Vanilla shows up on ingredient labels in at least three different forms, and they are not interchangeable, even though recipes often use the terms loosely.
Vanilla extract
A liquid made by soaking vanilla beans in alcohol and water, which pulls out the flavour compounds over weeks or months. Real vanilla extract, sometimes labelled pure vanilla extract, is the most common form used in home baking. It is potent, dissolves instantly into batters and liquids, but it is alcohol based, which means it can evaporate somewhat under high heat.
Vanilla powder
Made by grinding whole dried vanilla beans into a fine powder, sometimes with a small amount of sugar added to help it disperse evenly. Unlike extract, it has no alcohol content and holds up better under prolonged heat, making it useful in baking where a recipe is in the oven for a long time. It also tends to have a purer, less boozy flavour than extract.
Whole vanilla beans
The actual dried seed pod of the vanilla orchid. Splitting a bean open and scraping out the tiny black seeds gives the strongest, most complex flavour of any form, along with the visible flecks people associate with real vanilla. Beans are the most expensive option, but a little goes a long way.
Which one is actually best
None of them is strictly better, they suit different jobs. Extract is the most convenient for quick recipes. Powder holds up best under heat and avoids any alcohol taste. Whole beans give the most complete flavour and the visual appeal of real flecks, which is why they are often used in combination with powder rather than alone.
How this applies to flavoured sugar
Dirty Vanilla uses a combination of real vanilla powder, whole vanilla beans, and a whole vanilla pod, rather than relying on a single bottled extract. The powder disperses evenly through the sugar, the beans provide the visible flecks and deeper flavour, and the pod continues to release aroma while the pouch sits sealed.
