Vanilla Vida co-founder Oren Zilberman talks to NutritionInvestor ahead of an equity round in Q4 and explains how the Israeli start-up is transforming the vanilla industry with a faster process, enhancing the aroma and flavour of the dried beans while reducing production costs
By Murielle Gonzalez
Oren Zilberman is an Israeli venture capital investor who grew up on a small farm in Israel — and when he speaks about Vanilla Vida, one can understand where the passion for the business comes from. “My father is a medium-size farmer, so I’ve always been aware of the challenges in the industry and what needs to be done from an innovation perspective to make things a little bit better,” he says, going on to explain how and why he got involved in the start-up. He tells me that Vanilla Vida holds a patent-pending technology process that allows farmers to grow vanilla vines in climate-controlled environments. The process increases by 80% the plant’s capacity to produce beans with natural flavour and aroma while reducing the growth and curing cycle by 20% and 85%, respectively.
Back in 2019, Zilberman was working at investment firm Titan Ventures in Israel. Screening companies in the agtech arena, his path crossed with fourth-generation farmer Shlomi Kadosh. “He had an idea to bring a revolution to the cultivation process of the vanilla industry,” says Zilberman. “The vanilla industry is very traditional and beautiful, but it hasn’t changed in 100 years. On the other hand, the demand is much higher than the supply, and this is an opportunity,” he adds.
Vanilla, the world’s most common flavour, is a spice derived from orchids of the genus Vanilla, primarily obtained from beans of the flat-leaved vanilla plant native to Mexico. Vanilla vines grow in tropical weather and their flowers start to bloom when the plant is older than two years. New flowers open every day for a couple of weeks to a couple of months. This blooming period allows for trial and error attempts to pollinate the flowers for vanilla beans.
Madagascar, Uganda, and India are some of the world’s top producers — and it’s all done by hand by local farmers.
“The global market of vanilla is worth $3 billion,” says Zilberman, noting the market of synthetic vanilla is around $2 billion, yet 94% of the global consumption of vanillin, its core compound, is synthetic. He also notes the price gap between the two.
“You can pay between $300 to $700 for a kilogram of natural vanilla, which is a crazy price. But synthetic vanilla is way cheaper,” says Zilberman. He explains the demand for natural vanilla is in an upward trend fuelled by the increasing consumer interest in clean label products.
As well as being labour intensive, the traditional vanilla process is long — it takes four-to-six months to dry the vanilla beans. And because most of the process relies on human labour and nature, the quality of the end product is not homogeneous. “Vanilla Vida brings a solution to both the agriculture and production side of the vanilla industry,” says Zilberman.
Vanilla Vida: Israeli agtech
Zilberman joined Kadosh as the company’s first investor and helped him to raise pre-seed capital. Kadosh is a seedling propagation and production expert with more than 40 years of experience. His idea was to use technology to grow the vanilla plant faster.
Convinced by the opportunity behind Kadosh’s idea, ZIlberman took up the reins of the start-up as its chief executive, and both then teamed up with Raz Krizevski, a specialist in metabolites and aroma compound formation — and thus Vanilla Vida was formed.
“We changed the original idea, and we started from the end. We took research and development work done in Israel about climate-controlled greenhouses and developed the technology to do the best curing process in the world — everything based on data,” says Zilberman. In the vanilla industry, curing is the process of drying the vanilla beans for commercialisation.
Zilberman says the technology allows Vanilla Vida to produce the best dried vanilla beans in the market and do so every time in the same way. “We know that quality and consistency is very important to our customers,” he explains.
The process is simple. Vanilla Vida grows the orchids indoors, and the patent-pending technology is applied before the green beans are ready to harvest. Zilberman explains: “We use advanced technology to detect the building blocks that are inside the bean — for example, the specific building block to produce the vanillin, caramel, or vinegar flavour. Then, we give the bean ‘more fuel’ to produce more of that specific building block — and we do this without cutting the bean open.”
Zilberman says the process, which the agtech start-up calls metabolic manipulation, allows Vanilla Vida to customise the end product to the flavour and aroma required by a client. “We know US customers are all about sweetness, so we can make a vanilla bean that is much sweeter than average. The French love the smoky, whiskey kind of flavour, and the Germans are focused on the vanillin content, nothing else. Well, we can manipulate the building blocks of those aromas to be produced in the beans,” says Zilberman.
Vanilla Vida claims to have the technology and capacity to produce 40 times more vanilla per square foot than the traditional open field process in the jungle. “We can grow about 6,000 kilograms of green beans per 1,000 square foot,” says Zilberman.
The go-to-market plan
Vanilla Vida has just finished its first pilot sale with US customers, and Zilberman says the company has secured demonstration sales with a few small-size flavour houses in Europe — all clients have come back with positive feedback. “We sent our samples mixed with some of our competitors, and each customer said they found our samples being of better quality — that’s good enough for us,” says Zilberman.
Vanilla Vida is a portfolio company of The Kitchen FoodTech Hub since its pre-seed round of March 2020. This year in April, the company secured funds from the Israeli government to support its scale-up plans.
The start-up is recruiting a handful of Israeli farmers who will receive a government grant to support the construction of climate-controlled greenhouses to join the supplier programme of Vanilla Vida. These farmers will grow vanilla vines following the protocols set out by the start-up.
“If you don’t have the money to build the greenhouse, you can’t grow vanilla in the way we do it. So, the Israeli government has approved a grant to farmers that will cover 50% of the investment,” says Zilberman. “The vision is to take 10% of the global vanilla market by growing vanilla in Israel,” he adds.
Zilberman notes Vanilla Vida seeks to recruit up to six farmers to scale up the production output over time. He argues that operating with a handful of suppliers is a strategic decision from the intellectual property perspective.
Vanilla Vida’s protocols are also being developed to bring production costs down. Zilberman says the company’s production cost of a kilogram of dry vanilla beans is currently around $70. In Madagascar, India and Uganda, it ranges between $40 to $80. The aim, he says, is to strike a competitive price to encourage the consumption of natural vanilla without affecting the market of the traditional farmers.
“We understand that selling a kilogram of dry vanilla for $250 is a crazy number, and it won’t help the world to consume more natural vanilla,” says Zilberman. “With our technology, the price could go down to less than $150 — and we want to be there as fast as we can because by bringing the price down, the demand will be much higher, and the market is going to be bigger for everybody to share,” he adds.
Vanilla Vida is now focused on fulfilling sales order to clients in the US and Europe. Zilberman says the company is also working on a second protocol, including R&D work to improve the efficiency of the metabolic manipulation process, the pollination, and the overall operation.
Zilberman has defined three milestones to achieve by next year — complete the R&D programme, the scale-up stage with the farmers, and begin small-scale sales with international customers.
To achieve these goals, Zilberman will take the company on a Series A funding round in Q4. “We have raised $1.3 million in pre-seed capital to date,” he says, noting the pre-seed round closed at a $3 million-plus valuation. “We were a company with an idea on paper then, but now we have data, sales and a technology that works,” he concludes.
Date published: 5 May 2021