Vanilla Prices Surge to Surpass Silver Prices
Vanilla prices have reached a record-breaking $600 per kilogram, rendering the floral flavoring agent more expensive than silver, currently priced at $550 per kilogram.
By comparison, in 2013, vanilla only cost $50 per kilogram.
Soaring vanilla prices can be blamed in part on a cyclone that hit Madagascar last year, wiping out a large number of vanilla plants on the island. Madagascar is the world’s top vanilla-growing region, producing approximately 80 percent of the global supply. Seeing as vanilla plants take three to four years to produce pods, the devastating weather has reduced the vanilla supply substantially, thus contributing to price hikes.
But rapidly increasing vanilla prices can also be attributed to the rising importance of natural foods among consumers. While most of the world’s vanilla flavoring does not come from real vanilla pods and instead is produced artificially, a 2015 commitment by Nestlé to transition to all-natural ingredients within five years inspired other companies, including Hershey’s, to follow suit. This has led to increased demand for real vanilla in place of artificial vanillin, contributing to inflated costs.
A further reason for the increased price is linked to local exporters hoarding inventory in hopes of further price hikes, the Economist reports.
The expense of real vanilla has led some companies, such as Baskin-Robbins, to seek out alternatives. Last month, Nigel Travis, CEO of Dunkin’ Brands Group, told Bloomberg that the expense of vanilla, coupled with rising dairy prices, was putting “pressure on both our margins internationally, and the costs to our franchises.
“We’ve taken this very seriously,” Travis continued, noting that Baskin-Robbins has negotiated lower prices on pecans and cocoa to make up for the added cost and is testing other flavors to reduce its reliance on vanilla.
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