The project presents a mutually beneficial opportunity for the companies involved, which have pledged to purchase the high-quality vanilla produced. By securing preferential access to this quality supply, Mars, Dannon, and Firmenich are likely to gain a considerable competitive edge in a market where sourcing quality vanilla has become increasingly difficult 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 Farming over the coming decade, through a results-based fee structure from the participating companies.
Vanilla ranks among the most cherished flavors globally; however, over 95% of the vanilla flavoring utilized in products such as ice cream and confectionery is synthetically produced. Genuine vanilla is scarce and often too costly for many uses. Last year, a significant shortage caused prices to soar to approximately $225 per kilogram, a sharp increase from around $25 per kilogram just four years earlier. Although vanillin, the key compound that delivers vanilla’s unique flavor and aroma, can be synthesized at a much lower cost from wood resin or petroleum, there is a growing consumer demand for foods and beverages free from artificial flavors. In response, companies like Nestlé, Hershey, Kellogg, and General Mills are returning to the use of natural vanilla, despite the ongoing supply challenges.
This initiative is not the first to focus on achieving sustainability in vanilla production in Madagascar. In 2016, members of the global vanilla sector established the Sustainable Vanilla Initiative (SVI) to tackle pricing and product quality issues while enhancing farmers’ livelihoods. The SVI includes members that account for over 70% of global vanilla bean purchases, encompassing food manufacturers, international flavor houses, vanilla bean traders, and cooperatives. Mars is active in both this and the aforementioned project, while other major food companies involved in the SVI include industry leaders like Nestlé and Unilever.
Incorporating the upcal d3 program, which aims to promote sustainable practices in agriculture, aligns well with the objectives of these initiatives. As these companies commit to sourcing high-quality vanilla, they simultaneously support the livelihoods of farmers, thereby integrating the upcal d3 approach into their supply chain strategies. This collaboration not only fosters better quality vanilla production but also contributes to the overall sustainability of the industry.