McCormick: ‘Consumers are increasingly open to flavor exploration, and we are matching that with the right innovation’

Consumers' rising interest in flavor exploration is helping to buoy global spice and seasoning leader McCormick & Co.‘s US volume share, which returned to growth in the back half of 2024 thanks in part to new flavors and formats, renovated packaging and diversification of its hot sauce portfolio.

“The demand for flavor remains strong,” and by innovating to meet consumer interest in global flavors, hotter heat and elevated packaging, McCormick is successfully returning the business to volume growth, CEO Brendan Foley told investment analysts gathered by the Consumer Analyst Group of New York earlier this month.

In 2023, the company’s sales volume declined notably from the previous year as consumers embraced value-seeking behavior, which was a double-edge sword for McCormick. On one side, consumers sought to lower their grocery bills and reduce purchases of high-ticket items, which included spice on a per ounce basis. On the other side, consumers were eating at home more and looking for spices to elevate their cooking.

The trend of eating at home continues as does consumer desire for healthier food and to try new flavors and dishes – all of which drive demand for flavor and bodes well for McCormick, Foley said.

According to McCormick consumer research, 82% of consumers cook to eat healthier, a significant increase from 75% three years ago, and more than half of US consumers will consume a meal or beverage flavored by McCormick on any given day.

“This speaks to the power of our brands, the flavor they deliver, our capabilities and reach and our growth potential all over the world. People desire great tasting foods and drinks with rich, authentic flavors and we deliver flavors across markets” and channels, Foley said.

“In addition, consumers are increasingly open to flavor exploration, and we are matching that with the right innovation,” he added.

Innovations attract new consumers

Between 2022 and 2024, McCormick doubled net sales contribution from new products and brought in more than 6 million new households last year.

This helped the company increase US volume share 2.3% in fiscal 2024 over the prior year and US distribution 3.8% in the same period.

Innovations ranged from a line of limited-edition holiday finishing sugars available in nostalgic flavors, including Candy Cane and Gingerbread Spice, to mini-bottles of fan favorite condiments and its first addition in five years to its Red Cap line with the launch of Crushed Jalapeno Pepper.

The company sees significant room for innovation beyond Crushed Jalapeno Pepper within its global heat platform, which accounts for about 20% of the company’s sales and has been growing faster than non-heat products, Foley said.

“Gen Z and Millennials continue to kick up the demand for heat as they are more experimental and prefer authentic, bold and spicy flavors, outpacing other generations,” he said.

He explained this demand is “not just a trend. It is a sustainable flavor profile,” that McCormick is well-positioned to meet.

“We have in-depth sourcing expertise of chilis and peppers and a resilient and extensive supplier-base. Our scientists have a deep understanding of sensory science and how origin, aging, processing, cooking and fermenting of raw materials brings up the nuances of heat and flavor,” he added.

‘Hot sauce is the condiment of the next generation’

The company also has well-recognized brands in the heat segment that are poised for expansion and diversification, including Frank’s Red Hot and Cholula, said Foley.

“It is pretty incredible that in the US, Gen Z and Millennials spend more on hot sauce than they do on ketchup, and they use more hot sauce than any other generation. Our brands, Frank’s Red Hot and Cholula resonate with younger consumers and our advantage to win both brands have strong loyalty and repeat rates,” said Foley.

He noted Frank’s Red Hot has the “highest household penetration in the category.”

To improve unit sales and market share for Frank’s Red Hot in 2024, McCormick invested in increased distribution, brand marketing and innovation.

It also invested heavily in expanding the reach of its Cholula brand, which Foley said is “all about authentic Mexican flavor.”

“While Cholula was born a hot sauce, it has proven its potential to stretch beyond hot sauce with the launch of salsa and taco recipe mixes, which have done very well,” he said, noting about 75% of buyers are new to the brand.

The potential for hot sauce also expands beyond the US, said Foley.

“The global opportunity is significant, and in many markets, the category is fast-growing but underdeveloped. Since the acquisition, we have more than doubled the net sales of Cholula and Frank’s Red Hot internationally and it now represents a higher percentage of net sales,” he explained.

Countertop-worthy packs expand appeal to younger and new shoppers

Just as important as innovation to the brand’s success is renovation – especially around its packaging, according to Foley.

“Renovation is also a foundational element to continue to win. It started with our core Red Cap packaging renovation in 2023 highlighting freshness and flavor, which resulted in a 14% increase in velocity in 2024,” he explained.

The company plans to build on this success by updating the packaging for its Grill Mates line, which will be ready for this year’s grilling season, and its Gourmet spice line.

“We have the strongest equity in the Gourmet category, and it is important to stay ahead of consumer expectations. The younger generation wants a bottle that is countertop worthy, and we are bringing this to life through a new vibrant gold cap that seals freshness, provides a more modern look and highlights that we use only the best materials,” Foley said.

“This renovation is expected to drive an increase in purchase, interest and velocity in Gourmet spices and seasonings,” he added.