Vanilla is the most preferred flavor in food and other products. It is the most dominant flavor among all and finds its applications in foods, beverages, pharmaceuticals, cosmetics, and perfumeries. The demand for this flavor is increasing, and the supply is limited. Various manufacturers are putting their efforts into making vanilla extract by adulteration in natural vanilla extract to meet the demand. The natural vanilla pods contain vanillin, which is also manufactured synthetically. The manufacturers of vanilla extract are offering high-quality vanilla extract to the end-user industries for premium product development. For instance, in July 2015, Rodelle, Inc., launched its new Ultra-premium vanilla extract.
The growing food and beverage industry, consumers' inclinations towards tasty and flavourful products, and increasing application in the pharmaceutical industry as a bitterness suppressor are some of the major factors responsible for the market growth.
There are some popular varieties of vanilla extract, including pure, imitation, and handcrafted. According to the FDA, pure extract means extracting real vanilla beans and nothing else. Some wood by-products make imitation vanilla. The concentration of imitation vanilla is relatively low compared to pure vanilla extract. Imitation vanilla is required twice of pure vanilla extract to match pure vanilla extract's strength in any recipe. Handcrafted vanilla extract can be made at home by keeping split vanilla beans in a sealed container full of alcohol for about eight weeks; the vanilla will be infused into the alcohol, and the extract will be prepared.
The increasing consumption of processed foods, including bakery products and frozen dessert items, is expected to drive the market. Moreover, the rising disposable income and millennials' growing interest in flavourful products will further drive the market.
According to the Food Safety Standards Authority of India (FSSAI), in India bakery industry has achieved 3rd position in generating revenue in the processed food sector. In 2015, the bakery industry in India was valued at USD 7.6 billion. Moreover, due to the coronavirus outbreak, the demand for functional foods and packaged foods has also increased, which is expected to grow the market.
The demand for vanilla extract increases in the pharmaceutical sector for masking the original taste and flavor of different medicines. The vanilla extracts are also applied as bitterness suppressor in various syrups and suspensions given to children. Moreover, the vanilla extract has antimicrobial and antioxidant properties, making it a useful product in the pharmaceutical and nutraceutical industry.
The demand for vanilla extract increases in the cosmetic industry due to its concentrated flavor, antioxidants benefits, and phenolic compound vanillin. According to Paula's Choice, LLC., the vanilla extract used in skincare primarily for its antioxidant benefits. It acts as a skin-soothing agent in cosmetic products. It is used in lip balms, glosses, lipsticks to create a pleasant taste. It is also used in creams, lotions, and bath care products. As an ingredient in cosmetics, it also helps to neutralize free radicals and prevent skin damage. All these benefits are creating demand for vanilla extract in the cosmetics industry.
| Study Period | 2020-2032 | CAGR | 5.7% |
| Historical Period | 2020-2022 | Forecast Period | 2024-2032 |
| Base Year | 2023 | Base Year Market Size | USD XX Billion |
| Forecast Year | 2032 | Forecast Year Market Size | USD XX Billion |
| Largest Market | Europe | Fastest Growing Market | Asia Pacific |
Europe is expected to be the dominating region for the vanilla extract market. This is due to the increasing applications of vanilla extract in food and beverages. Moreover, the region has the largest food industry, which is also a significant factor in its market growth. The consumption of vanilla extracts in various bakery and confectionery products such as cakes, pastries, biscuits, and candies is increasing. According to FoodDrinkEurope, the European food and beverage industry generated a turnover of approximately USD 1.4 trillion, making it the EU's largest manufacturing industry. The leading European importers of vanilla include France, Netherlands, Germany, the U.K., Italy, and Belgium.
Fig 1: European Top Importers of Vanilla, 2017
Source: CBI (Ministry of Home Affairs)
There is an excellent opportunity for the producer of vanilla to export vanilla to Europe in recent times. Due to structural problems in the world's leading supplier of vanilla Madagascar, a shortage of vanilla was created in Europe.
Asia-Pacific is expected to be the fastest-growing region for the vanilla extract market. This is due to the consumers increasing disposable income, millennials' growing interest in flavourful products, and increasing premium food consumption. Moreover, the increasing manufacturing sector in the region is expected to increase vanilla extract demand further. Countries like India, China, and South Korea are the major contributors to regional market growth. In India, vanilla is cultivated in Kerala, Andhra Pradesh, and Tamil Nadu.
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Based on Nature
the global vanilla extract market has been segmented into organic and conventional vanilla extract. Organic vanilla extracts are rapidly gaining ground. This is due to increasing consumer awareness regarding natural and organic food ingredients. According to FiBL (The Research Institute of Organic Agriculture), organic agriculture participates in 186 nations, and approximately 72 million hectares of agricultural land are managed organically by 2.8 million farmers. The global sales of organic products, including food and beverages, were more than USD 110 million in 2018.
The demand for vanilla extract is high in food and beverages product. This is due to the consumer's preference for vanilla flavor. Vanilla is extensively used in bakery products, confectionery products, among others.
The COVID-19 pandemic has posed a severe threat to the global food system by disrupting its long supply chains and logistics. A diverse local agriculture network can help urban areas create a more resilient food system for its residents. Furthermore, the pandemic has impacted markets and farm prices, supply chain slowdowns and shortages, farmers' health, farm workforce, and worker safety, among other disruptions. The farming sector has witnessed a sharp dip in the business, including the dealership network, and the reluctance of farmers to purchase expensive high-powered farm equipment in light of the pandemic.
The governments are slowly lifting lockdowns after months of restrictions, which is anticipated to bring the farm equipment market opportunities to grow. The opening of manufacturing facilities, international borders, and favorable monsoon conditions in equatorial regions are expected to restore the global agriculture and farming industry. Government initiatives and support to farmers are also expected to encourage the farmer's morale. The U.S. government announced a USD 19 billion relief program to farmers, including USD 16 billion in direct payments to producers this year.
