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NATURAL VANILLA

CONTENTS

SECTION I PRODUCT CHARACTERISTICS AND SPECIFICATION SECTION II PRODUCT APPLICATIONS SECTION III INDIAN MANUFACTURERS SECTION IV IMPORT/EXPORT LEVEL SECTION V PRICE TRENDS SECTION VI INDIAN DEMAND SECTION VII BROAD OUTLINE OF MANUFACTURING PROCESS SECTION VIII RAW MATERIAL REQUIREMENTS, UTILITY

AND AVAILABILITY SECTION IX GLOBAL SCENARIO SECTION X DISCUSSIONS ON ECONOMIC CAPACITY,

PROJECT COST AND PROFITABILITY PROJECTIONS

SECTION XI SWOT ANALYSIS SECTION XII FACTORS INFLUENCING THE POSITION FOR

A NEW INDUSTRY AND RECOMMENDATIONS

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SECTION I

PRODUCT CHARACTERISTICS AND SPECIFICATION Synthetic Vanillin Appearance Colourless crystals Odour Sweet, balsamic, powdery, vanilla-like Chemical formula C8H8O3 Specification Specifications of Vanillin produced by Rhone Poulenc, France. Trade Name RHOVANILTM Colour of Ethanolic solution 50 max, hazen Melting point 81.0 to 83.0 deg.C Assay 99.6 min, % Sulphated ash 0.05 max, % Heavy metals (as lead) 0.0010 max %

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SECTION II

PRODUCT APPLICATON

As a constituent of perfumes Vanillin has become important as deodorant to mask the unpleasant odour of many manufactured goods, like wearing apparal, rubber goods, paper products and plastics etc. Until recently, about 85% of vanillin has been used as flavouring agent in ice creams, candies puddings, cake mixes, gelatine desserts and soft drinks etc. Rest is used in deodorants, perfumes and other fixatives and as chemical intermediates. Vanillin is now produced exclusively for flavour industry.

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SECTION III

INDIAN MANUFACTURERS

Introduced in India, by the British, in a spice garden at Kurtallam in Tamil Nadu owned by the East India Co., More than 200 year ago, at Kallar Fruit Research Station, Nilgiris the crop has been under cultivation and processing was conducted at Aambalavayal, Kerala and at Kallar/Burliar Fruit Research Station. At present, Karnataka has the largest area under vanilla plantation. India has the ideal climatic conditions for growing vanilla. Vanilla producing states: Area under vanilla cultivation Around 1500 hectare Mostly cultivated in Karnataka, Kerala and Tamil Nadu Wynad and Idukki in Kerala Androth island in Lakshadweep Nilgiris in Tamil Nadu Mangalore and Mercara in Karnataka

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SECTION IV

IMPORT/EXPORT LEVEL

4.1. Imports Period April 2001 to March 2002 Countrywise Imports Vanilla Powder Country Quantity in Kgs

Singapore 56 Sample of individual imports Name of the Importers

Quantity in tonnes

Value in Rs. Country Date Port

Weikfield Products Co.Ltd. (Vanila extracts)

0.010 44149 UK 24.03.2002 to 31.03.2002

Mumbai

Vinoram Pvt. Ltd.,(Vanilla extract)

10 kg 14765 SG Oct2002 Chennai

Dragoco India Ltd., (Vanilla cream)

175 kg 23305 SG Oct2002 Chennai

Teddy Exports (Vanilla fragrances scented beads

120 kg 13795 SG Oct2002 Chennai

Dragoco India Ltd.,(Vanilla cream)

125 kg 16309 SG Oct2002 Chennai

Godrej Sara lee Ltd.,(Vanilla perfume

33440 pcs 596546 MY Oct2002 Chennai

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4.2. Exports Period April 2001 to March 2002 Countrywise Exports Vanila Bean Country Quantity in Kgs

Italy 50 Norway 20000 Uganda 120 U Arab Emts 15000 UK 800 USA 161725 197695 Countrywise Exports Vanilla Powder Country Quantity in Kgs Nepal 150 Russia 140 Tanzania REP 2405 U Arab Emts 12968 UK 120 USA 9040 24823 Countrywise Exports Vanilla Oleoresin Country Quantity in Kgs

Australia 15 Canada 1015 France 69 Tanzania REP 488 USA 8000 9587

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Sample of individual exports Name of the Exporters

Quantity in tonnes

Value in Rs. Country Date Port

Chemical Fragrance (Vanila extracts)

0.010 53354 Hong Kong 01.07.2002 to 15.07.2002

Mumbai

Bush Boake Allen (I) Ltd., (Vanilla beans)

100 kgs 7412 London Serp2002 Chennai

Novartis Consumer Health India Ltd.,(food supplement optifast vanilla)

451000 unit 7619 Clombo Sep2002 Chennai

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SECTION V

PRICE

Basic price of natural vanilla Rs.370 per kg Taxes and duties Extra as applicable Currently, the green beans fetch around Rs.300 to Rs.400 per kg and One kg of cured processed beans would weigh 250 to 300 gm,

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SECTION VI

INDIAN DEMAND

Demand for Synthetic Vanillin Indian demand 250 tonnes per annum Indian consumption pattern of vanillin

Indian Demand Level for Natural vanilla Indian demand : Around 1000 tonnes of cured beans per annum The actual demand could be more, if the product would be readily available in the market. Estimated production of cured vanilla : 20 tonnes The main constraint on popularising vanilla is the shortage of planting material. As with other orchids, seed propagation is unsuitable and only stem cuttings is feasible and better alternative.

MISCELLANEOUS1%ICE-CREAM

5%

PHARMACEUTICALS3%

BISCUITS12%

PERFUMERY/FLAVOURS

28%

AGARBATHI51%

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Progressive farmers in Karnataka, Kerala and Tamil Nadu are to be offered several incentives and planting material to encourage vanilla cultivation, considered the gold crop because of its high returns next only to that of saffron. Cardamom Research Centre of the Indian Institute of Spices Research, Madikeri, is also engaged in the research and propagation of vanilla in Karnataka in particular. The project envisages the supply and evaluation on a large scale. Nearly 150 ha are to be identified in a phased manner. The area is to be divided into smaller acreages of 0.25 to one ha each in Kerala (60 ha), Karnataka (60 ha) and Tamil Nadu (30 ha). There would be 140 such units each in Kerala and Karnataka and 70 in Tamil Nadu. Meanwhile, according to the Madikeri based institute, the entire Western Ghat region in Karnataka, comprising Kodagu, Uttar Kannada, parts of Hassan, Chimaglur and Dakshina Kannada are suitable. At the Madikeri Centre, efforts are being made to develop scientific culture packages to improve the quality and productivity of vanilla. A germ plasm collection of 30 of three specific varieties had been established., Ovule culture of vanilla has also been standardised. Indian Prospects The potential for vanilla cultivation in the country is tremendous as a result of a growing demand for Natural vanillin in place of the synthetic substitute following the shift towards natural products the world over. It is a very ideal, most economic orchid crop for organic cultivation having a tremendous potential for domestic consumption and exports given the growing demand for Natural vanillin in the global market.

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SECTION VII

BROAD OUTLINE OF MANUFACTURING PROCESS

Vanilla pods must be cured in order for the vanillin, which gives vanilla its distinctive flavour, to be produced. The curing method facilitates the enzymatic process that transforms glucovanillin into vanillin. It consists mainly of keeping the pods warm and slowly drying for nearly six months until they become pliable and deep brown, with a fine white crystalline coating of vanillin Vanilla is cured with special care and some innovative techniques using solar dryers. Green Vanilla beans are to be processed to get the characteristic vanilla flavour and aroma. There are different methods of curing but they all consists of more or less four stages viz, Killing Sweating Slow drying and Conditioning Mexican process, Bourbon process, Peruvian process and Guiana process are the important methods of curing vanilla. Properly cured vanilla beans contain about 2.5 % vanillin. Process for Pure Vanilla Extract By percolating or macerating chopped vanilla beans with ethyl alcohol and water. The process is usually kept as cool as possible to keep flavour loss to a minimum, though some manufactures feel that there must be heat to create the best extraction. Most companies use a constituent blend of beans, sometimes from several regions, to create their brand flavour. The extraction process takes about 48 hours, after which the extracts will mellow in the tanks with the beans from days to weeks, depending on the processor, before being filtered into a holding tank ,where the amber-coloured liquid extracts remains until being bottled.

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Technology A scientific package of practices is now available for large scale growing of the crop. Vanilla flowers need hand pollination for bean set, in view of the absence of pollinator bees in India. In the private sector, tissue cultured vanilla plantlets are available with IAHS (Bangalore) SPIC (Coimbatore) AVT(Cochin) H and M Ltd (Cochin) Bush Boake Allen (Madras) and Synthetics India Ltd (Kollencherry) Among Government outlets, plantlets are available at Spices Board, Cochin and Indian Institute of Spices Research, Calicut. Technology development Vanilla from Ricebran Oil Ricebran oil is subjected to molecular distillation to isolate a fraction which is 95 % rich in oryzanol content. This fraction can further be processed to recover ferulic acid in pure condition. From this stage, vanilla can be produced directly from ferulic acid. Of the synthetic method of making vanilla from procursors as eugenol guiacol and ferulic acid it is claimed that ferulic acid, is a better alternative. Source of technology Oil Technological Research Institute, Anantapur, Andhra Pradesh

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Plant and machinery and suppliers Extractor Kulkarni's Hafi Elektra Pvt. Ltd

Post Box No.132, Thane 400 602

Dryer The Anup Engineering Ltd., Behind 66 KV Electric Sub Station Odhav Road, Ahmedabad-382 415 ATRE Thermal Products Pvt. Ltd., Pushpa Heights, 1st Floor, Bibwewadi Corner, Pune-411 037

Refrigeration section

Voltas Ltd., Chennai

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SECTION VIII

RAW MATERIAL REQUIREMENTS, UTILITY AND AVAILABILITY

Raw material requirements The report of the national committee on Vanilla published by the Spices Board, Cochin predicts a production of 1000 tonnes from 3500 hectares of land at the rate of 300 kg per hectare. While the recovery rate of vanillin is 2.5% and above. The Current prices are, therefore, very attractive. Natural Vanilla Vanilla pods are the fruit of the vanilla orchid, Vanilla plantfolta, a large, green stemmed, climbing perennial plant with a fleshy, succulent stem, smooth, thick, bright green leaves and numerous twining aerial roots by which it clings to trees in its wild state. It may grow up to 30 m, It is a climbing orchid The pods, commercially called beans, have no flavour when picked, as the flavour develops during the curing process. The beans are very dark brown and contain tiny black seeds. Constituent Having well over 250 organic components, creating its unique flavour and aroma Even the same species of vanilla beans grown in different parts of the world will vary in flavour and aroma due to climate and soil differences. While some beans are higher in Natural vanillin content than others, this is not the only indicator of flavour or quality. Varieties There are about 150 varieties of vanilla, though only two are used commercially in significant quantities Bourbon Tahitian Species

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There are three cultivated specise of Vanilla namely Vanilla planifolia Vanilla fragrans Vanilla pomponc and V.tahitensis Cultivation practices Soil: Rich in humus and good in drainage Climatic condition: Humid tropical climate upto 1500m above mean sea level. Temperature: Ranging from 21 to 32 degC is ideal for vanilla. Annual Rain fall: 200 t0 300 cm Propagation: By stem cutting of 60 to 120 cm length Standards: Planted six month in advance Spacing: 1.5 to 2 m with in rows and 2.5 to 3 m between rows. Planting period: September to November in shallow pits filled with humus and mulch Planting material required: 1600 to 2000 standards per hectare. General cutivation practicess: The vanilla plants should be allowed to trail horizentally on poles/ trellis tied to standards after trailing to a height of 1.5 to 2m or coiled around the branches of the standards(looping) to facilitate polination and harvesting. Polination: The flowers are pollinated by hand in early morning just when the flower opens. If the pollination is successful, the flower withers but it still remains attached to the ovary. If it is unsuccessful, the flower drops off the next day. The success rate is 85% to near 100%. In the case of successful pollination, the size of ovary increases rapidly and the pods start maturing. An experienced hand can pollianate 1000 to 1500 flowers in a day. On maturing and ready for harvest, the pod resembles a dark brown string bean 12 to 25 cm long with a circumference ranging between 2 cm to 5 cm. The physical changes in colour and size and development of flavour occur during curing.

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Yield Flowering starts in the third year of planting Peak flowering occurs during 7 to 8th year Period Yield per hectare Third year (beginning) 60 kg Fourth year 150 kg Fifth year to the tenth year 300 kg A good vanillery yeilds about 300 to 600 kg cured beans per hectare per year. About 6 kg green beans produce 1 kg cured beans. Intercrop Can be raised as an intercrop with coffee, coconut, arecanut, pepper.

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SECTION IX

GLOBAL SCENARIO

World demand for Synthetic vanillin 3500 tonnes per annum Origin Vanilla is native to the tropical rainforest of South-Eastern Mexico and Central America International trade in Natural Vanilla Around Rs.300 crores Global Production of Cured Vanilla Around 6000 tonnes Total area of Vanilla cultivation 38500 hectares Global growth rate 4 to 5% per annum The Bourbon Vanilla from Madagascar commands a premium price Major Producing Countries Madagascar Indonesia (cultivated in Java and Bali Islands) Comoro Mexico, (grown in Vanuatu ) Reunion Islands Tonga Malaysia Sri Lanka Jamaica Qudeloupe Uganda and Tonga Major world suppliers 70% of world supply is from Madagascar and Indonesia

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Importers of Natural vanilla USA Germany France Canada Japan UK Italy Australia Singapore Global Outlook Only 1 to 2 % of the total market is met by extraction of vanilla beans. The remaining vanillin produced is of synthetic origin Even if 5% of the demand for synthetic vanillin is substituted by Natural vanilla bean, there would be an additional demand for 70000 tonnes of vanilla beans by the year 2003. To produce this quantity, 2.38 lakh hectares have to be brought under vanilla. If the current growth rate (annually) continues, the global demand for vanillin is likely to touch 4000 tonnes by the year 2005. The USA is the single largest importer, accounting for consumption of half of the worlds production. The curing process for vanilla beans is labour intensive and the vanilla plant only grows in a few territories over the world, making synthetically produced vanillin far cheaper than Natural vanillin With the increasing interest in natural products, alternative methods are being developed to produce Natural vanillin from sources other than vanilla planifolia Cell cultures, microorganisms, and isolated enzymes are the potentially alternative sources for the production of vanillin from natural feedstock.

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Technology Development Enzymatic production of Natural vanillin and optically pure alcohols:- The principal component of red pepper,capsaicium, proved to be a promising candidate to produce Natural vanillin using a bi enzyme system, consisting of VAO (Vanillyl alcohol oxidase) and a hydrolase. By combining these two enzymes a one port conversion from capsacin to vanillin can be realised This enzymatic production has in general, environmental advantages compared to the traditional synthetic vanillin production. Producer Venui Vanilla Co Ltd Product Vanilla Beans and Powder, Extract (Essence) and Paste Grown and Processed in Vanuatu Retail Supplies Wholesale Sales Within Australia World Wide KAS Distribution 86 Henry Street Eltham VIC 3095 E-mail : kasorganics@optusnet.com.au Phone 03 9431 3496 Fax 03 9444 0496 Venui Vanilla Co. PO Box 162 Santo, Vanuatu E-mail : anilla@vanuatu.com.vu World Wide http://www.4-u-veges.com/vanilla_shop.html

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SECTION X

DISCUSSIONS ON ECONOMIC CAPACITY,

PROJECT COST AND PROFITABILITY PROJECTIONS Economic capacity : 30 tonnes per annum Project cost : Rs.78 lakhs Assessment of project cost 1. Land S.No. Description Cost

Rs.in lakhs

1.1 Cost of land of 125 acre at Rs.45000 lakh per acre

56.25

Subtotal 2. Building S.No. Description Cost

Rs.in lakhs

2.1 Building of area 75 sq.m. at Rs.3200/sq.m.

2.40

Subtotal 3. Cost of Plant & Machinery S.No. Description Cost

Rs.in lakhs

3.1 Miscellaneous machinery 4 3.2 Packaging machinery 4 Total cost of plant and Machinery 8 4. Technical know-how fees Rs.1.00 lakh

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5. Preliminary & Pre-operative expenses: S.No. Description Cost

Rs.in lakhs

5.1. Preliminary expenses 0.20 5.2. Pre-operative expenses:- 5.2.1 Establishment 0.20 5.2.2 Rent rates and taxes 0.20 5.2.3 Travelling expenses 0.20 5.2.4 Interest and commitment charges on borrowings 1.20 5.2.5 Insurance during construction period 0.20 5.2.6 Other preoperative expenses and deposits - 5.2.7 Interest on deferred payment - Total 2.20 6. Provision for contingency Rs.0.68 lakhs 7. Working capital margin Rs.7.90 lakhs 8. Total project cost Rs.78 lakhs 9. Means of finance (Rs. in lakhs) Promoter's contribution 31 Term loan from financing institutions 47 Total project cost 78

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10. Financial statements Cost of production A Variable cost

Rs. in lakhs

Raw material and utilities 46.19 Spares and maintenance 0.48 Selling expenses 5.55 Total variable cost (A)

52.22

B Fixed cost

Salaries and wages 9.00 Interest on term loan and working capital loan 12.74 Depreciation 1.00 Administrative expenses 3.33 Total fixed cost (B) 26.07 C. Total cost of production (A+B)

78.28

D. Selling price per kg. (in Rupees)

370

E. Annual sales turnover

110

F. Net profit before tax (E-C)

32.72

G. Breakeven point in %

44%

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SECTION XI

SWOT ANALYSIS Strength Growing demand for the product

Weakness Inadequate plant materials

Opportunity Substitution possibilities for Synthetic vanilla

Threat Lack of standardisation

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SECTION XII

FACTORS INFLUENCING THE POSITION FOR A NEW INDUSTRY AND

RECOMMENDATION The initial investment estimated by NABARD was Rs.50000 per hectare. Besides, this could be cultivated as an inter crop in the coconut, pepper and arecanut gardens. Growing vanilla as an inter crop in the coconut gardens is the most ideal as vanilla plants require some regular sunshine. Natural vanilla is an excellent investment opportunity and the product has high level of relevance and importance. The demand is bound to go up in the coming years