Original content
What are the end consumption channels of Madagascar vanilla?
Madagascar is one of the world's leading producers of vanilla, and its vanilla beans are highly prized for their quality and flavor. The vanilla industry in Madagascar plays a significant role in the country's economy, and the beans are exported to markets around the world, where they are used in a wide range of products across various consumption channels.
The end consumption channels of Madagascar vanilla are mainly international food conglomerates and cosmetics companies. Approximately 40% of the vanilla is sold for food purposes while the remaining are used for cosmetic and industrial purposes. Moreover, the cosmetics & personal care industry is projected to witness the highest consumption growth, attributable to the increasing use of vanilla extracts in cosmetics products. The use of vanilla beans in the food industry, however, is still the predominant consumption channel of the vanilla bean market.
Food and Beverage Industry:
Baking and Pastry: Madagascar vanilla is a popular ingredient in the baking and pastry industry, used in cakes, cookies, pastries, and other sweet treats.
Ice Cream and Frozen Desserts: It is a key flavoring agent in ice cream, gelato, and other frozen desserts.
Chocolate: High-quality chocolates often use Madagascar vanilla to enhance their flavor.
Confectionery: Candy and confectionery products benefit from the aroma and taste of Madagascar vanilla.
Beverages: Some beverages, like flavored coffees and alcoholic drinks, may also contain Madagascar vanilla for a distinctive flavor.
Dairy Products:
Yogurt: Madagascar vanilla is a common flavoring in yogurt.
Milk-Based Products: It can be used in flavored milk, milkshakes, and other dairy beverages.
Spices and Extracts:
Madagascar vanilla extract is a popular ingredient for home and professional chefs in various recipes, including both sweet and savory dishes.
Perfumery and Cosmetics:
The fragrance industry often uses Madagascar vanilla for its sweet and aromatic scent in perfumes and colognes.
Vanilla is also used in various cosmetic products, such as lotions, body creams, and soaps, for its pleasant aroma.
Pharmaceuticals:
Vanilla is occasionally used in pharmaceutical preparations, including some medicines and dietary supplements, for its flavoring properties.
Culinary and Gourmet Products:
Gourmet and specialty food products may contain Madagascar vanilla to enhance their flavor and quality.
Home Baking and Cooking:
Many home cooks use Madagascar vanilla extract in their baking and cooking to add a rich and authentic vanilla flavor to their dishes.
Floral Arrangements and Decorations:
Dried vanilla beans and pods are sometimes used in floral arrangements, decorations, and crafts due to their distinctive appearance and aroma.
What is the supply chain structure of Madagascar vanilla?
The linear representation of the export supply chain for Vanilla can be represented by:
Farmers > Commissionaires > Collectors > Processors > Exporters
Farmers usually partnering with collectors who are local middlemen that liaise with and purchase the products from the farmers, working as an intermediary between the farmer and the exporter. Collectors will then process the vanilla and then proceed to the exporter for quality control.
When the vanilla passes through the quality control, it is then proceeded to brokers or trading partners and will be further processed by grinders, packers, flavor, and fragrance houses. The end of the supply chain is the final distribution to retailers and manufacturers. However, there are also a few large companies that work directly with the farmers, thus the sector is not vertically integrated.
Source: Tridge Analysis on the Vanilla Industry in Madagascar
What is the price trend of vanilla in the Madagascar?
The first years after vanilla prices hit a peak above $600.00/kg. about 6 years ago, a slow and steady decline ensued. Initially this was the result of a combination of factors, namely an unsustainable high price combined with poor quality and plummeting demand, just as was witnessed in 2004 – 2005, after prices peaked above $500.00/kg. In 2020, as COVID took over the world, there was a rebound in demand for industrial vanilla as retail grocery activity boomed. This temporarily arrested the decline in prices. From 2020 through the first half of 2022, vanilla prices were stable and exports from all origins were very strong. Increasingly abundant vanilla production (mostly because of new plantings) foretold further price erosion soon to come. In the meantime, the short-term spike in demand and prices for vanilla drew government scrutiny. The enforcement of rules and regulations within the sector, such as opening harvest dates, closing export dates and repatriation obligations were far more rigidly applied. In addition, the issuance of export licenses became highly politicized and were granted only when an exporter’s income tax obligations, however questionable, were settled.
It was in early 2020 when the idea of a fixed minimum export price gained a foothold within the vanilla sector. The Government set an initial minimum price at $350.00/kg, which was so far off the actual vanilla price on the ground that it was virtually ignored by all exporters. By late 2020 the government revised the minimum export price to USD$ 250.00/kg and insisted that exporters repatriate this amount per kilo of vanilla exported into local currency within 90 days of exporting, despite it being over $100.00/kg above the actual market price on the ground. For the most part exporters complied, not by forcing their clients to pay artificially high prices (which the buyers would not have accepted) but rather by finding the USD offshore to make up the spread between their selling price and the minimum $250.00/kg to meet their repatriation obligations. This added costs but was feasible for the 2021/2022 season and Madagascar exported over 3000 mt. Unfortunately, this figure did not represent a sudden explosion in demand but rather a foretelling of troubles ahead in the vanilla market.
In early 2022, the government decided to ratchet up enforcement of the minimum price policy and make it more difficult for exporters to make up the difference between the selling price and official export price simply by buying USD on the open market, mostly from money traders in Mauritius. They were convinced that the market could and should pay at least $250.00/kg since only a few years earlier it had paid over $600.00/kg. A very flawed rationale in our opinion. Suddenly, exporters were being hit with tax audits using the $250.00/kg price as a benchmark to calculate their export revenues. The exporters’ actual selling prices were in fact much lower. This resulted in large, unexpected, tax bills which had to be settled before any exports of vanilla were permitted. In addition, a special group of exporters was formed called the Conseil National de la Vanilla or CNV. Members were ardently pro fixed price policy, and the organization quickly took control of the direction of vanilla policy in Madagascar. Several high-profile meetings were organized between the CNV and major vanilla buyers. The first and most famous July 4th, 2022, at the Madagascar embassy in Paris. Buyers were encouraged to sign a document which committed them to respect the minimum export price of USD$ 250.00/kg, divulge their local suppliers, and estimate how much vanilla they would buy at the government fixed minimum price. The document was known as the AMI, and very surprisingly many international companies signed on as they feared they would be cut off from their supply of Madagascar vanilla. In A&H (Canada)’s opinion, it is very unlikely there was any real intent from any of the signatories to buy at the minimum price of USD$ 250.00/kg.
Wholesale prices
In 2023, the approximate wholesale price range for Madagascar vanilla is between US$ 6.3 and US$ 24.5 per kilogram or between US$ 2.86 and US$ 11.11 per pound(lb).
Source: https://www.austhachcanada.com/2023/05/28/may-2023/#:~:text=The%20Madagascar%20Government%20insists%20that,about%20USD%24%2018.00%2Fkg.
What are the types of vanilla bean?
1. Very dry
Hard and brittle with intense flavor. The type with the lowest moisture level of 15-20%. Due to its brittleness, this type will break easily, and may not be suitable for cooking purposes. However, dry vanilla is the most prevalent type for industrial usages, as vanilla only needs to be processed once, and more water content will drop its concentration level.
2. Rouge/Red
Has tints of red in its ridges and is relatively dry with a moisture level of 22-25%. One of the most common types of vanilla used in the industry.
3. TK
Has a balanced amount of vanilla content and vanilla crystals on its surface as it dries. The moisture level is 30%.
4. Gourmet
The most attractive vanilla bean in appearance. Has a high demand by chefs or professional use. This type has the highest moisture level of 35-38%. The Gourmet type commands a high price due to its ability to be used multiple times, with an average of 3-4 usages, compared to others that are unusable after two applications.
The two main types of vanilla exported from Madagascar are Bourbon vanilla and Tahitian vanilla, with Bourbon vanilla being the most prominent and sought after.
Madagascar, often referred to as the "Vanilla Island," is known for its high-quality vanilla beans. The main type of vanilla bean found in Madagascar is Bourbon vanilla (Vanilla planifolia). Bourbon vanilla is renowned for its rich, creamy, and sweet flavor with distinctive vanillin notes. It is one of the most sought-after and widely used types of vanilla globally.
Within Bourbon vanilla, there are several sub-varieties and classifications based on factors such as size, appearance, and quality. The most common grades of Bourbon vanilla found in Madagascar include:
Grade A Vanilla Beans: These are the highest quality Bourbon vanilla beans. They are typically long, plump, and well-cured with a high vanillin content. Grade A beans are often preferred for gourmet and premium applications.
Grade B Vanilla Beans: Grade B beans are of good quality but may be slightly shorter or less plump than Grade A beans. They still have a strong vanilla flavor and aroma, making them suitable for various culinary uses.
Grade C Vanilla Beans: Grade C beans are smaller and may have more visible imperfections, but they are still flavorful and aromatic. They are often used in extracts, flavorings, and industrial applications.
In addition to Bourbon vanilla, Madagascar also produces another variety known as Tahitian vanilla (Vanilla tahitensis). Tahitian vanilla has a slightly different flavor profile, often described as more floral and fruity compared to Bourbon vanilla. However, Bourbon vanilla is the dominant and most widely cultivated type in Madagascar.
Bourbon vanilla from Madagascar is highly regarded in the culinary world and is a preferred choice for baking, desserts, and confectionery. The term "Bourbon" in Bourbon vanilla does not refer to the alcoholic beverage but rather to the name of the region historically known as Réunion, which was formerly called Île Bourbon, where this variety was cultivated and from where it spread to Madagascar.
What are the common forms & cuts of vanilla?
The primary regions for vanilla cultivation in Madagascar :
Major Vanilla-Producing Regions: The primary regions in Madagascar known for vanilla cultivation include Sava (Sambava, Antalaha, Vohémar, and Andapa), Analanjirofo, Diana, and Sofia.
Varieties: The two main types of vanilla exported from Madagascar are Bourbon vanilla and Tahitian vanilla, with Bourbon vanilla being the most prominent and sought after.
Quality and Flavor: Madagascar vanilla is renowned for its high quality, rich flavor, and aromatic properties. It is often considered one of the finest vanilla varieties globally.
Major regions & Seasonality :
Harvest Season: The main vanilla harvesting season in the Sava region typically begins around June or July and extends through November or December.
Peak Harvest: The peak of the vanilla harvest often occurs in August and September.
Curing Process: After harvesting, the vanilla beans undergo a curing process that can take several months, extending into the following year.
2. Analanjirofo Region:
Harvest Season: Similar to the Sava region, the vanilla harvest in Analanjirofo begins around June or July and continues until November or December.
Peak Harvest: The peak harvest months are typically August and September.
Curing Process: The curing process follows the harvest, and the cured beans are then prepared for export.
3. Diana Region:
Harvest Season: The vanilla harvest in the Diana region aligns with the general seasonality in Madagascar, starting around June or July and concluding in November or December.
Peak Harvest: August and September are often the peak months for vanilla harvesting in Diana.
Curing Process: Curing is a crucial step, and the processed beans are readied for market distribution.
4. Sofia Region:
Harvest Season: Vanilla cultivation in the Sofia region follows a similar seasonality pattern, with harvesting starting in June or July and lasting until November or December.
Peak Harvest: The peak harvest months are typically August and September.
Curing Process: Curing is performed to develop the unique flavor and aroma of the vanilla beans.
It's important to note that these timelines are general estimates, and actual harvest dates can be influenced by various factors, including weather conditions and agricultural practices. Additionally, the curing process, which involves several months of drying and conditioning, extends the timeline from harvest to market availability.
Vanilla cultivation is a labor-intensive process, and the seasonality is crucial for determining when farmers can harvest and process the beans for export, contributing to the global vanilla market.
Whole or ground natural vanilla, used as a spice/ Fragrance . Vanilla is most commonly traded in pods (i.e. beans), but the vanilla powder can also be found on the market.
Vanilla extract, used as a flavor in the food industry and as a fragrance in the cosmetics industry.
What are the quality standards of vanilla?
Vanilla lacks a standardized grading system, but certain terminology is used in order to distinguish vanilla types, which are appearance and size. However, the quality of the vanilla beans is mostly dependent on the moisture content, which ranges from very dry levels of 15-20% to moist levels of 35-38%. Vanilla beans are established after the curing process, in which the ripe green vanilla pods are turned into the commonly known black color.
Madagascar vanilla is subject to quality standards to ensure its premium quality, flavor, and authenticity. However, the specific quality standards for Madagascar vanilla can vary depending on the type of vanilla (e.g., Bourbon vanilla) and the organizations or industry associations involved. Here are some general quality parameters for Madagascar vanilla by January 2022:
Appearance: Madagascar vanilla beans should have a plump, dark, and oily appearance. They should be free from visible defects, mold, or discoloration.
Size: Vanilla beans should conform to specific size criteria, with lengths typically ranging from 12 to 20 centimeters (about 4.7 to 7.9 inches) or more, depending on the grade.
Moisture Content: Vanilla beans should have an appropriate moisture content, typically around 30-35%. Excessive moisture or dryness can affect quality.
Aroma and Flavor: The beans should have a strong, sweet, and characteristic vanilla aroma. The presence of vanillin and other aromatic compounds contributes to the distinctive flavor.
Vanilla Content: Higher vanilla content is often preferred, as it contributes to the characteristic vanilla flavor. Madagascar vanilla is known for its high vanilla content.
Grade: Madagascar vanilla beans are commonly graded into different categories, with Grade A being the highest quality. Grade A beans are often characterized by their size, appearance, and aroma.
Curing and Fermentation: Proper curing and fermentation are crucial to develop the beans' flavor and aroma. Madagascar vanilla should be well-cured to achieve the desired quality.
Ethical and Sustainable Practices: There is an increasing focus on ethical and sustainable vanilla production in Madagascar, including adherence to fair labor practices, environmentally responsible farming methods, and community development.
Certification Programs: Some Madagascar vanilla is certified by organizations such as Fair Trade or organic certification bodies. These certifications may have specific standards for ethical and sustainable practices.
Source: Tridge Analysis on the Vanilla Industry in Madagascar
Read more relevant content
Recommended suppliers for you
What to read next
