McCormick looks to build off record 2012

by Eric Schroeder
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SPARKS, MD. — Fiscal 2012 was a “milestone” year for global flavor giant McCormick & Company, Inc., as the Sparks-based company exceeded $4 billion in sales and $400 million in earnings during the year.

In a letter to shareholders as part of the company’s 2012 annual report, titled “Flavored for global growth,” Alan D. Wilson, chairman, president and chief executive officer, highlighted the factors leading to strength in the business last year, with an eye toward growing in fiscal 2013.

Leading the way are current eating trends, which Mr. Wilson said favor McCormick’s business as consumers discover how to prepare restaurant-style meals at home while seeking products that offer convenience and promote wellness.

“Our portfolio of products has broad appeal; we offer a complete range — from value-priced items to premium gourmet products,” he said.

Mr. Wilson said McCormick followed up the launch of 200 new products in 2011 by introducing approximately 250 in 2012 within its consumer business. The stepped-up innovation is part of a broader effort in place within both the consumer and industrial businesses at McCormick to have new products launched in the past three years to exceed 10% of sales by 2015. This compares to a range of 8% to 10% since 2007.

“Our global strategy team has identified local product successes that have global appeal such as Recipe Inspirations, gourmet recipe mixes and grinders, as well as grilling marinades and seasoning blends,” he said. “We are also innovating to drive sales of our regional leaders. Frozen Zatarain’s items, launched in 2011 and expanded in 2012, now account for nearly 25% of this brand’s sales. In France, we expanded our Ducros brand of spices, herbs and seasonings with 31 new items. Our line of authentic recipe mixes helped grow our 2012 sales of Hispanic products in the U.S. to nearly $110 million.”

McCormick plans to draw awareness to its brands through more marketing support, Mr. Wilson said. In 2012, McCormick invested a record $198 million in brand marketing support, with digital marketing accounting for 12% of that total, up from 4% in 2010. Digital marketing support is expected to grow to more than 20% in 2013, he noted.

During fiscal 2012 McCormick strengthened its position in developed markets while expanding its presence in high-growth emerging markets. Mr. Wilson said the percentage of sales in emerging markets was 14% in 2012, double its size of five years ago. And by 2015, McCormick hopes to reach 20%, Mr. Wilson said.

McCormick should make a splash in China in 2013. The company in 2012 announced an agreement to acquire Wuhan Asia Pacific Condiment, which is a provider of bouillon products in the central region of China.

“This acquisition is complementary to the products we currently sell in China and our strong presence in the coastal regions of the country,” Mr. Wilson said. “Once completed, we expect this acquisition to increase our sales in China by more than 60%. We have a solid pipeline of other acquisition opportunities, many of which are located in emerging markets that offer strong growth opportunities.”

Overall, for the fiscal year ended Nov. 30, 2012, McCormick had net income of $407.8 million, equal to $3.07 per share on the common stock, up 9% from $374.2 million, or $2.82 per share, in fiscal 2011. Net sales were $4,014.2 million, up 9% from $3,697.8 million.
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