Minnesota‘s Vanilla Bean Project rethinks sustainability of the popular flavor

NINA MOINI: A Lakeland-based company is working to make the vanilla bean trade more sustainable by using wind cargo ships. Husband and wife duo Andy and Sara Kubiak founded The Vanilla Bean Project in 2018, an effort to bring more sustainability to the overseas vanilla bean trade. Joining me now is Andy Kubiak, the co-founder of The Vanilla Bean Project. Thank you so much for taking the time this afternoon, Andy.

ANDY KUBIAK: Nina, thanks so much for having me on the show today.

NINA MOINI: Well, I'm very excited about this because I'm more of a vanilla than chocolate person if I had to make the choice. But in researching you and in learning about you, vanilla is super popular. Will you tell me a little bit about why you wanted to focus in on vanilla?

ANDY KUBIAK: For sure. Well, first of all, Nina, as you may know, vanilla is the world's most popular flavor. And it goes back to all those childhood memories, right? If you're lucky like me, my mom baked me chocolate chip cookies, and I'd get off the bus from school, and I'd come home, and our house would smell like freshly baked cookies.

NINA MOINI: Yeah.

ANDY KUBIAK: That's vanilla.

NINA MOINI: Right.

ANDY KUBIAK: We all kind of have a memory of what vanilla is like in our lives. And we got into vanilla once we realized just how amazing it was. I mean, vanilla beans are the cured fruit of orchids, which to us is phenomenal. And so once we started working with vanilla, we fell in love with it. And we decided to start a business around it.

NINA MOINI: And so what work were you doing prior to this?

ANDY KUBIAK: Well, I've been in the organic food ingredient business for 25 years, and so I had a lot of experience in food and in commodities and ingredients. And so in the vanilla trade, we were able to create a business, which is the small bottles of product that you find on the grocery store shelf. And also we sell product in gallon jugs and 55 gallon drums to food manufacturers to flavor consumer product goods.

NINA MOINI: OK. And there's also a really serious environmental component to the work that you do. Can you tell me a little bit about that?

ANDY KUBIAK: Definitely. Well, we're the first company in the world to become Regenerative Organic Certified for pure vanilla extract.

NINA MOINI: Wow!

ANDY KUBIAK: So that uses USDA organic protocols as a baseline and adds provisions for soil health, animal welfare, and farm worker fairness. So it's like an elevated organic standard on top of the federal standard. And then we also are launching into a new program where we're integrating sail cargo instead of container ships and jets to transport our raw materials right now across the Atlantic Ocean from Europe to the United States to eliminate our emissions from our supply chain.

NINA MOINI: Wow. I mean, is that common or what does it take to do that?

ANDY KUBIAK: Well, it's been done before, right?

[LAUGHTER]

NINA MOINI: Right, originally, yeah.

ANDY KUBIAK: We're the pioneers and the trailblazers in sail cargo right now in the natural food category. And we're working with some incredible partners right now in France, two separate companies. The first leg of our journey goes, as I mentioned, from Europe to the United States. And we actually have a pallet right now on the ocean. It's amazing to see it out in the middle of the Atlantic Ocean.

And we also are the first North American investor, really the only North American investor, in a new line that will be launching from Madagascar to France, which will also be a sail cargo container ship. And so we'll be able to take all 9,000 nautical miles for raw materials from Madagascar to Minnesota. And we'll achieve between an 80% and 90% reduction in our Scope 3 emissions. So we're really excited about that and the value streams that will create for our product to create products that actually have low carbon-emitting qualities, which are very, very easy for people to understand.

NINA MOINI: Yeah. And tell me a little bit more, you mentioned that there's a current load that's out on a cargo ship and it's slated to arrive later this month. How are you keeping an eye on that or how is it going?

ANDY KUBIAK: Well, I spent my morning trying to figure out if I'm going to be a set 10% tariff on it, which I will be, which is kind of a surprise. But the ship itself and the whole process is in super good hands with our French partners. There's no issue there. In fact, they send us updates all the time. And we actually put quite a bit of vanilla on the ship. Sara and I were in France a couple of weeks ago, and we loaded up the Grain de Sail II with all kinds of vanilla products so the crew can enjoy good vanilla on the route across the Atlantic, which that was kind of fun.

But hey, it's in good shape. This is a very modern ship. It's basically constructed from all modern materials. And yeah, we're anticipating a very safe land here at the end of the month in New York when the ship comes into port.

NINA MOINI: Yeah, that's amazing. I do think sometimes people want to be more sustainable in a business or in their personal lives, but they feel like it's like too much work maybe for them or it's really expensive. I mean, do you have to be really intentional to make moves like this? Is it costing you a ton more? How is it for your bottom line?

ANDY KUBIAK: That's a really good question. So we started this process last summer because there's so much momentum right now with regulatory markets in California and also quite a few corporate mandates with Scope 3 emissions. So we looked at this as a business case. How can our company solve a problem? Which is what we did.

And so we probably are, again, some of the first people to decarbonize a global supply chain. But we've done it at a profit using nature and really the power of wind, if you will, to solve the problem. And we would say that it's not coming at an increased cost so much. And we think that costs over time will come down to make this very reasonable, if not status quo.

And again, we're being driven in this way because there are regulated markets that are telling us, especially in California, that if you're over $1 billion in sales-- which we saw companies in California that are over $1 billion in sales-- and so by 2027, they'll be required to report their emissions from Scope 3. And so we are basically ready to do that now. So we feel that's very progressive and that's very good for our industry. And it's another reason why we are probably the most differentiated manufacturer of pure vanilla extract in the world. And that's a win for Minnesota and the Midwest.

NINA MOINI: Super cool, so you could actually be ahead of the game when things start to shift, it sounds like. But you did mention tariffs. I just want to talk briefly about your company's been around now since 2018-ish. That's not that many years. You're in this period of growth, and you're figuring things out and your own kind of best practices, so where do tariffs and some of the changes that we hear about on a daily basis, how does that factor into your day-to-day plans and your long-term plans?

ANDY KUBIAK: Well, I think that on the short strokes here, I mean, tariffs, just like your guest on Monday, Mr. Farrell, tariffs are a tax. I mean, that's clear. And so if imported foods, which 80% of vanilla beans come from Madagascar. So we can't grow vanilla beans domestically, so if we want to use pure vanilla extract in products and have that flavor profile in our foods, that essentially those products that are imported will have 10% more cost as a food product. So about 20% of the food that we consume in the United States will be subject to that minimum 10% tariff now.

And so that-- actually, I grew up in Minnesota. And I've always been proud because we don't tax food, and we don't tax clothing. There's very few exceptions. And so when we start talking about taxing food or tariffs, that's something that we haven't seen, certainly in my lifetime, in Minnesota.

And it's going to be a challenge, I think, for all small businesses, not just ours, because I think it's something like 70% of imported food is actually that that business is being conducted by small businesses. So this is not going to impact just us, but it's going to impact all small businesses.

And let's face it, consumers might make switches because if that 10% tariff does increase and is inflationary to food, which I don't know how it couldn't be, it could be negative not just for vanilla or possibly cinnamon or cloves or black pepper or coffee or cocoa. I mean, I could list 20-- or Italian olive oil. I could list all kinds of different commodities that I enjoy working with in my kitchen and I enjoy.

And there may be some trade-offs that have to happen. And that's not exactly something that we want in the vanilla market. We don't want people to use artificial vanilla in their products. We want them to use extract from plants like we make.

NINA MOINI: A lot remains to be seen. But Andy, I wish you all the best and thank you so much for coming on and sharing about this with us. I learned a lot.

ANDY KUBIAK: Perfect, thanks so much, Nina. I really appreciate it. And I love your show.

NINA MOINI: Thank you so much. That was Andy Kubiak, co-founder of The Vanilla Bean Project.