Citing a 'significant rise in the pricing for major raw materials' the Norwegian company, with sales for the group that brushed the $1billion mark last year, said that from today it would impose a 5-10 per cent price rise for its vanillin and ethylvanillin product lines.
"The company has absorbed these additional costs during and up to 2003, but says that it is no longer possible to sustain this unfavourable situation longer-term," a spokesperson said this week.
The rise in prices takes affect from today and is applicable for its vanillin and ethylvanillin product lines. Ethyl Vanillin is manufactured through a synthetic process with raw materials derived from fossil hydrocarbons. Due to its more intense flavour and fragrance profile, aromatic ethyl vanillin is between two and four times stronger than normal vanillin grades, said the company.
Borregaard's line of vanillin is based on lignin from spruce trees, a natural and renewable source classified as 'nature identical' with a crystal shape and size (<20 to 120 mesh, <125 to 840 microns) and sold in six different grades (crystals or powder) 'which gives excellent flow properties without any additives.'
Each year, about 10,000 tons of vanillin is chemically synthesised. Most of this is used in the food and fragrance industry. Commercial vanilla plantations, in countries such as Madagascar, the largest producer supplying three-quarters of the world's vanilla, contribute to the 2200-2400 ton annual harvest of vanilla pods. But the prized ingredient vanillin constitutes only 2 per cent of this yield. Making it a very expensive commodity, exacerbated by harmful storms and bad weather in Madagascar in recent years that has wrecked harvests. About 1400 tonnes of dried vanilla is produced worldwide each year.
Because vanilla is so much in demand, and because it is so expensive, synthetics are often used instead of natural vanilla making up approximately 97 per cent of vanilla that is used in flavours and fragrance.
Prices for vanilla are currently at an all-time high of $400-$500 per kilo, up from about $15 a decade ago. According to ITC/UN Statistics the total global demand for vanilla is about 2000 to 3000 metric tonnes a year with the world market for vanilla beans highly concentrated in a few developed countries.
The US, France and Germany account for about 80 per cent of world imports, the US absorbing 50 to 60 per cent, and France and Germany between 10 to 15 per cent each. These three countries are also major re-exporters of both vanilla beans and processed vanilla products
The popular flavour is used in a range of food and beverages, most notably in the dairy industry where vanilla ice cream still leads the stakes. Soft drink giants Pepsi and Coca Cola also recently launched vanilla versions of their popular drinks.
Flavours and ingredients companies have recently launched a range of cost-effective formulations to replace the highly expensive natural version. For expample, UK flavours company Quest International has introduced its range, Vanilla Analogues, to the market and Danish ingredients giant Danisco, a leading extractor of vanilla in the Americas, has developed two new flavour systems 'to help manufacturers' margins.'
"When using a vanilla replacer as a toner or smoother to a high-proof spirit, we can show savings of approximately 50 per cent based on today's price of vanilla three-fold extract," said Samantha Forgham, business manager, beverages with Danisco last year at the launch of the vanilla systems.