Vanilla extracts are made by chopping whole vanilla beans and repeatedly passing a mixture of alcohol and water over them for several days, then aging the extract to develop a more complex, full flavor. Vanillin and the other flavor components are more soluble in alcohol than water, so the higher the flavor content desired in the extract, the higher the proportion of alcohol necessary to carry it.
Artificial vanilla flavoring contains synthetic vanillin made from various industrial by-products, especially wood lignin, and doesn’t have the full, complex, subtle flavor of whole vanilla beans or their extracts. The demand for vanilla flavoring far exceeds the available crop, and natural vanillin costs about 100 times more than synthetic. About 90% of the vanilla flavoring consumed in the United States is artificial; in France, about 50%.