I am a third year undergraduate student doing bachelor's degree in Business Management. My question is my research topic
I think you need to look at it from both sides, the producers and the consumers.
For the producers, it might not be good news as a fall in price means a fall in revenue. Do not forget that these people tend to be micro producers in tropical developing country, who are living at the poverty line o just about above and who do not get paid much for the produce in the first place, the middlemen are the one making most of the profits.
So, any fall in price tend to be passed down the supply chain to the producers, the middlemen keep their percentage. As for any such tropical products (coffee, tea, chocolate comes to mind), the supply chain is really long, having many stakeholders in them.
The producers sell to a company that collects from different farms. They sell to the company that has a regional collecting business who sell to the business that owns the warehouses. They check the quality and ship the produce to the wholesalers. The wholesalers treat the produce or not and then sell it to the manufacturers. The manufacturers transform the produce and sell it to the distributors (supermarkets, suppliers to food businesses). The distributors use the produce (vanilla here) to make something, like a cake or ice cream and then sell it to the consumers.
So, as you see, a fall in price of vanilla might not have a great impact for the consumer, as the lower price will not be passed up the supply chain, each stakeholder having the possibility to keep or even inflate its own profit margins as they tend to work as percentage.
In the end this could mean that the end consumer eating that cake or ice cream will not see a difference in price but the producer down the supply chain will bear the brunt of the fall in price, which could further poverty with all its consequences.
Is there a reason for the decreased price of vanilla?
An area to explore is to see if the use and price of synthetic vanilla (vanillin) will be affected. Manufacturers mix and switch between natural and synthetic depending on price and how much flavor difference is tolerated.
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