Images

I scream, you scream, we all scream for biotech to enhance our ice cream. Source: stu_spivack/ flickr

September has arrived and summer is fizzling out, but, depending on where you live, you could be witnessing the last few weeks of the most important season of the year: ice cream season. While you may think there's no possible way for biotech products to find their way into something as simple as ice cream, the two most important ingredients -- dairy products and flavoring -- are already being enhanced by the building blocks of life.

We recently discovered how animal-free dairy milk created by garage biology enthusiasts and animal lovers -- not a large corporation -- offered numerous advantages over even the best quality organic dairy milk, but those dairy products won't hit the market until late 2015 at the earliest. However, there is a vanilla flavor produced in a next-generation fermentation platform powered by engineered yeast that's already on the market: Swiss fermentation company Evolva and International Flavors & Fragrances (NYSE:IFF) launched vanillin, their first product, in the second quarter. Will the new product complicate your relationship with vanilla ice cream?

Vanilla vs. vanillin
As may be expected, the development and launch of a biotech-inspired vanilla flavor has been surrounded by controversy driven by drastic misunderstandings and misinformation. Some have claimed that synthetic biology has created a "better tasting vanilla bean," that the technology used to produce the compound is "virtually unregulated," and that "high-end ice creams won't disclose their use of synthetic biology ingredients." The only things that are virtually unregulated are the emotional claims themselves.

First and central to understanding Evolva and International Flavor & Fragrances' new product, consider the difference between natural vanilla extract and vanillin. Natural vanilla extract comes from vanilla beans grown in orchids in tropical regions around the world. It contains dozens of compounds, including vanillin, that influence the ultimate flavor of each scoop of ice cream.

Images

This is a vanilla bean; the product of limited and inefficient agricultural production. Source: author

Unfortunately, it's simply not possible to use only vanilla extract from vanilla beans to add flavor to the global food system. Why not? Global annual production amounts to less than 10,000 metric tons. Why does the world produce so little vanilla? There are a few reasons. For one, vanilla orchids must be hand pollinated within a 12-hour window of the flower opening. Miss the window -- and you won't get any vanilla beans. Even when farmers are successful, yields of vanilla beans vary wildly from country to country. Worse yet, only 2% of the weight of each vanilla bean actually becomes vanilla extract. Consider the volatile production data compiled by the United Nations from the world's top four producers since 2000.

G

Source: Data from U.N. FAOSTAT, graph created by author

G

Source: Data from U.N. FAOSTAT, graph created by author

Madagascar harvests the most land by far, but produces just 1 pound of marketable vanilla extract per acre of plantation. There may be no comparison for a difficult to cultivate crop such as vanilla, but just to compare to the most efficient agricultural systems, American farmers are expected to produce 9,374 pounds of shelled corn per acre this fall, according to the U.S. Department of Agriculture. For a fairer comparison, simply consider that China is 20 times more efficient than Madagascar, while both Papua New Guinea are five times more efficient.

The world could produce more vanilla, but it would require taking a bulldozer to fragile and biodiverse rainforest ecosystems -- an approach Madagascar took about 10 years ago to boost production and make up for abysmal yields. China has derived ways to industrialize production in greenhouses (see the high yield in the graph above), and although hundreds of square miles of greenhouses aren't feasible, it may begin stealing market share from poorer nations in the next few years.

What does it all mean for you? Limited production has resulted in sky-high prices, which has made natural vanilla extract a premium product. Enter vanillin. While not as high quality or tasteful as the real thing, vanillin can be mass produced and sold at a much lower cost. In fact, vanillin owns 99% of the vanilla flavor market, while natural vanilla extract owns the other 1%. It's a fine substitute for mass-market products such as Coca-Cola's (NYSE:KO) vanilla-flavored Coke products and various ice cream brands. Without it, you'd be paying much, much more for foods at the supermarket (and we'd also likely live in a world with far fewer rainforests).

Consider that spice and ingredient specialist McCormick & Company (NYSE:MKC) can offer 2 fluid ounces of vanillin, or imitation vanilla, at 45% of the price of natural vanilla extract.

Images

Notice the large price differences between equal volumes of natural vanilla extract (far left) and synthetic vanillin (far right). Source: author

There will always be a market for the real thing, but production and market realities will always make it a premium, high-priced product. It's important to note that vanillin doesn't compete with vanilla bean production -- no farmer will lose his or her livelihood because of the mass-market flavor. In fact, global vanilla bean production tripled from 1990 to 2012, according to the United Nations. If any argument can be made, perhaps it's that synthetic vanillin has boosted the world's appetite for natural vanilla extract. So, why should biotech get involved?

Why you want yeast making your vanillin
Vanillin makes up 99% of the vanilla-flavoring market, but it's also chemically synthesized from petrochemicals in large Chinese factories (which don't conjure up warm feelings of regulations) and lignin, a major waste component of global pulp and paper production. Synthetic vanillin is economical because it's produced from waste feedstocks that are abundant and cheap. However, you probably didn't know you were eating something derived from a petrochemical factory or smelly paper mill with every scoop of ice cream and sip of Coca-Cola Vanilla.

By contrast, the vanillin produced by Evolva and International Flavors & Fragrances is produced through natural fermentation processes, boasts an improved taste profile to traditional vanillin, and is easily regulated (industrial fermentation is used to produce beer and ethanol). It's still not as flavorful as natural vanilla bean extract, but that isn't the competition. The food industry would gladly pay a small premium to synthetic vanillin's price for a better-tasting product produced in a more sustainable manner. I'll bet many consumers would feel better about it, too, especially after considering the advantages offered by fermentation-derived products:

Don't think it's all about profits, either. Evolva has committed to donate 1% of all product-derived revenues, not profits, to support the conservation of biodiversity and basic science education in poorer countries. Think of it as the stock market's first environmental and social stewardship dividend. The company is even working side by side with farmers and countries producing rare flavor and fragrance ingredients from less efficient sources to ensure they're the ones benefiting from the transition to production systems powered by enhanced biological systems. What's not to like about a better product and a socially responsible development strategy?

Foolish bottom line
When evaluating the use of biotech in a new application or industry, it's important to separate emotions from the facts. The new vanillin ingredient from Evolva and International Flavors & Fragrances will be sold as a better alternative to synthetic vanillin, not vanilla, to food companies large and small for inclusion in new and existing products. While it doesn't taste as great as natural vanilla extract, it does offer convincing advantages (including taste and sustainability) over vanillin flavoring currently used. If you would rather eat fermentation-derived ingredients than petrochemical- or lignin-derived ingredients, then you should have nothing to fear about biotech in your vanilla ice cream. Then again, chocolate ice cream flavors won't be far behind.

Maxx Chatsko has no position in any stocks mentioned. Check out his personal portfolioCAPS pageprevious writing for The Motley Fool, or his work with SynBioBeta to keep up with developments in the synthetic biology industry.

The Motley Fool recommends Coca-Cola. The Motley Fool has the following options: long January 2016 $37 calls on Coca-Cola and short January 2016 $37 puts on Coca-Cola. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.