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| Vanilla Orchid |
Surging
vanilla prices are forcing many spirits producers to get creative or eat the costs. It seems that an unprecedented global shortage of vanilla
is prompting spirits producers to make changes, whether that entails pulling
certain vanilla-rich products from the market, adjusting processing techniques,
or simply taking a hit until prices return to normal-if
they ever do. Vanilla prices
have been on the rise for years, initially because of increasing consumer
demand for "natural" vanilla.
Vanilla is derived from the pods of an
orchid, with demand outstripping production and prices rising accordingly. A cyclone hit Madagascar back in March, an island that produces about 80 percent of the world's vanilla, reducing the supply even further.
About one-third of the vanilla crop there was
destroyed. Today the price of vanilla beans is now 10 times what it was
just five years ago. From a low of around $50 a kilogram in 2013, the price
rose in 2015 and 2016 to $100 to $200 per kilogram as the demand for natural
vanilla increased. The price skyrocketed after the cyclone, to around $500 per
kilogram.
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| Vanilla Beans and the Orchid Flower |
It takes
about three years from the time an orchid vine is planted until the vanilla
beans can be harvested and a new supply will be hard to come by for the short haul. This means
higher prices for some time. There
are three viable options for flavored spirits makers at this time. One is to absorb the cost, pull the vanilla
flavored spirits off the shelves, buying vanilla from other parts of the world,
like Tahiti, Indonesia and Madagascar or using less vanilla in the blend.
Most of the spirits producers are reluctant to
pass on these costs to the consumers because of the highly competitive nature
of the business. However, there needs to
be changes made if they are to stay profitable.
There are some producers that seem to able to survive the
vanilla shortage better than others. Particularly
larger producers, that have larger stocks of vanilla will most likely be
unaffected by the current vanilla shortage.
