Demand for wood-sourced vanillin soars on price pressures for vanilla

In the last 12 months Norwegian firm Borregaard​ has experienced a 28 per cent increase in demand for its vanillin products based on lignin, the binding agent in wood.

This is due to the high vanilla prices, and the "extra round flavour"​ of lignin vanillin compared to chemical vanillin, says Thomas Grys, director of Borregaard Synthesis Aroma.

Synthetic vanillin costs one-hundredth of the price of the natural product and not only substitutes for vanilla but also supplements adulterated vanilla extracts.

Today most non-Chinese vanillin producers use a chemical catechol route to produce vanillin, that kicks off with the chemical benzene.

But with benzene prices at record highs on the back of $60 a barrel for oil, the price for this vanillin has leapt up by about 25 per cent in the last year. And if oil prices continue to stay at these highs, a further 20 per cent rise is likely.

"Our product, a direct substitute for vanilla, is more expensive than the oil-based vanillin, but the flavourist and food developer needs lower doses, so the product goes further,"​ Grys tells FoodNavigator.com.​

One ton of wood produces about four kilos of lignin vanillin.

According to Gyrs, a key advantage for the lignin vanillin is the flavour profile, "much closer to that of the natural vanilla bean than the oil-based vanillin"​.

Lignin vanillin is rounder and more intense and often becomes the preferred choice of the pink noses and blenders, he continues.

But even this form of vanillin has its own price pressures, notably rooted in the fact Borregaard is the only global producer.

"The configuration and integration of the plant makes an expansion difficult. The demand is now higher than our present capacity, which makes the market very tight,"​ adds Grys.

The world export market for natural vanilla is valued at around $422 million (€317 million) with nearly 50 per cent sourced from the leading producer country Madagascar. But poor weather conditions and political turmoil in Madagascar in recent years has sent the price for vanilla rocketing.

Between 1999 and 2003 annual growth in value for vanilla beans rose by 64 per cent, hitting 30 per cent between 2002 and 2003 alone and rising to $500 per kilo highs. But recently prices of vanilla beans have dropped significantly on a bumper harvest, trebling production from 500 metric tons in 2003 to around 1500 mt in 2004 in Madagascar.

As the most popular consumer flavour in the world demand for vanilla remains strong, putting constant pressure on already bullish prices and pushing food makers to seek out alternative versions of this flavour to use in food formulations that will satisfy the consumer palate.

One of the most common alternatives is vanillin, with strong global demand currently hovering between 12,000 to 15,000 mt a year, with 2000 mt of this lignin vanillin. By comparison, total world demand for natural vanilla is about 3000 metric tons.