All perfect praise be to Allaah, The Lord of the Worlds. I testify that there is none worthy of worship except Allaah and that Muhammad, sallallaahu ʻalayhi wa sallam, is His slave and Messenger.
Regardless of whether this type of alcohol is intoxicating or not and whether it transforms into another substance during the manufacturing or baking process or not, the small alcohol content that does not have any effect on the person consuming it does not cause the consumption of such food to be unlawful according to a group of contemporary scholars.
This view gives a broad concession for Muslims. Hence, this small and insignificant alcohol content in the vanilla, which is one of the ingredients of cake, does not entail deeming the consumption of such a cake unlawful.
Ibn ʻUthaymeen was once asked about the so called (non-alcoholic) beer, given that some brands of non-alcoholic beer have alcohol content. He replied:
“As to percentage, do not think that any percentage of alcohol in a thing makes it unlawful; rather if the percentage of alcohol has an effect whereby when a person drinks this mix, he becomes intoxicated, then it is unlawful. But if the percentage is very small without effect, then it is lawful. For example, a percentage such as 1%, 2% or 3% does not make the beverage unlawful. Some people misunderstood the hadeeth that states, 'Whatever intoxicates in large quantities, then a small quantity of it is forbidden,' to mean that if a small percentage of an intoxicant is mixed with a large amount of a substance that is not intoxicating, then it is unlawful. This is a misunderstanding of the hadeeth. 'Whatever intoxicates in large quantities, a little of it is unlawful' means that if a lot of something will cause intoxication, and a little of it will not cause intoxication, then a lot or a little are both unlawful, because you may drink a little that does not cause intoxication, then you may be tempted to drink more and become intoxicated. But if something is mixed with alcohol, while the alcohol content is a minute amount and does not have any effect, then it is lawful and does not come under the ruling of this Hadeeth.”
Moreover, one of the recommendations of the eighth seminar of the Islamic Organization for Medical Science (IOMS), based in Kuwait, under the title ‘Some medical issues: an Islamic perspective’ incorporating the issues highlighted above, with the participation of Al-Azhar and the Fiqh Academy in Jeddah, reads:
“It is permissible to take foods where a slight amount of alcohol is used for the purpose of dissolving materials that are insoluble in water, such as coloring agents, preservatives and so on. The principle on which this permission is based is the concept of 'Umoom al-Balwa (i.e. permissibility due to unavoidable necessity; when a matter becomes widespread/general and is difficult to avoid). Apart from that, it is also a factor that most of the alcohol added actually gets evaporated in the production process.” [Al-Fiqh al-Islami wa Adillatihu]
Allaah knows best.