As Hurricane Harvey barreled toward Texas, Rebecca Masson, owner of Houston’s Fluff Bake Bar, thought about what was most important to her; what she had to keep safe. She ran to her pantry, grabbed the last 10 quarts of vanilla she had, and sped to shelter. At a time when top vanilla producers are charging $600 to $750 per kilogram for vanilla beans, Masson’s stash of vanilla was nothing short of liquid gold. “I could not risk it being flooded or stolen,” she says. “To lose all my vanilla? That would be no joke.”
Bakers and ice cream makers across the country have been crushed by the price surge for vanilla, which spiked after a cyclone hit Madagascar, the world’s leading producer of vanilla, on March 7. The current $600 per kilogram price is up from around $100 in 2015, and near $500 per gallon for pure vanilla extract, which sold for $70 a gallon in 2015.
While price hikes due to weather or a poor harvest are nothing new, the current vanilla crisis is unique. “The increase feels different than any other price hike we have seen because it is both prolonged and dramatic,” says Allison Kave, who co-owns Brooklyn bar and bakery Butter & Scotch.
“I’ve seen hikes before,” Masson says, recalling a 2005 surge when vanilla bean prices doubled. “But six to seven months later, prices went back down.” Not so this time. Instead, prices have showed no signs of softening.
Craig Nielsen, VP of sustainability at Nielsen-Massey, which has been in the business of making vanilla since 1907, says his company does not expect a change in price anytime soon. Vanilla plants take about three years to mature and produce beans. When the cyclone hit this spring, it tore through the main vanilla-growing areas in Madagascar, known as the SAVA region. Not only were crops devastated, but the surrounding trees, essential to filter sunlight and diffuse the heat hitting the vanilla vines, were also decimated. This means future crops may also be damaged or die from the stress of too much sun.
But Nielsen says the price hike is about more than the cyclone. In 2007, vanilla production began to decline in alternate growing regions (regions outside of Madagascar) because prices had fallen so low. It makes sense: farmers were not willing to invest the time and labor to grow and harvest vanilla in that depressed market, and supply started to decline.
Then, in 2015, vanilla prices started to climb as consumers began demanding natural ingredients in their candy bars, ice cream, and cakes. In November 2015, Hershey’s announced that it would swap out the artificial ingredient "vanillin" for the real deal in its kisses and chocolate bars. The move was the first in a series of changes to remove all artificial ingredients from the chocolates. With big food demanding real vanilla, prices started to climb to $150, then $200, then $275 a gallon, according to Masson. Add on a cyclone, and the three- to four-year life cycle of the crop, and prices went through the roof.
Some makers, like Amy Keller of Jane’s Ice Cream in Kingston, New York, were smart enough to stockpile vanilla at the first sign of a price surge a few months ago. But Keller is already worrying about what will happen she runs out, as prices have gone up not only for Madagascar vanilla (which accounts for 75 to 80 percent of world supply) but for vanilla from other sources — Indonesia, Mexico, Uganda, India — because of the heightened demand.
“If I could increase the price of my ice cream at the same percentage as the rising price of vanilla, I’d be doing really well right now — like, really well,” says Peter Arendsen, owner of the wholesale ice cream company Ice Cream Alchemy. Unfortunately, he can’t, so for now, he eats the cost. As does Ample Hills Creamery in Brooklyn, where co-owner Jackie Cuscuna says she will not pass the cost onto her customers, but notes that she has stopped introducing any new flavors made with vanilla.
Others have had to take more severe action. This summer, the organic ice cream company Blue Marble stopped selling its vanilla base to its wholesale customers, instead offering sweet cream or buttermilk flavors. Elsewhere, New York City pastry chef Fany Gerson, who relies on vanilla for her La Newyorkina popsicles and her doughnuts at Dough, took to milking the most out of every pod: She uses the beans once, then soaks them, uses the liquid that results, then dries them and grinds them into a vanilla sugar.
Four months ago, when Eric Berley, who co-owns the Philadelphia ice cream shop Franklin Fountain with his brother Ryan, started paying $544 a gallon for vanilla, he crunched the numbers and estimated that he would have to spend $22,000 more on vanilla this summer than last. To mitigate losses, he painstakingly reviewed every ice cream recipe and held blind taste tests with lower amounts of vanilla. The tweaked recipes have helped somewhat. “We didn’t have to take the full hit,” he says.
The soaring cost of vanilla did force prices up at Butter & Scotch; on August 1, the price of its whole vanilla birthday cake went up to $72, up from $60. “It was a really hard decision, but we’d seen the price increase so dramatically,” says Kave. Kave and co-owner Keavy Blueher have also abandoned offering homemade cream soda (made from whole vanilla beans), and, like Berley, have tweaked recipes to use the least amount of vanilla possible. They’ve even looked into making their own vanilla extract, but after doing the math on pricing on the beans and labor, found it would not make sense.
Imitation product is available, sure, but most bakers worth their weight in frosting won’t touch the stuff. “I don’t use anything artificial or made in a lab,” says Masson, who managed to find a blend of Tahitian and Madagascar vanilla extract at $1.72 an ounce ($500/case) in July. But she’s not sure what she will do when her vanilla runs out: She says the case is already up to $991. “Vanilla is all I think about,” she says. “I dream about it. Because at this rate, I just won’t be able to afford it.”
While bakers and makers are reeling, there may be a silver lining in this story after all. Nielsen points out that previously low price levels were not sustainable for the farmers, because of how labor intensive the crop is to grow, harvest, and produce. “There needed to be an adjustment in price to keep farmers interested in growing and maintaining the vines,” he says.
Nielsen predicts future vanilla prices will undergo a measured, not dramatic, price decline because of the continued strong global demand, tied to a commitment by large food manufacturers to use natural versus artificial flavors. A more moderate price, somewhere around $100 or $150 a gallon, might be the best of both worlds.