May 10, 2018 3:21 pm

Global butter shortage, steep vanilla prices hurting Canadian bakeries

WATCH ABOVE: Just in time for ice cream season, the most popular flavour of the summer treat could soon cost you a fortune. As Geoff Hastings reports, the skyrocketing price of vanilla is the culprit.

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A global surge in the price of vanilla and an increase in demand for French dairy products like butter is affecting bakers around the world, including in Edmonton.

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Jennifer Stang, owner of La Boule Patisserie & Bakery Inc. in Old Strathcona, said she goes through between 100 and 200 kilograms of butter a week — and not all of it is created equally.

“There’s a really large difference between the butter we can get and source here. It comes down to butter fat percentage and content, versus the stuff you can get from New Zealand, Ireland, Belgium, France,” Stang said.

Higher butter fat content equals a richer taste, softer texture and faster melt — qualities favoured by bakers. French pastries and butter have become so popular abroad that the increased demand led to a shortage of the dairy product.

READ MORE: Is cooking with lard healthier than cooking with butter?

French baker Stephane Louvard puts his hand on a slice of butter in his Paris bakery, Friday, Oct. 20, 2017. French pastries and butter have become so popular abroad that the increased demand led to a mini shortage of the dairy product in French supermarkets.

AP Photo/Bertrand Combaldieu

The price of butter rose 60 per cent in a year in 2017, reaching 6.7 euros per kilogram in August, according to official data.

A supply of Kerrygold Pure Irish Butter sits amid other butter brands on a store shelf Friday, March 17, 2017 in Edina, Minn.

AP Photo/Jim Mone

Stang said she noticed the price increase about half a year ago. She can’t get French butter in Canada due to import rules, so she used to buy Irish butter with similar qualities. She now buys Canadian butter and manipulates it herself to reduce the amount of water in it, therefore increasing the butter fat content.

“That increases my costs because when you take water out, all of a sudden that pound of butter that was $6 is now $6.50.”

WATCH: The world is facing an unusual cooking conundrum: kitchens are running short of butter. Supply of the all-important ingredient is low and demand is high. France is feeling it, because without butter — there can be no pastries. Jeff Semple looked into whether it will trigger a croissant crisis here in Canada.

The cost of vanilla has also been on the rise for years, and things only got worse in March 2017 when a cyclone hit Madagascar —  the world’s leading producer of vanilla — destroying a good portion of the crop for 2018. Madagascar produces upwards of 80 per cent of the world’s vanilla.

La Boule uses real Madagascar vanilla — both pods, liquid extract and paste — in almost all of their baked goods and Stang says there’s no other substance like it.

An increase in European butter and vanilla prices has been felt at Edmonton’s La Boule Patisserie & Bakery Inc. May 9, 2018.

Dave Carels, Global News

She said they’ve seen the price increase in over the past year, particularly the last six months. So far, they have not had to raise prices, but staff are very aware of how much vanilla goes into each batch.

“I do keep an eye on all of the staff when they’re working with the vanilla, just to make sure every last bit of it’s used — and used appropriately and that nothing is wasted because you don’t want to do that. When you start wasting, then that’s when it gets passed on to the customers, for sure,” she said.

But Stang said La Boule isn’t in as difficult a position as a home baker might be.

“We don’t pay store retail prices when we’re purchasing things,” she said.

“We buy things in quantity and use it constantly. Whereas you’re buying this as a one-off at home. And yeah, when it goes from $5 for one pod to $20 for one pod, you’re gonna feel that more as a home baker.”

An increase in European butter and vanilla prices has been felt at Edmonton’s La Boule Patisserie & Bakery Inc. May 9, 2018.

Dave Carels, Global News

There is artificial vanilla, or vanillin — a common flavouring alternative that comes in natural and synthetic versions — but Stang said she’d never use it because it tastes like chemicals.

“Though they may come close, it’s not the same. Anything you put in, you’re going to get out — so you might as well go with the good stuff,” she laughed.

A baker at Dlish Cupcakes, a bakery that uses vanilla every day, prepares the day’s first batch in Toronto on March 17, 2018.

THE CANADIAN PRESS/Chris Donovan

Toronto cupcake master Verge Manuel says vanilla prices generally increased 10 per cent a year. But two years ago it doubled for him, and last year it went up five-fold.

Vanilla prices are the highest they’ve ever been, said David van der Walde, director of Montreal-based vanilla importing company Aust & Hachmann Canada.

He said the wholesale price now runs as high as $850 per kilogram for premium beans — a 10 per cent increase from last year, which was 30 per cent more than the year before that. Five years ago, you could get vanilla for as little as US$20 per kilogram, added van der Walde.

A baker at Dlish Cupcakes, a bakery that uses vanilla every day, prepares the day’s first batch in Toronto on Saturday, March 17, 2018.

THE CANADIAN PRESS/Chris Donovan

The trend towards embracing whole foods has also driven up prices, as consumers began demanding natural ingredients in everything from chocolates to cakes to yogurt.

So big food companies responded, with Hershey’s among the power players that announced a switch to real vanilla in 2015 for their chocolate bars.

READ MORE: Rising vanilla prices affecting Saskatoon small businesses

Meanwhile, increased demand coincided with shrinking supplies, van der Walde said, noting that less-established plantations outside of Madagascar gave up on the labour-intensive crop because prices were low.

“And then the price starts to go up again,” he said.

Vanilla cupcakes are put out at Dlish Cupcakes, a bakery that uses vanilla every day, in Toronto on March 17, 2018.

THE CANADIAN PRESS/Chris Donovan

Even the big companies feel the impact, such as Nestle Canada and its naturally flavoured Real Dairy brand.

Catherine O’Brien, senior vice president of corporate affairs, says in an emailed statement to The Canadian Press that there are no plans to raise ice cream prices, but they are “continually managing ingredient and commodity costs across all of our product portfolios.”

Smaller players are undoubtedly struggling, van der Walde said.

A baker at Dlish Cupcakes, a bakery that uses vanilla every day, prepares the day’s first batch in Toronto on March 17, 2018.

THE CANADIAN PRESS/Chris Donovan

Michelle Chow, president of the Vanilla Food Company, says she hears the same concerns from her ice cream clients, who tell her they expect to raise prices to keep pace.

Chow’s online store sells to home bakers and commercial kitchens, with varied vanilla clients, including soap makers, tea sellers and breweries.

She said many have had to switch from whole beans or ground powder to more affordable options, such as extract or vanilla paste. But those, too, have gone up in price.

READ MORE: Edmonton-area Second Cup stores selling Italian Centre baked goods

As for this year’s Madagascar harvest, Van der Walde said that runs May to August, but the beans — which are actually the fruit of an orchid — are harvested green, and need six months to prepare for export.

That means a fresh influx isn’t expected before fall, with the best beans not expected until November or December, van der Walde explained.

Pure vanilla extract is shown on a grocery store shelf in Toronto on March 15, 2018.

The Canadian Press

The market is driven by big industrial buyers like the flavour company McCormick — not loyal customers of gourmet shops or grocery stores, he added.

“They buy 80 per cent of the vanilla out there, so they’re the ones that determine how high the market can go,” van der Walde said.

“As long as they’re willing to pay US$550 or US$600 per kilogram, the market is happy to oblige them.”

An increase in European butter and vanilla prices has been felt at Edmonton’s La Boule Patisserie & Bakery Inc. May 9, 2018.

Dave Carels, Global News

While vanilla is often synonymous with being plain or bland, Stang said it’s anything but.

“Vanilla is the furthest thing from boring! It’s an orchid pod that only grows in certain areas and has to be hand-pollinated. And then it has to be picked, and it has to be fermented and turned and all of these flavours built up over years.

“If they manage to get a crop next year, it will probably be five years again until it’s ready for consumption. What vanilla has to go through to get to us is amazing.”

— With files from The Associated Press and Cassandra Szklarski, The Canadian Press

© 2018 Global News, a division of Corus Entertainment Inc.

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