Firm rides out vanilla bean turmoil

Short supply chains and Tongan-sourced vanilla are shielding Bay of Plenty-based Heilala Vanilla from market turmoil which has seen the global price for vanilla beans rocket.

Production problems on Madagascar, the world's dominant producer of vanilla beans, has seen the price rise by as much as 300 per cent in a year, said Jennifer Boggiss, chief executive of Heilala Vanilla, New Zealand's only grower and manufacturer of premium vanilla products.

"We've seen the market price rise over the past 12 months, and sharply over the last 12 weeks. This is mainly due to increasing demand, and unfavourable growing conditions that resulted in weak flowering and lower yields," she said.

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Heilala is holding its own price increases down to about 30 per cent and has been protected from global volatility by sourcing beans from its own plantation on the island of Vava'u in Tonga.

"Our supply chain is very short and very transparent, while other supply chains go through many traders and wholesalers. We also have close relationships with both our growers and our customers, which has been an important factor in our growth."

Ms Boggiss said Heilala had always paid its growers above the market price.

She emphasised that the cost per serving was minimal, given that vanilla might make up only 1 per cent of a product.

"But large price fluctuations are damaging to the industry, and we don't want manufacturers to have an excuse to not use pure vanilla."

Heilala has scored a number of successes recently with high-profile deals to add vanilla to products such as Whittaker's Chocolate and Lewis Road Creamery milk and icecream.

Lewis Road Creamery chief executive Peter Cullinaire said vanilla was a highly concentrated essence.

"Very little volume is required to add flavour. In terms of impact on overall pricing, it's not too dramatic. We wouldn't look to pass that price on. My personal view is that companies like Heilala need to pass on pricing increases when they're impacted as significantly as they are."