This audio was auto-generated. Please let us know if you have any feedback.
Dive Briefing:
- McCormick & Co.'s CEO says innovation is a “priority” for the spice and flavor giant as it expands its product offerings.
- In a conference call with analysts last week, Brendan Foley said innovation, along with marketing, had contributed to the volume improvements in the most recent quarter and would continue to play a meaningful role in the business going forward. “We expect to see strong performance in the second half as well,” he said. “The pipeline for the remainder of the year remains strong.”
- Innovation has become a priority for food and beverage companies as they seek to attract consumers who have less money to spend as food prices have been rising for years. New products also provide companies with an opportunity to increase their ability to keep customers on track with trends.
Dive Insight:
As McCormick’s innovations continue to make their way onto store shelves, the Maryland-based company is gaining an increasingly strong position. Innovations will play an even bigger role throughout 2024, with new product launches expected to double in the second half of the fiscal year compared to the first half.
“Everyone is engaged in innovation,” Polli said. “It has contributed meaningfully to our first-half 2024 performance, and we expect it to deliver strong results in the second half as well.”
He noted that much of McCormick's innovation is happening in the heat of the moment, and that he expects the category to be a “long-term growth accelerator globally” for the company.
McCormick not only jumps into the hot category with a wide range of flavors, but also owns a handful of brands synonymous with the category, including Cholula and Frank's RedHot. Last month, Cholula made its first foray into the frozen category, launching a bowl aimed at busy consumers who want flavor and convenience.
McCormick also mentioned other innovations, including Lori's new seasoning blend, Flavor Maker Blend, Frank's Red Hot Dip & Sauce and popular flavors in squeeze bottles.
McCormick said second-quarter revenue fell about 1 percent from a year earlier, to $1.64 billion.
However, analysts noted that the company is showing signs of improvement. TD Cowen’s Robert Moskow noted in a research note that U.S. consumer volume improved sequentially from -2.6% to -0.3% in the most recent quarter. Moskow noted that McCormick has shipped all of its renovation SKUs, with two-thirds on shelves.
““If McCormick can demonstrate that it has done the right thing to regain its competitive edge in the U.S. spices and seasonings category — correcting its price gap, improving its packaging, introducing innovations that resonate with Gen Z, and addressing supply chain inefficiencies — the stock will be more valuable,” he said.
