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Dried vanilla fruits. Vanilla is a flavoring derived from orchids of the genus Vanilla, primarily from the Mexican species, flat-leaved vanilla (V. planifolia). The word vanilla, derived from the diminutive of the Spanish word vaina (vaina itself meaning sheath or pod), is translated simply as little pod.
Add this, along with the pod, to your liquid and steep. The pods can then be removed, rinsed, dried, and placed in granulated white sugar to produce what is called vanilla sugar. Vanilla sugar is when a vanilla bean has been added to white granulated sugar or confectioners (powdered or icing) sugar. The bean is cut in half and buried in the sugar, covered, and left for a week or two to allow the vanilla to permeate through the sugar.