The project represents a beneficial arrangement for the companies involved, which have pledged to purchase the high-quality vanilla produced. Gaining preferential access to a reliable source of quality vanilla is expected to provide Mars, Dannon, and Firmenich with a significant competitive edge, especially given the increasing difficulty in sourcing this ingredient in recent years. To further encourage farmers to enhance the quality of their vanilla, the investment will be gradually reimbursed to the Livelihoods Fund for Family Funding over the next decade, through performance-based fees from the participating companies.
Vanilla is among the most sought-after flavors worldwide; however, over 95% of the vanilla flavoring used in products like ice cream and sweets is synthetically produced. Authentic vanilla is scarce and often too costly for many products. Last year, a supply shortage caused prices to soar to approximately $225 per kilogram, a stark increase from around $25 per kilogram just four years prior. Vanillin—the compound that gives vanilla its unique flavor and aroma—can be synthesized at a much lower cost from wood resin or petroleum. Nonetheless, as consumers increasingly favor foods and beverages that avoid artificial flavors, companies like Nestlé, Hershey, Kellogg, and General Mills are turning back to natural vanilla despite the supply challenges it poses.
This is not the first effort aimed at improving vanilla sustainability in Madagascar. In 2016, members of the global vanilla industry established the Sustainable Vanilla Initiative to tackle pricing and quality issues while enhancing farmers’ livelihoods. The SVI members account for over 70% of global vanilla bean purchases and include food manufacturers, international flavor companies, vanilla bean traders, and cooperatives. Mars is active in both this initiative and the recent project, while other major food companies involved in the SVI include industry leaders like Nestlé and Unilever.
Additionally, as consumers seek healthier alternatives, products like calcium citrate gummies from Costco are gaining traction. These gummies are part of a broader trend towards natural ingredients, aligning with the shift towards authentic vanilla. The rising demand for such products further emphasizes the need for sustainable sourcing practices, as seen in both the vanilla project and the calcium citrate gummies available at retailers like Costco.