McCormick sales grow with innovation, marketing and retail leadership

By Elizabeth Crawford

- Last updated on GMT

McCormick sales grow with innovation, marketing and retail leadership

Related tags: Marketing

Flavor and spice leader McCormick & Company is on track to meet its ambitious goal of increasing sales 4% to 6% in local currency in 2015, thanks in part to initiatives in North America to drive growth through innovation, marketing and leadership at retail, executives said. 

The firm’s consumer business grew sales 1% from a year ago, but this percentage climbs to 5% when the impact of unfavorable currency rates are excluded and the sales are placed within the goal’s context of “local currency,”​ according to the firm’s quarterly earnings report issued March 24. Overall sales climbed 2%, or 6% excluding unfavorable exchange rates.

“McCormick’s first quarter results demonstrated progress with our growth strategies,”​ which include new product launches, building brand equity and leading in its categories at retail, said Alan Wilson, chairman and CEO.

“Our innovation activity includes completing the rollout of McCormick skillet sauces”​ for which “we’re pleased with the retailer acceptance and began advertising in the first quarter to build awareness and trial,”​ he said.

The company’s relaunch of its gourmet line also “is in full swing”​ and is resonating well with the consumers “who really care about the products that they put in their food and understand the differences and origins in spices,”​ Wilson said.

He added this line is not about improving sales on the value end, but rather appealing to consumers who want premium, fresh products. The increased gourmet assortment saw a sales lift of 8% and a 5% category increase in the quarter, he added.

The firm also aggressively is pursuing an earlier grilling season with its new line of Grill Mates, burger mix, sauce and seasonings, including a co-branded Blue Moon blend, Wilson said, noting the firm is gaining shelf space for these products.

“We’ve also achieved good retail placement for our flavored sea salt and have new variation of Old Bay, Lawry’s marinades, gluten free recipe mixes and Zatarian’s rice mixes,”​ he said.

He acknowledged that traction with the smaller brands is “mixed” ​and that substantial competition exists in the highly fragmented spice category.

Focusing on retail

However, McCormick is addressing this competition with a “sharp focus on retail price points,”​ and “more advanced analytic rigor around pricing management”​ that will help the firm win at retail, Wilson said.

The firm’s sales team is targeting key staples that are price sensitive and using “existing trade promotion fronts and retailer negotiations to optimize shelf-price thresholds,” ​he said.

“Our win at retail efforts extend to e-commerce and we’ve made particularly good progress with Amazon,”​ where it gained 4 share points in the last year and its Taco Seasoning Mix is the No. 2 item in the Prime Pantry.

Advertising mix

McCormick also is combating competition from smaller players with big advertising.

The company is increasing its investment in digital marketing from 11% in 2010 to a third of its advertising – a plan that saw consumer engagement on Facebook increase 25% with 25 million impressions during the holidays compared to a year ago, Wilson said.

“We attribute this to the strength of our community as well as the quality of our content which includes user generated photos and comments and step-by-step visuals,”​ he said.

To support the upcoming grilling season, the firm will launch two new television ads “that capture the effort and passion that consumers apply when grilling,”​ Wilson said.

Reflecting on the progress of these efforts, Wilson said the firm has “strong growth rates,”​ but that it will not rest because there is a lot of work left to do.

Overall in the quarter, the firm’s adjusted operating income was $122 million compared to $125 million in the same period a year ago. The favorable impact of sales growth was offset partly by higher material input costs and increased retirement benefit expenses, McCormick reported. 

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