McCormick eyes opportunities in organics

by Monica Watrous
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McCormick offers a number of USDA Certified organic options in its branded spices line.

NEW YORK — Consumer demand for simple ingredients and better nutrition plays to McCormick & Co.’s strengths as a spices and seasonings company.

“I think we are seeing a rapid migration with consumers and consumer attitudes, very rapid into things like more organic, natural, free-from, whether it is G.M.O.s or gluten or sugars or fats or whatever it is, there is a real move there,” said Alan Wilson, chairman and chief executive officer of the Sparks, Md.-based company, during a May 29 presentation at the Sanford C. Bernstein Strategic Decisions Conference in New York. “And I think we need to make sure that we are responding to that.”

In addition to its portfolio of branded spices, flavor extracts and recipe mixes, McCormick sells flavor solutions to 9 of the top 10 food and beverage companies and 9 of the top 10 food service and restaurant chains in the world. Recent innovation has been shaped by efforts to improve the nutrition of products, whether it is reduced sodium, lower fat, less sugar or a move toward clean label.

“In recent years, one-third of our new product projects have had some type of health and wellness initiative,” Mr. Wilson said. “With our foundation in spices and herbs, we are a go-to company for these kinds of projects.”

Mr. Wilson said McCormick continues to develop capabilities and technologies to deliver on consumer health trends.

“Certainly, consumers and customers are making trade-offs in terms of cost versus those sorts of things,” Mr. Wilson said. “The cheapest thing you can put in a product is salt. So when you replace salt with something else, you have to work through the formulas. But we are really focused on providing clean, natural and consistent flavor for our customers.”

Alan Wilson, chairman and c.e.o. of McCormick.

Organic is another opportunity for McCormick, which offers a number of USDA Certified organic options in its branded spices line, from curry powder to Saigon cinnamon. Mr. Wilson said the company plans to expand such offerings.

“There is a growing consumer interest in organic,” Mr. Wilson said. “It is only about 2% of sales in our category right now, but we see it really growing and we have been the leader traditionally. We were early out and… are continuing to increase the amount of organic available in our line.”

The company has been working to improve the productivity of its supply chain to offset the costliness of procuring organic herbs and spices.

“G.M.O.s is another question,” Mr. Wilson said. “And so as you segregate a supply chain, it certainly does add cost, but we all have to be sensitive to the fact that that is what consumers are looking for. And so we are aligning our products, like we have with gluten-free, like we have with expanded organics, to be where consumers want to go.”

Consumers also are increasingly shopping for fresh foods on the perimeter of the grocery store, but Mr. Wilson said McCormick’s center-aisle spice products aren’t threatened by the trend.

“The value difference that we offer is the convenience and the shelf stability of our products,” Mr. Wilson said. “And so certainly, fresh herbs have been out forever. We used to be in that business, actually. But we don’t see that necessarily as our biggest competitive threat.”

Health and wellness may also be a focus of future acquisitions for McCormick, which in February purchased Drogheria & Alimentari (D&A), a privately held spices and seasonings company based in Italy, for approximately €85 million ($97 million).

“Part of our approach with Drogheria & Alimentari is it is a really cool premium brand that is 100% G.M.O.-free, where everything is organic except for the sea salts, which can’t be organic,” Mr. Wilson said. “And so that offers us another alternative to kind of reach that consumer.”
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READER COMMENTS (1)

By kim.folta@conagrafoods.com 6/2/2015 12:23:07 PM
interesting-notice have an organic "line" see upside-how can we create the upside for SFS in general?