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Summary of our market study
The global vanilla market has been experiencing volatility, with a notable trend of increasing demand for natural vanilla, particularly in the USA. The global production stabilized at 7,715 tons, with Madagascar being the dominant exporter, accounting for nearly 80% of vanilla exports. The market is witnessing a shift towards more sustainable and organic products, with large companies committing to natural vanilla use. The COVID-19 pandemic impacted operations, causing supply chain delays, but also spiked sales in some segments like vanilla extract, driven by more home cooking. The industry is led by key players such as Nielsen-Massey Vanillas and Givaudan, among others, faced with the challenge of adapting to increased consumer preference for natural products and coping with supply shortages.
Despite these challenges, the demand for vanilla in the US surged, with vanilla exports from Madagascar to the US growing by 266%. The volatile prices, peaking at $636/kg before stabilizing around $400-500/kg, reflect the complex dynamics between supply constraints and robust demand. The market structure involves small-scale farmers, collectors, and large agri-food companies, with innovation and technology playing crucial roles in production processes and addressing supply chain issues.
Vanilla Market in Flux : Navigating Evolving Demand in the United States
The United States has established itself as a significant participant in the global vanilla market, taking the lead for imports worldwide, accounting for approximately 15 to 20 percent of demand. It's clear that the U.S. market has a penchant for this flavor, with vanilla being incorporated into a multitude of products ranging from food and beverages to cosmetics and personal care items. An examination of the recent market trends reveals a growing inclination towards natural vanilla. Large spice companies and major food industry players, such as Nestlé and Kellogg's, have been maneuvering to meet this inclination by committing to increase the natural component in their products, moving away from artificial vanilla. However, despite an uptick in demand for natural vanilla, the market has faced challenges, particularly from the COVID-19 pandemic. This impacted business operations due to supply chain constraints and restricted site access, yet sales of vanilla extract soared by nearly 120 percent, illustrating a surge in home cooking and baking activities. Moreover, the industrial vanilla market experienced growth as grocery shopping and home meal preparation intensified during lockdowns. Pricing within the vanilla sector has been characterized by extreme volatility.
Over the span of a few years, vanilla prices have skyrocketed from about 85 to 450 dollars per kilogram, with a peak close to 640 dollars. This surge has been primarily attributed to a tightening supply against soaring demand for natural vanilla. Speculation and security concerns in producer countries like Madagascar, which supplies the majority of the U.S. vanilla imports (around 40%), have also played roles in driving up prices. While the U.S. remains a net importer of vanilla, its imports and exports have displayed an interesting dynamic, with exports witnessing a gradual increase up until 2020. Madagascar constitutes the principal source of U.S. vanilla imports, followed by Indonesia, with all other countries making a minimal impact on the trade flow. The demand for vanilla in the U.S. extends beyond consumer purchases, impacting various industries. For instance, the food and beverage industry is a major consumer, with sales in this sector growing by approximately 30%. The beauty and personal care market is also burgeoning, with a 10 to 15% increase in sales, making vanilla an important ingredient in this sector as well. Vanilla's use is widespread; industrial chocolate makers, dairy product manufacturers, and cosmetic companies form the trifecta driving demand.
Key Players Shaping the Global Vanilla Market Landscape In the global vanilla market, several prominent companies operate across different stages of the value chain. These players range from agri-food giants to specialized flavor and fragrance producers, each contributing to the dynamic nature of this industry. Let's explore some of these influential market participants and their roles.
- Nielsen-Massey Vanillas Nielsen-Massey Vanillas, with a rich legacy in vanilla expertise, is one of the leading producers of high-quality vanilla extracts and flavor products. Renowned for their dedication to craftsmanship and superior taste, Nielsen-Massey is committed to providing pure vanilla products to consumers worldwide.
- Heilala Vanilla Limited Heilala Vanilla Limited stands out as a boutique vanilla brand offering a range of premium vanilla products. The company prides itself on sustainable and ethical practices, working closely with growers to ensure a direct and beneficial supply chain that supports local communities.
- Archer Daniels Midland (ADM) ADM, a global leader in agricultural processing and food ingredients, has a significant presence in the vanilla market. Their expertise spans from cultivation to processing and distribution of vanilla, catering to the demands of the food and beverage industry with a keen emphasis on quality and sustainability.
- Givaudan As one of the world's leading flavor and fragrance companies, Givaudan plays a pivotal role in the vanilla market, particularly in creating vanilla-based aromatic solutions. Their innovative approach to sensory experiences positions them as a trendsetter in the vanilla essence and extract sector.
- Sensient Flavors Sensient Flavors is a global player known for their ability to develop unique and tailored flavor profiles for their clients. Vanilla is one of the many natural flavors they offer, enriched by their expertise in innovation and consumer trends.
- Döhler Döhler is a global producer, marketer, and provider of technology-based natural ingredients, ingredient systems, and integrated solutions for the food and beverage industry. Their vanilla offerings cater to the ever-growing demand for natural and authentic taste experiences.
- Lochhead Manufacturing Lochhead Manufacturing specializes in providing premium quality vanilla extracts for the food and beverage industry. Their commitment to traditional processing methods ensures a product that maintains the rich and complex flavors that vanilla connoisseurs seek.
- International Flavors & Fragrances (IFF) IFF is a behemoth in the world of scents and tastes, offering creative and sustainable solutions for the global market. Vanilla is one of the many essences the company harnesses to craft distinctive flavor and fragrance experiences demanded by consumers
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Summary and extracts
1 Market overview
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 Demand Analysis
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 Market structure
3.1 Market Structure and Value Chain
Source: ****
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 ...
3.2 Production
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.
Vanilla Farmers:
Have more than ** years of experience; Own * hectare of land for vanilla farming; Work * days a week during vanilla season and ...
4 Analysis of the offer
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 Regulation
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 ...
5.2 Labeling
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 ...
6 Positioning of the players
6.1 Segmentation
- IFF International Flavours and Fragrances
- Givaudan
- Nielsen-Massey
- Aust & Hachmann
- Nestlé Groupe
List of charts presented in this market study
- World vanilla production
- Main vanilla producers
- Balance commerciale - Vanille aux États-Unis
- Les importations de vanille
- Evolution de la valeur de la vanille exportée de Madagascar vers les USA
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Latest news
Nestlé sells its Natur baby food products to FNB - 06/02/2024
- nestlé is the world's number one food company.
- FNB is a French investment fund specializing in small and medium-sized food companies.
- Nestlé is in exclusive negotiations with FNB to sell its infant food business in France.
- The products concerned are NaturNes potties, Babicao and Babivanille infant powders, and the P'tit yogurt range.
- These products are manufactured at the Arches plant.
- Worldwide sales of Nestlé infant formulas rose by more than 10%.
Nestlé France sells its baby food products to Mousline - 02/02/2024
- Nestlé is in exclusive negotiations with the French investment fund FnB for the sale of its infant food business.
- The ranges concerned are soups, purées, desserts and breakfast powders under the NaturNes, Babicao and Babivanille brands, as well as the P'tit franchise.
- Infant milks, the mainstay of the portfolio - with Laboratoires Guigoz and Nestlé Nidal - remain with Nestlé France.
- The infant nutrition products concerned by this sale are manufactured at a factory in the Vosges region of France, which employs 230 people.
- FnB, the potential buyer, specializes in supporting French SMEs in the food industry.
- The infant food market in France shrank by 6% in volume last year due to the drop in the birth rate, with a sharper decline for milks than for diversification foods.
- Nestlé has 14 factories in France.
Nestlé wants to conquer the vitamin market. - 19/04/2023
- Nestlé has made more than 60 acquisitions since Mark Schneider took over as CEO in 2017.
- Nestlé Health Science sales have almost tripled in 5 years, from 2.6 billion Swiss francs to 6.6 billion in 2022.
- The global vitamin and mineral market is worth 140 billion Swiss francs (142 billion euros).
- Nestlé increased its market share in vitamins from 1% to 4% between 2018 and 2021, while in medical nutrition it rose from 18% to 19% over the same period.
- Nestlé acquired The Bountiful Company in 2021 for 5 billion Swiss francs.
- Nestlé controls 14% of the US vitamin and dietary supplement market.
- The French market for vitamins and dietary supplements reached 2.6 billion euros in 2022, up 3%.
- Nestlé is the leader in clinical nutrition in France, with a market share of 30%.
An investigation has been launched into the major players in the perfume world, dubbed the "Perfume Cartel". - 09/03/2023
- Perfume gotha suspected of illegal price fixing
- Firmenich: sales up 10.5% to 4.9 billion Swiss francs in 2022
- International Flavors and Fragrances: sales of $11.80 billion for 2022
- Symrise: sales of 4.6 billion euros for 2022, with profits of over 265.55 million euros Firmenich to merge with Dutch DSM
- Companies can be fined up to 10% of worldwide sales for violating EU antitrust rules
Nestlé is in exclusive negotiations with the FnB fund to sell its Mousline purées. - 29/03/2022
- 150 employees at the Rosières-en-Santerre (Somme) site.
- The FnB is a fund dedicated exclusively to supporting French and European SMEs in the food industry.
- 72% of the dehydrated purée market.
- Nestlé assures that this sale will have "no impact" on the 150 employees at the site.
Nestlé earns over 16 billion euros - 17/02/2022
- Nestlé targets 7.5% growth in 2021
- Recurring operating income up 1.4% to 15.1 billion Swiss francs
- Net profit up 38.2% to 16.9 billion Swiss francs
- Leading category is hot and powdered beverages
- The Group pursued its premiumization and value-creation strategy: premium products account for 35% of Group sales and grew by 12% in 2021
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