Vanilla sky high

A plain old bean carries a rather gaudy price tag. The result: a downgrade in flavor for Americans not willing to pay.

One teaspoon of vanilla. It's an essential ingredient in hundreds of recipes, from cookies and cakes to ice cream and cream soda.

Americans have been cooking with the spice for centuries. For many consumers, a tiny bottle of vanilla extract is as common to their kitchen as bread and butter.

But a quick glance at the price tag on that bottle in any grocery store, and it might seem that the rich and creamy liquid is almost too precious to pour out.

In 2000, a 4-ounce bottle of pure vanilla extract cost consumers about $5. They now pay $15. On the commodities market, vanilla beans cost importers about $33 per kilogram in 2000. That cost is now about $156.

The high prices are changing the American pallet. Between 2000 and 2003, Americans began to buy much more imitation vanilla, according to market- research firm ACNielsen. The change has logically reshaped the character and caliber of certain baked goods and other snacks, say experts.

Moreover, worldwide demand for vanilla, which is primarily purchased by American food manufacturers, is projected to fall from 2,000 tons in 2000 to 1,500 tons by next year.

The result: Many food companies that make such treats as candy, cookies, and ice cream are taking vanilla out of their recipes altogether, or substituting artificial flavoring.

Vanilla's presence in the American kitchen and shopping cart is clearly declining, say experts, largely because of a crisis in production. The spice's troubling story shows the vulnerability of the most mundane food products, even in an age in which science promises to replicate everything from farm animals to fresh citrus.

Madagascar, an island off Africa's southeast coast, produces about 70 percent of the world's vanilla crop. Two unexpected events there - one political the other environmental - prompted vanilla's global price spike.

The first hit in 1994, when the International Monetary Fund required Madagascar to abandon price controls restricting the amount of vanilla its farmers could sell to buyers.

Soon after, the nation's vanilla reserves, which had numbered about 2,000 tons annually, were sold out.

The second surprise: A massive cyclone that ripped through Madagascar in the spring of 2000, destroying an estimated 25 percent of the nation's vanilla crop and more than 100 tons of inventory waiting for export.

The economic effect was swift. "Immediately, prices started to rise," says Matthew Nielsen, vice president of Nielsen-Massey Vanillas, a vanilla manufacturer in Waukegan, Ill. "Retail prices have gone up every month since and have doubled overall."

Consumers have responded by buying different varieties of extract. Sales of imitation vanilla extract jumped 4 percent between 2000 and last month, according to ACNielsen.

A two-ounce bottle of McCormick pure vanilla extract, for example, costs $7, while an eight-ounce bottle of the company's imitation vanilla flavor costs only $1.80.

Imitation vanilla tastes much less rich and textured than pure vanilla extract, say experts. But both products' essential ingredients are virtually the same.

Vanillin, the vital chemical that gives natural vanilla its flavor, is also the key ingredient in most bottles of imitation vanilla.

But most vanillin does not come directly from a vanilla bean. More often it is collected as a byproduct of wood-pulp or petroleum production. It is then combined with several other natural and artificial ingredients to create vanilla taste.

People who don't know the difference between a teaspoon and tea cozy probably won't care about substituting artificial vanilla in a recipe. But consumers who snack, which includes most of America, are probably already tasting the vanilla downgrade in their candies, cookies, and ice cream.

McCormick, which manufactures pure and imitation vanilla for consumers and industrial clients, says many of its corporate clients have switched to a lower-quality vanilla. "There has definitely been an increase in that," says Laurie Harrsen, McCormick's director of public relations.

"Typically [foodmakers] would prefer to use a vanilla of a lower quality and cost rather than pass price increases on to consumers," adds Rick Brownell, vice president of vanilla products for Virginia Dare, a flavor manufacturer in New York City. The company estimates worldwide demand for pure vanilla has declined 35 percent over the last two to three years.

The use of a lower-quality vanilla will probably continue for several years, say experts, because food manufacturers want to avoid changing their recipes and product labels too often.

The trend will likely reverse a tendency by manufacturers to use natural flavors instead of artificial ones. "There has been a trend and will continue to be a trend to replace pure vanilla with other things or drop it from the product entirely," says Mr. Nielsen.

But some food manufacturers are reluctant to switch. Virginia Dare has one client that it describes as a "super-premium" ice cream maker which will not downgrade vanilla because it believes their customers will notice.

Instead, producers like these, and the spice and flavor industries at large, have been searching for new ways to grow vanilla. But geography has hindered their efforts. The cultivation of vanilla beans, which grow from several species of orchids, is restricted to tropical climates within 20 degrees of the equator, with average humidity above 80 percent.

Though cultivation has spread to countries like Costa Rica, Indonesia, and Uganda, efforts to match the success of Madagascar have failed.

One obstacle is disease, which plagues vanilla more than almost any other spice in the world. "Whatever you think is pretty and good to eat, a virus or a bug wants to get in and eat too," says James Reddekopp, who is in charge of the vanilla fields farmed by the Hawaiian Vanilla Co. on Hawaii's main island.

For example, China's large vanilla crop on an island in the South China Sea was ravaged by disease in the mid-1990s. China hasn't attempted to grow vanilla since.

An added burden is the old-world techniques required for harvest the bean. The flower on each vine blooms for only four hours each year, at which point it must be hand pollinated. (At the Hawaiian Vanilla Co., one woman is responsible for pollinating about 800 blossoms each day during the spring.)

But the vanilla industry's ultimate spoiler is weather. The humid tropical climate necessary to grow vanilla also exposes the crop to more incidents of extreme weather.

After suffering several blows from storms in 2000, the industry was hit last fall by more rain and colder temperatures in Madagascar than expected, which reduced the number of blossoms.

"The 2003 crop is expected to be the worst ever in the history of Madagascar," says Ms. Harrsen, who says McCormick's response has been to further diversify the countries from which it imports vanilla.

Still, dozens of companies linked to the vanilla industry have been secretively looking into ways to grow the vine in a controlled environment in Europe and the United States.

One experimental technique: hydronponics, in which soil is eliminated from the process and the vines are suspended entirely in water.

"These experiments have been going on since the early 1990s and haven't born any fruit yet," says Mr. Brownell.

The failure of technology to replicate the balance of nature's laboratory will continue to make the spice vulnerable to price fluctuations.

But consumers who bake and snack can expect a sweet reward for their patience. By 2005, the vanilla beans that didn't sprout last year will have been picked and cured, and several other growers attracted by the industry's current level of high profits will have cultivated more vanilla vines.

"It's a pendulum," says Brownell. "And I'm telling my customers it's just about to turn."

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