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Exporting vanilla to Europe

Takes about 21 minutes to read

There is a big opportunity on the European market for suppliers from all countries of origin who can deliver high-quality vanilla. Structural problems in the world’s leading supplier, Madagascar, has created a vast shortage of supply, providing room for others. A special opportunity exists for suppliers who apply sustainable practices or who hold organic or Fairtrade certification.


1 . Product description

There are two main types of vanilla on the international market:

  • Bourbon vanilla, from Vanilla planifoliaAndrews”. This type is the most popular cultivated variety, mainly cultivated in Madagascar. V. planifolia is the same variety originating and growing in Mexico but has become synonymous with Madagascar. Bourbon vanilla is the preferred type of vanilla used in Europe, although vanilla extracts are also used.
  • Extract-grade vanilla, from Vanilla tahitensis. This type is a weaker vanilla with “fruity, floral, and sweet flavours”, which is grown in Papua New Guinea and Indonesia. Extract-grade vanilla is used to produce vanilla extract, which is the main form used in the United States of America.

In Europe, vanilla is sold in the following forms.

  • Whole or ground natural vanilla, used as a spice. Vanilla is most commonly traded in pods (i.e. beans), but vanilla powder can also be found on the market.
  • Vanilla extract, used as a flavour in the food industry and as a fragrance in the cosmetics industry.

This study focuses on vanilla as a spice. The food processing, cosmetics and pharmaceutical/medicinal industries are the main players on the European vanilla market.

Tip:

The Harmonized System (HS) codes for vanilla are:

HS Code

Description

0905.1000

Vanilla, neither crushed nor ground

0905.2000

Vanilla, crushed or ground

2 . What makes the EU an interesting market for vanilla?

Vanilla is one of the most popular spices in the world and an important ingredient in many products. However, European imports of vanilla are declining due to the worldwide vanilla shortage and the rising global prices. The high prices for vanilla are even forcing ice cream producers to consider taking the flavour off their menu. The popularity of the spice will provide you with opportunities on the European market if you are able to supply vanilla for a reasonable price.

Decline of imports, but there are still opportunities for developing country suppliers

European vanilla imports from developing countries decreased to 1,200 tonnes in 2017, representing a value of €394 million. Vanilla imports from developing countries have increased in value annually by 63% between 2013 and 2017, but decreased by 13% in volume. This situation was the result of low crop production due to Madagascar experiencing the usual cyclones after the rainy season that caused damage to the world’s biggest vanilla producer. Madagascar is naturally prone to cyclones which has a negative impact on the country’s agriculture. Therefore, vanilla prices went sky high, leading to a strong reduction of supplies.

Figure 1 shows the decrease of European imports of vanilla, but also the increase of supply from developing countries since 2016.

Countries other than European or developing countries are fairly negligible and thus excluded from this graph. In 2017, these other countries only accounted for 6.6% of the total European imports.

Prices remained fairly stable until 2012, due to adequate supplies and stocks. The poor harvest in 2013 (with a fall in both the quality and the volume of vanilla produced) caused prices to rise. Despite a better harvest in 2014, prices remained high in 2015 and increased even further in 2016 and the beginning of 2017.

The price of vanilla beans has increased by almost 50% for industrial grades and by 15–20% for gourmet or food service grades since 2012, which is in line with the increase of value in European imports from all countries (+51% between 2013 and 2017). The increase in prices was caused both by the increase in demand and by the uncertain situation in the main producing country Madagascar. Industrial demand is expected to slow down because of the escalating vanilla prices, as food manufacturers have more and more alternatives at their disposal to create vanilla flavour. The long-term trend in the price of vanilla will depend on how successful producers in countries other than Madagascar are in expanding their production and on their willingness to continue the cultivation of this crop (see Production below for further details).

Tips:

  • Due to the volatility of market developments, prices are hard to predict. Keep up to date on the price of vanilla. Crop reports are a valuable source of information. Aust & Hachman and Eurovanille regularly publish crop reports. IEG Vu is a paid service that provides information on the vanilla market and prices.
  • The quality of vanilla depends on the prices that you pay to your collector and farmers. They need to be high enough for them to invest in good agricultural practices.
  • Farm-gate prices were very low until 2012. This made many farmers terminate or reduce their harvests. Therefore, as an exporter, it is important to invest in your suppliers to ensure your own supply.
  • With global demand increasing, it is becoming harder for European buyers to secure supply. For this reason, it is a good time to establish long-lasting relationships with serious buyers. Buyers are willing to pay higher prices to suppliers who are able to help secure supply and comply with delivery times as well as food safety requirements. They will also be more willing to invest in your partnership.

France, the Netherlands and Germany are the most interesting target countries

Figure 2 gives an overview of the leading importers of vanilla in Europe. The main importers of vanilla are France, the Netherlands and Germany.

Of the leading European importers, only the Netherlands managed to increase its vanilla imports significantly in terms of volume. However, in terms of value, all countries showed considerable increases, reflecting the increasing prices caused by the supply shortage.

Of the leading importers in Figure 2, France and Germany have a higher share of imports from developing countries than the European average. In 2017, 68% of the total vanilla imports by France originated in developing countries. For Germany this was 64%. This fact indicates that these countries can be interesting markets for your vanilla. France and Germany are also the main re-exporters of vanilla.

In the same period, only 3% of Italy’s imports originated in developing countries. The country’s growing imports mainly came from European re-exporters.

Apart from the leading importers, several smaller European importers significantly increased their imports of vanilla over the last five years. Examples include countries such as:

  • Ireland (by 43%)
  • Slovakia (40%)
  • Portugal (27%).

Tips:

  • Make your own statistical analysis to gain insight into the differences between leading European importers. Create a free account for statistical databases such as Eurostat and ITC Trade Map.

Strong role for European market players

European traders and processors play a relatively strong role on the European market for vanilla. The export volume amounted to almost half of the total vanilla imports of that year. The largest part of these exports are re-exports destined for other European countries.
European exports of vanilla amounted to 1,500 tonnes in 2017, representing a value of €195 million. The volume of exports declined between 2013 and 2017 at an annual rate of 16%. However, the value of exports grew by 37% in the same period, due to the strong growth in the global price of vanilla.

In 2017, 70% of all European exports of vanilla ended up in other European countries. The leading exporters in 2017 were:

  • the Netherlands (34% of total European exports)
  • France (30%)
  • Germany (18%)
  • Belgium (10%).

3 . Which requirements should vanilla comply with to be allowed on the European market?

You can only export vanilla to Europe if you comply with the buyer requirements for spices and herbs.

Legal requirements

If you do not comply with European legal requirements, your product can be refused at the border or withdrawn from the market. When exporting to Europe, you have to comply with the legally binding requirements for the following topics.

  • Food safety: traceability, hygiene and control as specified in the General Food Law.
  • Mycotoxins contamination: for vanilla, maximum levels of mycotoxins are set for aflatoxin (between 5 μg/kg for aflatoxin B1 and 10 μg/kg for the total aflatoxin content B1, B2, G1 and G2). For ochratoxin, the maximum level is 15 μg/kg.
  • Maximum residue levels of pesticides: anthraquinone residues may be found in spices such as vanilla as a result of artificial drying with fire. The smoke contains anthraquinone, which can end up in the product if appropriate precautionary measures are not taken.
  • Microbiological contamination: the presence of salmonella is the main reason for banning vanilla from the European market.
  • Food additives and adulteration: spices and spice blends are rejected by custom authorities for containing undeclared, unauthorised or excessive levels of extraneous materials.
  • Maximum levels of polycyclic aromatic hydrocarbons: contamination with PAHs stems from bad drying practices.
  • Irradiation: this process is allowed but not commonly used, as consumers do not always accept such treatments. Discuss this option with your buyer.

Food safety: traceability, hygiene and control

Food safety is a key issue in European food legislation. The General Food Law is the legislative framework regulation for food safety in the Europe Union. To guarantee food safety and to allow appropriate action in the case of unsafe food, food products must be traceable throughout the entire supply chain and risks of contamination must be limited. One important aspect for controlling food safety hazards is to define critical control points (HACCP) by implementing food management principles. Another important aspect is that your food products can be subjected to official controls. Products that are not considered safe will be denied access to Europe. Some products are subject to increased controls, but vanilla is currently not on the list.

Tips:

  • European buyers will often ask buyers to implement a food safety management system based on HACCP principles (see under Common requirements).
  • Check for increased levels of controls on your product. The list of spices and herbs and their supplying countries is updated regularly. Check the EUR-Lex website for the most recent list (see latest document under Amended by).
  • Read more about HACCP on the EU Trade Helpdesk).

Contamination of vanilla

Food contamination is a particularly important issue in Europe. Buyers will want you to comply with the increasingly stringent food safety requirements. Food safety issues include microbiological (bacteria, moulds), physical (plastic residues, metal, dirt) and chemical contamination. No specific limits for mycotoxin contamination are set for vanilla in European legislation, but food safety procedures have to be followed carefully in all post-harvest steps (especially drying) to ensure a safe product. The practice of vacuum-packing vanilla to retain the moisture not only leads to lower quality but can also cause mould formation.

Tips:

  • Do not vacuum-pack your vanilla, particularly if it is not yet dried enough, since this process can lead to food safety and quality risks.
  • Make sure during transport that vanilla is either dried or there is sufficient ventilation. For more information, refer to the website of the Transport Information Service.

Pesticides

The European Union has set maximum residue levels (MRLs) for pesticides in and on food products. Products containing more pesticides than allowed will be withdrawn from the European market.

The amendment of the European Pesticide Regulation 396/2005 came into effect in 2015. This amendment sets revised limits for pesticides found in vanilla and introduces a new limit for anthraquinone.

Tips:

  • You can use the MRL database of the European Commission, in which all harmonised MRLs can be found. Search for your product or the pesticide used and the database shows the list of the MRLs associated with your product or pesticide.
  • Read more about MRLs on the EU Trade Helpdesk.

Food additives and adulteration

Many of the spices and herbs rejected by custom authorities or buyers have undeclared, unauthorised or excessive levels of extraneous materials. There is specific legislation for food additives (such as colours, flavours and thickeners) that lists which E numbers and substances are allowed to be used. Spices and spice blends cannot contain added colours.

Crushed and ground vanilla is often intentionally adulterated with such substances as tonka bean, coumarin, cheaper varieties of vanilla, synthetic substitutes and even metal particles. An important reason for intentional adulteration – which is a serious malpractice – is economic gain. Food adulteration is an important issue for European buyers. According to a panel of industry experts consulted for this study, this type of food fraud is quite common in vanilla. The European Union and national European governments are becoming stricter in the enforcement of food fraud legislation as well.

Tips:

  • If you use additives, make sure that they are legal and agreed with your buyers. Also make sure to mention them in the list of ingredients.
  • You will have to build a track record and provide transparency and references if you want to sell processed vanilla to European buyers. Buyers will buy only from suppliers that they trust. The burden of evidence is on suppliers.
  • Refer to the Adulteration Awareness document of the European Spice Association for further information on food adulteration.
  • See our study of Buyer requirements for natural food additives and the website of the European Commission for more information on requirements for food additives.

Irradiation

Irradiation of spices and aromatic herbs is legally allowed in Europe, but needs to be declared on the label. It is a safe way to kill organisms, and it affects the taste of spices and herbs less than steam sterilisation. The maximum overall average absorbed radiation dose is 10 kGy. Consumers generally prefer non-irradiated products and therefore most buyers do not accept it either. As a result, this method is not widely used.

Tips:

  • Please note that irradiation is less damaging to the taste of spices and herbs than steam sterilisation. However, as consumers in Europe generally prefer non-irradiated products, this method is not widely used.
  • Read more about irradiation on the website of the European Commission.

Additional requirements

Consider complying with the following non-legal requirements to ease market access. By complying with these requirements, you can create a competitive advantage for your company or product offering. European buyers can use these requirements as selection criteria for their new suppliers.

  • Food safety certification: the most important food safety management systems in Europe are British Retail Consortium (BRC), International Featured Standards (IFS Food), Food Safety System Certification (FSSC 22000) and the Safe Quality Food programme (SQF). Each of these standards is part of the Global Food Safety Initiative. Always verify your buyer’s preference for a specific food safety management system, as some may prefer one system over the other. For example, BRC was developed by retailers in the United Kingdom and more commonly demanded on this market. If you want to target the United Kingdom, BRC may be more important.
  • Corporate social responsibility (CSR): companies have different requirements for CSR, such as signing their code of conduct or following common standards including the Supplier Ethical Data Exchange (SEDEX), Ethical Trading Initiative (ETI) or Business Social Compliance Initiative code of conduct (BSCI). Important issues in the vanilla supply chain are fair payment for farmers, the use of child labour and the impact on biodiversity.

Requirements for niche markets

Complying with the following standards can be essential to access specific market segments and buyers in Europe.

  • Sustainable product certification: the major certification systems are organic, Fairtrade and Rainforest Alliance. There is a growing market for certified products with well-known consumer logos. Organic products focus on land use and inputs. Fairtrade focuses specifically on improving the living conditions of smallholders in developing countries by paying them a premium. Rainforest Alliance, a mainstream sustainability scheme with a focus on social as well environmental issues, has recently developed a standard for several spices and herbs. Processors and exporters can play an important role in the certification process by coordinating the activities of smallholders. If they handle certified sustainable vanilla, they will have to be certified themselves in order to ensure a reliable chain of custody. There are specific certifications for traders, such as Fairtrade’s Trade Standard and the Rainforest Alliance’s Chain of Custody standard.
  • Self-verification: suppliers assess their own compliance with the sustainability code of buyers. Examples include Unilever’s Sustainable Agricultural Code (SAC) or the Olam Livelihood Charter.

Tips:

Quality requirements

Product quality is a key issue for buyers in Europe and includes food safety as well as product quality. The quality of vanilla is among others things determined by the pod length, which varies in the commercial product between 10 and 25 cm.

  • Grade A, also called gourmet or prime quality, is a pod full of seeds with deep black coloration and moist, flexible pods. Grade A-1 beans have a deep, intoxicating aroma and have a moisture content of 30-35%. As this vanilla is visually attractive, it can be a feature ingredient in gourmet cuisine. Grade A-2 beans have a lower moisture content, ranging from 25% to 30%.
  • Grade B, also called extract grade or manufacturing grade, is widely used in the food, beverage and flavour industries. The pods may be whole or split, with lower moisture (15–20%) than gourmet grades.

Further quality features preferred by most importers include vanillin content (minimum 2%) and moisture content in the range of 20% to 30%. Vanilla is graded in accordance with the relevant national standard of the producing country. In addition, ISO standard 5565-1:1999 provides some general guidelines on the grading, handling and packing of vanilla.

You also need to comply with the Quality Minima Document from the European Spice Association (ESA). The Quality Minima Document specifies the chemical and physical parameters that vanilla needs to comply with when sold in Europe before crushing and grinding.

  • Ash: maximum 10%
  • Acid-insoluble ash: maximum 1.6%
  • Moisture: maximum 11%

The ESA has not developed cleanliness specifications. As a result, European buyers often use the specifications for cleanliness stated by the American Spice Trade Association (ASTA).

Tips:

  • Use detection and prevention methods to ensure that your vanilla is not contaminated with metal, stones or animal droppings.
  • You can also use more sophisticated cleaning methods in order to add value to your product, such as steam sterilisation.
  • Check ISO standard 2255:1996 for general guidelines on the grading, handling and packing of vanilla.

Labelling requirements

Incorrect labelling is a major source of frustration for European buyers. As a result, you must be sure to handle this aspect properly. See our study of Value-added spices and herbs for information on consumer packaging requirements. For bulk products, include the following information:

  • the name of the product;
  • details of the manufacturer (name and address);
  • batch number;
  • date of manufacture;
  • grade of the product;
  • producing country;
  • harvest date (month-year);
  • expiry date;
  • net weight of contents;
  • other information that exporting and importing countries may require, such as the bar, producer and/or packer code, as well as any extra information that can be used to trace the product back to its origin.

Tips:

  • See our study of Value-added spices and herbs for requirements for consumer packaging and labelling.
  • See the website of the European Commission for additional information on food labelling legislation. This requirement only applies to final products that are sold directly to consumers.

Packaging requirements

Vanilla beans are often subdivided according to their size (length) and then bundled, with each bundle containing some 70–100 beans and weighing between 150 and 200 grams. The bundles are then packed into waxed paper-lined tin boxes which hold between 20 and 40 bundles. The tins are in turn packed in cardboard boxes. As vanilla is very sensitive to moisture, packaging of vanilla must be handled with appropriate care.

Vacuum-packing is not good for the quality of vanilla when it is not yet completely dried. Many buyers will refuse to buy it. Vacuum-packaging vanilla that is sufficiently dried is less of an issue, although there will still be buyers unwilling to accept it.

4 . What competition do you face on the European market for vanilla?

Madagascar, Jamaica and Indonesia are your main competitors

The European supply of vanilla is dominated by Madagascar. In 2017, this country accounted for 74% of the European imports from developing countries. Supplies coming from other developing country suppliers are much lower:
Jamaica (6.1% of imports from developing countries);

  • Indonesia (5.6%);
  • India (5.2%);
  • Papua New Guinea (2.6%).

Even though Madagascar is expected to remain by far the most important supplier in the coming years, since 2013 supplies from the country have declined by an annual average of 13% in volume. The increasingly high prices are expected to boost vanilla production in other growing regions such as Papua New Guinea and French Polynesia. Supplies from some smaller supplying countries are increasing, both in intra-European trade as well as from developing countries such as Indonesia (+5% annually since 2013) and Papua New Guinea (+168%).

Figure 3 shows global production of vanilla between 2012 and 2016. Besides Madagascar, Indonesia is a major producer of the spice. Although Indonesian vanilla export to Europe is growing, the country is still a relatively small supplier to Europe (5.6% of European imports from developing countries in 2017).

The production of most rising new suppliers did not have a large impact on the global market in 2017, as it takes years before they can actually harvest the vanilla. However, since the problems in Madagascar are expected to continue, the new producers might play a larger role in future.

Between 2013 and 2015, vanilla was in short supply while demand increased, leading to high prices. In 2016, the practice of mechanical “quick curing” of green vanilla beans was introduced in Madagascar as a way to increase processing speed and lower production costs. Vanilla trader Aust & Hachman expects this practice to lead to lower-quality vanilla, putting more pressure on the prices of good-quality vanilla in the coming years.

In recent years, many buyers in Europe have gone directly to the source in order to ensure their supply. This development provides an opportunity as well as a threat for exporters in developing countries. In some cases, European buyers will work directly with farmers or set up their own facilities in countries of origin.

Tip:

  • If you supply good-quality vanilla that complies with food safety requirements in Europe, you will not have problems finding buyers. Your challenge and added value for European buyers will be to secure supply.
  • Keep up to date on global production trends. An important indicator will be the success of the flowering of Malagasy vanilla, which should start in the months of August and September. Check the latest crop reports from such sources Aust & Hachman and Eurovanille for further information.

Growing European imports of ground/crushed vanilla lead to opportunities for local value addition

Most vanilla is still processed in Europe. Opportunities for increased processing in the country of origin are limited, as buyers will generally prefer to process this expensive product themselves and thus exercise more control over the process. In 2017, Europe imported 1,481 tonnes of crushed/ground vanilla. Of that amount, 36% originated in developing countries. Over the past five years, total European imports of ground or crushed vanilla increased by an average annual 20% in volume. However, imports supplied by developing countries increased by only 0.1% on average, indicating the hesitation of European buyers to buy processed or semi-processed vanilla outside of Europe. This likely has to do with buyers preferring to keep control over the processing of this expensive product.

Figure 4 below gives an overview of the main suppliers to Europe in terms of whole and ground/crushed vanilla.

Note that the trend towards importing semi-processed vanilla can still entail opportunities for you as an exporter. Not only did Madagascar, as a major supplier, manage to increase its supplies of crushed and ground vanilla by 2% annually, some smaller suppliers also saw their supplies increase, including:

  • Jamaica (from no supply in 2013 to 27 tonnes in 2017;
  • Peru (from less than 1 tonnes in 2013, to 3.5 tonnes in 2017.

Tip:

  • Processing vanilla is only interesting if economies of scale can be achieved. In any case, first address quality issues as a way to add value.
  • It is costlier to clean contaminated ground vanilla than in whole form. Your buyer will transfer the costs to you if your products do not comply with the requirements.
  • See our study of Value-added spices and herbs for more information.

Which channels can you use to put vanilla on the European market?

See our study of Market channels and segments for spices and herbs for an overview of channels, segments, trends and developments. The channels for vanilla do not differ significantly from this general overview.

5 . What are the end-market prices for vanilla?

The global prices for vanilla are skyrocketing due to low global production and high demand. The average global market price for vanilla in May 2018 was between US$ 600 and US$ 700 per kg. It is not uncommon for the retail price of vanilla to be as high as €2.99 per gram (i.e. €2,990 per kilo). These prices are only paid for small consumer packages, typically containing only 1 pod.

Figure 5: Indicative price breakdown of vanilla, sold in spices and herbs section of supermarkets
figuur_5_5.jpg

Please be aware that this price breakdown for vanilla is only a general indication. It is influenced by many different factors. These factors include the country of origin, the current and expected future harvest situation, quality of the raw material, level of processing, level of demand and the trend in prices. All these factors make it difficult to provide a reliable price breakdown.

Tips:

  • It is important to keep your eye on price development. Search the internet for recent reports. IEG Vu is a paid service that provides information on the vanilla market and vanilla prices. Nedspice, PBA Brokerage, Indian Spice Board and the International Trade Centre also regularly publish useful reports on crops and prices.
  • Due to the fact that vanilla prices are high in relation to other spices, buyers prefer to keep prices low. However, a certain price level must be reached in order to encourage vanilla farmers to keep farming. For this reason, it is important to integrate fair pay practices in order to ensure your supply. This process is especially relevant in times when prices are low and farmers are struggling. If the vanilla price is too high, many buyers will switch to synthetic substitutes that are now widely available. This situation will prevent trade prices from going up too high (e.g. import prices over €450 per kilo) as they did in 2003, when substitutes were not used as much.
  • Keep up to date on exchange rates with the aid of such websites as Oanda.

6 . Useful sources

Please review our market information disclaimer.

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