Analysis On Impact of Covid-19 Pandemic On the Global Vanilla Beans and Extraction Market
The COVID-19 pandemic has affected the industrial and commercial progress of most of the countries across the region. COVID-19 has negatively impacted the producers, distributors, and suppliers of vanilla beans and extracts around the world. The decline in export shipment and decreasing demand for vanilla beans and extracts are significantly reducing the market growth. The COVID-19 pandemic has affected the vanilla beans and extracts market in three ways: a direct impact on production and demand, supply chain disruption, and financial impact on firms and the market. Moreover, disruption in the supply chain directly affects the production of vanilla beans, further decreasing the growth rate.
Aftermath of Covid-19 And Government Initiative to Boost the Market
As COVID-19 devastated across the globe, the vanilla bean and extract producers are trying to access the vanilla market. In 2020, the vanilla industry market has reached around 80% of worldwide trade which benefitted the growth in the market. In the view of lockdown, the consumers are surge to procure groceries in bulk and the trend on home meal preparation has been raised during COVID-19 pandemic. As a result of a virus, the demand for vanilla beans and extract has been spiked and increases the growth in the global market. Owing to the highest demand for vanilla beans, the government has taken certain initiatives to transport the goods in safe mode.
For instance,
In July 2020, the vanilla sector has united to support the vanilla producers and export the vanilla beans to other countries with safety measures. The Sustainable Vanilla Initiative (SVI) and its local partner include the Madagascar Vanilla Exporters Group (GEVM), the German development agency, GIZ, and SVI/ILO are joined together to help all vanilla exporters and importers in the region. The collaboration has intimated the producer to use PPE (personal Productive equipment) while harvesting and processing the vanilla beans, further, it decreased the spread of the virus among the population. In addition, local exporters and GEVM officials have arranged the delivery of vanilla beans to each district's capitals. Whereas district officials will continue the distribution of vanilla beans in the market. This helps the movement of goods from producer to the end-user although the supply chain is disrupted during the COVID-19 pandemic.
Strategic Decisions for Manufacturers After Covid-19tTo Gain Competitive Market Share
In 2020, the market shares of vanilla beans and extract have been increased due to increasing demand in the market. On the other hand, the manufacturers of the vanilla beans and extracts were facing a significant challenge during COVID-19 due to lack of transportation and disruption in the supply chain. The demand for vanilla beans is exceeding the production. To meet consumer demand, the manufacturers are following a certain strategic decision to gain a competitive market share.
- Use of alternative sourcing:
The manufacturers are exploring to increase the quantity of sourced materials. For instance, during the COVID-19 pandemic, the vanilla extract manufacturers have stopped production due to a lack of resources and disruption in the supply chain. Hence, the manufacturers are opting for backup or alternative raw material suppliers which will help to continue the production even during epidemic or pandemic conditions. Therefore, continuous production will aid the manufacturer in increasing the market share.
- Merchandise the product at a low price
The customers have more attention to the low price of the product during the pandemic situation. Thus, the vanilla beans and extracts manufacturers are trading their products at a low price in comparison to the previous year. As vanilla is a high-value good, it available is at a higher price in the market. However, the price of vanilla beans and extracts has been reduced to 50% from the high price set in 2018 due to the pertaining pandemic situation. This further increased the demand among the consumers.
Impact on Supply Chain
During the pandemic situation, the supply chain was majorly disrupted due to a lack of resources and transportation. In addition, it has delayed several vanilla bean businesses' operations in China, the U.S., and Germany. During COVID-19 pandemic, certain regulation has been established to avoid the spread of disease among the population. Thus, the government has implemented lockdown and halted the transportation of goods from one place to another. For instance, in Indonesia, the COVID-19 pandemic has hindered the export of vanilla beans due to the limited air cargo space availability in the region. Owing to the lack of resources, the supply chain is significantly disrupted and negatively impacted the demand. As a result of the discontinuous supply chain, the vanilla products are unable to reach the customers or end-user from the producers.
Impact On Demand
The demand for vanilla beans and extracts has been raised drastically during the COVID-19 pandemic. As the government established lockdown and other safety measures to prevent the spread of disease, the people are staying at home and prepare their meals. The rising trend on home cooking, increases the demand for vanilla extracts in the market, as the consumer prefers to intake flavored food products. Similarly, the intake of dietary supplements among the population has been raised during the COVID-19 situation to strengthen their immunity. Moreover, the consumers are more preferring flavored dietary supplements which will mask the bitterness. Thus, vanilla-flavored dietary supplements have witnessed the highest demand in the market.
Conclusion
COVID-19 pandemic has taken a toll on the population and economy. A collaborative effort on governments, public health departments, and hospital fraternity to fight the coronavirus has led to economic slowdowns, lockdowns, and extreme public safety measures. Due to the lack of transportation, the supply chain has been disrupted and failed to meet consumer demand. Similarly, production has been ceased due to a shortage in resources. Thus, the growth rate of vanilla beans and extracts is declined during the COVID-19 pandemic. However, in this pandemic, customers prefer vanilla extracts in their food products to satisfy their papillae. Therefore, the demand for vanilla beans and extracts is growing significantly due to the high adoption of flavored food products.
