Food Business News - February 9, 2016 - (Page 18)

MADAGASCAR 2: Vanilla prices soar again ot at all plain, the vanilla market has turned volatile again. Five years ago prices for vanilla beans were hovering at about $20 a kilogram. This January, industry sources reported prices above $200 a kilogram. In turn, manufacturers of foods and beverages such as ice cream and cookies should brace for continuing high vanilla flavor prices. Skip Rosskam, president and chief operating officer of David Michael & Co., Philadelphia, said he is advising his customers to find ways to use less vanilla, which would improve the supply-demand situation. "Can you imagine somebody who sells vanilla for a living telling his customers that we're all going to be better off if you use less?" he said. "But it's true. That is what has to happen. We have to create more supply than there is demand." Josephine Lochhead, president of Cook Flavoring Co., Paso Robles, Calif., also gives advice to her customers who buy vanilla flavor for their foods and beverages. "No. 1 is not to stock up," she said. "When (the food and beverage companies) see these prices going up, they want to order four times what they normally do, and that just exacerbates the problem. Have patience. Don't panic." The market has seen higher prices. Vanilla beans went over $500 per kilogram in 2004, said David Vanderwalde, director of Aust & Hachmann, a vanilla bean buyer based in Pointe-Claire, Que., that sells to flavor houses. Growers in N 18 FOODBUSINESS NEWS ® other countries besides global leader Madagascar then entered the market, leading to a glut, he said. The market crashed. Prices plunged. Vanilla beans sold for about $20 a kilogram from 200810, Mr. Vanderwalde said. Only Madagascar growing regions could support such low prices for vanilla beans, a labor-intensive crop, Ms. Lochhead said. Cook Flavoring Co. grows its own vanilla beans in South Pacific regions and also buys vanilla beans from Madagascar. Wages in Madagascar run about $1.50 per day while wages in other regions average about $10 per day, she said. Since vanilla prices are high again, growers in other countries may consider reentering the vanilla market, but it's not that easy. After planting vanilla beans, it will take four years to develop a commercial crop, Mr. Rosskam said. "It's not a quick fix anywhere," he said. "It's not like we can expand production next year." Quality is also an issue While vanilla beans are more expensive, quality has become a problem. Quality is best at $20 a kilogram and worst at $600 a kilogram, Ms. Lochhead said. "There's always an inverse relationship between price and quality," she said. "When prices are high, it gives farmers an incentive to pick the beans before they reach maturity. Immature beans lack flavor." A practice called vacuum packing is affecting quality as well. "The recent practice of vacuum packing has had a significant detrimental effect on the quality of the vanilla beans as they attempt to stop the curing process until a later date," said Craig Nielsen, chief executive officer of Nielsen-Massey Vanillas, Inc., Waukegan, Ill. "Unfortunately, this retards the flavor development within the bean, and that development cannot be made up at a later date. Utilizing this practice means they are asking exorbitant prices for inferior quality beans under today's market conditions." The combination of high vanilla bean prices and poor quality might have food Pure vanilla flavor is a lot more important and distinguishable in an ice cream product than in a bakery product. - Josephine Lochhead, president of Cook Flavoring Co. February 9, 2016

Table of Contents for the Digital Edition of Food Business News - February 9, 2016

Food Business News - February 9, 2016
Mondelez expects snack sales to slow
Starbucks ‘firing on all cylinders’ in C.P.G.
Beverage Business News - Boosting the nutrition profile of beverages
Table of Contents
Web Contents
Editorial - Trust and the rising bar for ‘achieving’ food safety
Survey finds natural labels may mislead consumers
‘The U.S. consumer has changed’
Take the lead in transparency
ChemChina to acquire Syngenta for $43 billion
A new venture for PepsiCo
Chipotle focusing on recovery, food safety
Coca-Cola takes stake in Nigerian business
SuperValu picks new president, c.e.o.
Madagascar 2 - Vanilla prices soar again
Nestle in talks to acquire Israel’s largest food company
Global challenges weigh on Hershey’s earnings
Court sides with Dannon, General Mills in yogurt case
Market Insight - Beef is bouncing back
Ingredient Trends - Plant protein applications evolving
Ingredient Innovations - Three considerations when choosing emulsifiers
Emulsion innovation extends beverage stability
New Food Products
Ingredient Market Trends - Ethanol fuels fireworks in the Iowa Republican caucus
Ingredient Markets
Supplier Innovations and News
Ad Index

Food Business News - February 9, 2016