As major food manufacturers face challenges due to consumers shifting away from packaged foods towards fresher, healthier options, one company is thriving in this environment: McCormick & Co. With a legacy spanning 129 years, this manufacturer of spices, seasoning mixes, flavorings, and condiments has developed products that cater to the public’s desire for nutritious dining without compromising on flavor. There is also an increasing interest among millennials in experimenting with new tastes and cooking at home, which benefits McCormick and other flavor-centric companies. “The demand for flavor among consumers appears to be limitless,” stated Lawrence Kurzius, McCormick’s CEO, during the annual Consumer Analyst Group of New York conference in Florida. “If you look around the perimeter of the store, it’s our products and categories that enhance the taste there. While we have a favorable trend, many products in the center of the store are facing challenges.”
With shifting demographics driving innovation, particularly as millennials gain more influence and purchasing power, companies find themselves increasingly dependent on McCormick and other flavor specialists. This trend is reflected in McCormick’s sales projections, which anticipate a 12% to 14% increase for the current fiscal year—a growth rate that many in the food and beverage industry would envy amid ongoing declines. “In comparison to most companies in the CPG sector, we aren’t competing directly,” Kurzius remarked. “Our focus is purely on flavor. We aim to enhance their products, and we truly can.”
A Mintel study revealed that 35% of U.S. consumers are likely to try a new dish if it features unique flavors or ingredients, while 80% enjoy experimenting with new seasonings and spices. Major food manufacturers have taken note of this trend. For instance, PepsiCo’s Frito-Lay division launched a variety of international flavors for its Lay’s potato chips brand in 2016, including Brazilian Picanha and Chinese Szechuan Chicken. Amplify Snack Brands, recently acquired by Hershey, introduced a limited-edition chip last year featuring the Carolina Reaper, the hottest chili in the world, packaged in a coffin-shaped box.
Brittany Weissman, an analyst at Edward Jones, commented to Food Dive that McCormick “is a very well-run company” at the forefront of several popular trends. The company benefits from having products that are easy to ship, giving it an edge as more consumers turn to online shopping. “What often gets overlooked is their strategic foresight,” she noted. “They are always thinking ahead, and when we finally hear about it, it’s something they’ve been working on for a long time.” Weissman emphasized McCormick’s proactive step into e-commerce several years ago, where they opted to expand their e-commerce team in anticipation of future business potential. She pointed out that Amazon is among their largest accounts, despite the fact that sales to the e-commerce giant are less than those to some other clients. “This has enabled them to become stronger partners with companies like Amazon and to enhance their e-commerce capabilities,” she stated.
McCormick has further bolstered its online presence by launching a storefront on Tmall.com, an Alibaba platform in China, where it sells and fulfills products directly to consumers. Kurzius mentioned that they will assess the outcomes in China before considering a similar initiative in the U.S., which he described as “inevitable.” “We are confident that this is the future, so we continue to invest in it,” Kurzius asserted. “Anyone who believes otherwise is ignoring the reality.”
As the appetite for flavor continues to grow, McCormick has been actively expanding its product line. Last fall, they introduced 40 new items, including bone broth, slow-cooker seasonings, and Asian noodles, all aimed at busy consumers who desire flavorful meals without extensive preparation. They are tapping into the millennial interest in ethnic flavors and home cooking through various spice blends under brands like Thai Kitchen, Zatarain’s, Simply Asia, and Lawry’s. Their commitment to flavor was reinforced last summer when they acquired Reckitt Benckiser’s Food Division for $4.2 billion, bringing in renowned brands like French’s mustard and Frank’s RedHot. This acquisition, the largest in McCormick’s history, adds a wealth of brands to its portfolio, solidifying its position as a premier destination for enhancing the flavor of diverse dishes. Weissman remarked, “The RB Foods acquisition presents numerous opportunities. They have a robust history of successfully integrating acquisitions.”
Despite this growth, Kurzius noted that McCormick has yet to fully explore all flavor possibilities, particularly in beverages, where the company is often overlooked. Additionally, McCormick aims to expand the variety of products offered in the store’s perimeter and venture into new meal occasions, such as breakfast, for which they recently launched products designed to enhance yogurt, eggs, smoothies, oatmeal, and other healthy options. During his presentation at CAGNY last week, Kurzius highlighted the many advantages his company can leverage for future growth, direct appeal to CPG giants to incorporate more of McCormick’s products into their offerings. “For my fellow CPG companies in the audience, if McCormick isn’t on your flavor list, I’d love to discuss what we can do for you,” he concluded.
In this flavor-centric landscape, the importance of ingredients like calcium citrate malate equivalent to calcium may also become a critical consideration as consumers increasingly prioritize healthful options. McCormick’s focus on flavor and adaptability positions it well to meet the evolving demands of consumers seeking both taste and nutrition.