McCormick: 40% of flavor projects with US manufacturers are in healthier foods

By Elaine Watson

- Last updated on GMT

Related tags: New product development, Us

McCormick ceo Alan Wilson: 'Based on our analysis of recent US consumption data, we've seen some general slowdown...'
McCormick ceo Alan Wilson: 'Based on our analysis of recent US consumption data, we've seen some general slowdown...'
Almost four out of 10 product development projects for US food manufacturers developed by McCormick & Co last year were on “flavor solutions that feature all-natural ingredients, reduced sodium, lower calorie and other healthy attributes”, its chief executive has revealed.

Speaking on call with analysts to discuss the firm’s fourth quarter results yesterday, chief executive Alan Wilson said: “For our industrial business, we had strong demand for new products from food manufacturers, particularly for flavor solutions that feature all-natural ingredients, reduced sodium, lower calorie and other healthy attributes.

“In the US these types of health and wellness projects accounted for nearly 40% of our product development projects in 2011.”

9% of sales were from new products in 2011

Products launched by the seasonings giant in the past three years accounted for 9% of sales in 2011, a percentage Wilson said he hoped to increase: “Wewould expect new product sales to be something in the order of 10 to 12%.”

However, there had been a significant increase in innovation in ​the retail side of the business, he said: “In our consumer business, we launched more than 200 new branded products in 2011, well ahead of our normal pace which is closer to 100.”

Sales of Hispanic products had been particularly strong, he said. “Support behind our Hispanic products in the US including television and a sampling program, helped drive a 9% increase in sales of these products, which exceeded $100m in 2011.”

A general slowdown in consumption?

While price increases and efficiency gains had helped offset double digit increases in commodity costs, higher prices on the shelf had hit sales in the US, he said.

“Based on our analysis of recent US consumption data, we've seen some general slowdown, particularly in measured channels, in both the category and our branded sales.

“In addition, the rate of growth for private label has also slowed in recent weeks… While other factors may be behind some of this near-term fluctuation, we attribute a portion of the trend in branded spice and seasoning volumes to our pricing actions.”

Emerging markets set to account for 13%+ of sales in 2012

McCormick’s strongest growth was coming from emerging markets, which accounted for 9% of group sales in 2010 and were projected to account for at least 13% of sales in 2012, he said.

In the fourth quarter of fiscal 2011 (three months to November 30), McCormick posted a 13% rise in net sales to $1.11bn. Operating income rose 4% to $192m.

In the full year (fiscal 2011), net sales were up 11% to $3.697bn. Operating income rose 6% to $540m.

Click here​ to read McCormick's 2012 global flavor forecast.

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