is hard to grow by machine. The methods have barely changed in more than a century, and yield per unit has hardly improved since the 1960s.

In Mexico, where it comes from, vanilla is pollinated by bees. Outside Mexico, the vine flowers but sets no fruit. In the 19th century, the Belgian botanist Charles Morren worked out how to pollinate vanilla by hand (by other accounts, an enslaved man in Madagascar named Edmond Albius found the method by accident): use a thin bamboo sliver to lift the pollen into the cavity of the stigma. That simple motion carried vanilla growing from Mexico to Madagascar, Tahiti, Papua New Guinea, and Indonesia, raised flowering rates and yields, and built the global vanilla trade.

Even with hand-pollination, vanilla remains one of the most labor-intensive plants there is. It takes 600 flowers pollinated by hand to produce 1 kilogram of vanilla beans.

The plant is delicate and fussy about where it lives: the temperature must never drop below 20°C, day or night, all year round, and humidity must stay above 70%. The vanilla orchid grows slowly — the vine takes three to four years to mature. Each flower opens for only six to eight hours, and that is the window for hand-pollination.

Once the vine matures, getting the flavor out is just as involved. The fresh pods are picked each November, then blanched, fermented, dried, and cured. Not until the following May do they become vanilla beans — about half a year in all. Only then does vanilla smell like vanilla.

Just 1% to 5% of vanilla-flavored or vanilla-scented products on the market use natural vanilla, and demand for the real thing is rising. In 2015, Hershey said it would stop using artificial vanilla flavoring in two of its chocolate products. Nestlé promised to remove artificial colors from its products by 2020, and to cut back on ingredients people find "unfamiliar." Nestlé also said it would strip artificial additives out of chocolate products such as Butterfinger, Crunch, and Baby Ruth — which means swapping vanillin for vanilla.

All of this has tipped the balance between supply and demand.

Set aside the current enthusiasm for a moment: have you ever wondered why we love vanilla so much? How did it become the world's favorite flavor?

When the explorer Hernán Cortés — the man who destroyed the Aztec empire — carried vanilla from Mexico back to Spain around 1520, it had no use except to flavor chocolate drinks. Europeans disliked chocolate drinks at first, calling them fit for pigs. It is not hard to guess that vanilla was not especially popular either.

Early on, vanilla was mistakenly used as an aphrodisiac. The Spanish word for the pod, vaina, shares a root with the Latin word for womb. Vanilla was hardly alone in this; pepper and cannabis went through the same phase. "Almost everything that could be swallowed has, at some point in history, been thought to improve sexual performance," as Spice: The History of a Temptation puts it. Vanilla was also used early on to flavor tobacco.

Vanilla stopped being an accessory flavor in the 17th century, when Hugh Morgan, apothecary to Queen Elizabeth I of England, invented a candied sweet flavored with vanilla alone, no chocolate. The queen loved anything vanilla-flavored, and she is counted as one of the people who turned vanilla into a mainstream taste.

But without vanilla ice cream, the flavor might never have gone global. The French had already improved ice cream by adding egg yolks for a smoother texture; in the 18th century they added vanilla, which covered the eggy smell the yolks brought with them. Thomas Jefferson, one of America's founders, was posted to France at the time, and was so excited by his first taste of vanilla ice cream that he copied out a recipe by hand and took it home (it is now in the Library of Congress).

That is how vanilla ice cream reached the United States. According to a survey by the International Dairy Foods Association, vanilla was still Americans' favorite ice cream flavor in 2017, far ahead of second-place chocolate.

Rachel Herz, a psychologist at Brown University, thinks one reason people love vanilla is that it smells like breast milk. That may be why some companies like to add vanillin to milk powder and milk. Studies show that adding vanillin to 1%-fat milk makes people rate both its fat content and its creaminess higher.

Vanilla adds a sweet fragrance, and it also balances and damps down bitterness and acidity. One early recipe for Coca-Cola — from shortly after Dr. John S. Pemberton mixed the first batch in 1886 — is said to have used vanilla too. Several sources mention it, including Scientific American. But the Coca-Cola formula has always been secret, so there is no confirming it.

What is certain is that in the 1940s, when Americans ordered a Coke in a restaurant, many liked to ask the waiter for a spoonful or two of vanilla syrup. The habit lasted a long time.

The average American eats 5.4 grams of vanilla a year, roughly two vanilla beans. Multiply that out and 326 million Americans get through more than half of the world's natural vanilla in a year.

Americans also like vanilla-flavored cream soda. Many mid- and high-end cream sodas use real vanilla.

Coca-Cola launched Vanilla Coke in 2002. It was pulled from the market and later brought back, and it is now one of the longest-selling Coke flavors in the United States, also sold in the UK, Canada, and elsewhere. The company has since added a vanilla version of Coke Zero.

What goes into Coca-Cola, though, is vanillin, not natural vanilla — the usual choice for cheap food.

In 1875, chemists managed to extract vanillin from vanilla; it is the main component of the bean's aroma. Before 1930, both natural vanilla and semi-synthetic vanillin were made in small quantities and cost a lot. Then German scientists pulled vanillin out of coal tar, and fully synthetic vanillin — made without a single vanilla bean — was born, and output shot up.

Artificial vanilla flavor has been widely accepted, which is more than can be said for other artificial flavors, such as cherry. Part of the reason is that vanillin reproduces the aroma fairly well and has arguably done more to spread the vanilla flavor than natural vanilla has. The other reason may simply be that few of us ever get to taste the real thing.

Vanillin is also a standard ingredient in perfume.

The classic oriental family of fragrances is built on a vanilla base, paired with materials such as gum resins, patchouli, sandalwood, coumarin, and orris root. But other families use it too — woody, herbal, and floral scents all draw on vanillin to some degree for a sweet note, and more than 40% of all perfumes contain it.

The world now makes about 18,000 metric tons of vanillin a year. Of that, 85% comes from the guaiacol method and 15% from lignin — an extract not fit to eat, used mainly in perfume. Vanillin costs roughly $11.70 to $17.60 a kilogram, far below vanilla's current $600.

But consumers chasing the natural label think less and less of artificial vanillin.

According to the market research firm Euromonitor International, 55% of shoppers deliberately look for products with natural ingredients — even in developing countries such as China, Turkey, and India. And 39% are willing to pay extra for "natural," more than for "organic" or "non-GMO."

Craig Nielsen, a partner in the vanilla products company Nielsen-Massey, says: "Consumers are starting to read food labels and to look for natural, even organic, products."

The U.S. Food and Drug Administration requires that only ice cream flavored with natural vanilla may be labeled "vanilla." If the flavor does not come from natural vanilla, the package can say only "artificial vanilla" or "vanilla flavored."

The hunt for natural ingredients has pushed Nestlé to plan on replacing the artificial vanilla flavoring in its food with the real thing. Once the industry's biggest company moved, smaller ones followed.

Do we really need that much natural vanilla?

Natural vanilla does taste more layered than vanillin: besides vanillin it contains more than 170 other compounds, and beyond vanillin's sweetness it is said to carry a musky note. Then again, some say a good vanilla extract is just as useful and just as effective.

"All the vanilla beans in the world are not enough to make every naturally vanilla-flavored product," says Carol McBride, vanilla category manager for Symrise's U.S. market. "We need to grow more vanilla, and grow it sustainably, so our children's children can go on eating it."

Food and fragrance chemical companies such as Symrise, Givaudan, and Mane IFF are running sustainable-farming projects in Madagascar. Farmers worried about theft, or short of cash, have sometimes picked their vanilla early. They did not know that unripe vanilla holds less vanillin and fewer of the compounds that make vanilla taste like vanilla. One division at Symrise now teaches farmers exactly this.

Population grows exponentially; resources grow in a straight line.

Enthusiasm for natural sandalwood and sandalwood oil once drove the same overcutting, and the price has stayed high ever since.

Fisheries are being overfished toward exhaustion. According to United Nations figures, nearly 90% of the world's fishing grounds are at or beyond their catch limits.

Sustainable farming is a subject coffee brands like to talk about as well. Climate change is making Ethiopia hotter and drier and its weather more extreme: hot days hotter, rainy days wetter. By the end of this century the country's coffee harvest could be half what it is now.

Disease may push up the price of citrus and lemons along the Mediterranean, which in turn could affect anything scented with natural citrus, from food to shampoo.

Because vanilla comes from so few places, and its output is so concentrated, this is not the first time the price has swung.

Around 2000 to 2003, extreme weather cut Madagascar's vanilla harvest by 30%, and the price topped $500 a kilogram.

Supply and demand set the price, and the price then reset supply and demand. Vanilla was profitable enough for farmers at the time that growers outside the main producing regions, in India for instance, began planting it too.

David Van der Walde, director of the Canadian vanilla trading firm Aust & Hachmann, remembers what the last price spike did: vanilla got so expensive that consumers and some companies switched to substitutes or to vanillin-flavored products. After the peak, demand fell 40% and the price dropped off a cliff.

Suppliers were left clearing their stock. Van der Walde's lesson: "We won't keep big inventories anymore. Every time we buy from Madagascar now, we make sure there's an end buyer waiting."

If there is anything to take from the last vanilla crisis, it is that today's $600 will probably fall before long.

Craig Nielsen is vice chairman of Nielsen-Massey, a vanilla producer more than a century old. He expects the price to come down moderately, though not back to $65 a kilogram; he puts the eventual level at $100 to $150.

Tim McCollum, founder of Madécasse Chocolate & Vanilla, also thinks that in three or four years vanilla will settle back to $100 to $150 a kilogram — a normal, sustainable level.

As for the farmers who grow it: some timed their harvest to the best prices and for the first time had the money to build concrete houses and send their children to school. Others, smallholders especially, got nothing out of the boom — because they were short of cash, or afraid of the violent crime the high prices attracted, or simply because they did not know the market and picked too early.

"The idea that these farmers have a stable long-term livelihood is a joke. You can't ask a smallholder to stake his family's entire living on a crop whose price goes from heaven to hell every five years," says Benjamin Neimark, a scholar at Lancaster University in the UK.

Cover image from Wikipedia, Visualhunt, and others.