Vanilla powder description: Vanilla Extract is the most popular way that vanilla is used by home bakers. Vanilla Extract is produced by steeping the vanilla beans in an alcohol and water solution for several months, sometimes with sugar added, thereby producing a clear dark liquid with a rich flavor that is highly aromatic. There are two fold and three fold extracts, called essences, but these are very strong and are mainly used by professionals. Do not add vanilla extract to hot liquids as the alcohol evaporates, along with some of the vanilla flavor.