Key takeaways:
- McCormick’s Q1 results show steady growth, but underlying performance remains modest, with organic sales up just 1.2%.
- Margin recovery is still constrained by persistent cost pressures and weakening pricing power across the food chain.
- The potential Unilever deal has overtaken earnings as the central story, signalling a broader shift towards scale and integration in the industry.
McCormick & Company reported first-quarter 2026 results today (1 April) that, on the surface, tick the expected boxes. Sales rose 16.7% to roughly $1.87bn, although organic growth was just 1.2%. Adjusted earnings per share came in at $0.66, up from $0.60 a year ago, but the same old issue lingers underneath – costs are still doing the damage. Margins haven’t snapped back; in fact, they haven’t really moved much at all.
This has been the pattern for the best part of a year and a half now. Revenue keeps edging forward, helped in part by pricing, but profitability hasn’t followed at the same pace. Input costs remain sticky, and while some pressures have eased at the edges, they haven’t disappeared. The result is a business that looks stable on paper but still hasn’t quite reset.
That pattern has now held for roughly six quarters – steady top-line progress, but no clean recovery in profitability.
Ordinarily, that would be the story – and one that’s not unique to McCormick, with much of the food industry feeling the same squeeze. On this occasion, however, the bigger noise sits outside the numbers. Reports that Unilever is to combine its food arm with McCormick have shifted attention almost entirely – particularly after signalling that a deal could be finalised as early as this week, even if there’s still no certainty it will go through.
It’s worth saying that demand isn’t the problem here. People are still cooking, still reaching for flavour, still buying into sauces and seasoning as a way to make everyday food feel a bit more interesting. If anything, flavour has taken on a bigger role as manufacturers try to strip out salt, sugar and fat without losing consumer appeal. That puts companies like McCormick right in the middle of product development, not just at the end of it.
The pressure is coming from input costs, which haven’t eased enough; supply chains that are still uneven in places; and pricing – which helped offset earlier waves of cost inflation but is now losing momentum as new pressures begin to build again across parts of the system. Consumers are pushing back, and retailers are quicker to say no.
So yes, the results matter but they don’t really change the direction of travel. They show a company holding steady, not breaking out – and right now, that feels like only part of the story.
Growth is there but it’s getting harder to bank it
McCormick is still, broadly speaking, in a good place. Its position in flavour gives it a direct line into some of the biggest shifts shaping food today, particularly as manufacturers reformulate under pressure from health policy, labelling requirements and the growing scrutiny of ultra-processed foods. In bakery and snacks especially, flavour systems are doing more of the work – carrying taste where sugar, fat or salt might once have done.
Recent performance has also been supported by acquisition, notably McCormick de Mexico, which contributed to first-quarter growth. That helps lift reported numbers but also highlights how much momentum is being supported externally rather than purely through organic demand.
The Baltimore-based company’s structure helps. It isn’t just selling spices on a supermarket shelf. Its flavour solutions business supplies manufacturers, QSRs and foodservice operators, embedding it early in the process, often at the point where products are being designed, and that’s a valuable place to be.
But that positioning doesn’t insulate it from what’s happening further down the chain. Pricing has been the main tool for protecting margins, and that tool is starting to blunt. Consumers are more careful; they’re switching, comparing and trading across tiers in a way that wasn’t as pronounced even a year ago. Retailers, too, are more resistant to increases that risk slowing volume.
At the same time, McCormick’s customers – the food manufacturers – are under pressure from multiple directions. They’re dealing with their own cost inflation, tighter regulatory scrutiny, reformulation demands, and emerging shifts linked to health trends such as GLP-1 weight-loss drugs, which are beginning to influence consumption patterns in certain categories. All of that limits how much additional cost can realistically be pushed through the system.
Meanwhile, the cost base itself remains unpredictable. Commodity markets are still exposed to geopolitical disruption, freight continues to fluctuate, and there’s no clean return to pre-inflation conditions. What this creates isn’t a recovery phase, but a prolonged period of adjustment – one where margins are managed rather than rebuilt.
“We delivered strong growth in sales, adjusted operating income, and adjusted earnings per share, supported by the McCormick de Mexico acquisition and organic growth across both Consumer and Flavor Solutions,” said chairman, president and CEO Brendan M Folley. “Strong sales, acquisition accretion, and disciplined cost management enabled margin expansion as we continued to invest for future growth.”
Deal speculation shifts the conversation
This is where the Unilever angle cuts through, with both sides in advanced talks and the prospect of a deal now far from theoretical.
What is being discussed isn’t a straightforward acquisition but a more complex transaction that would see Unilever spin off its food division and merge it with McCormick. The combined business is expected to be valued at more than $60bn, with around $15.7bn-$16bn in cash forming part of a wider cash-and-stock structure. Unilever shareholders would take a controlling stake of roughly 65% in the new entity, leaving McCormick investors with a minority position but significantly increased scale.
By structuring the deal this way – described as a Reverse Morris Trust – Unilever would be able to exit its food division without a traditional sale, while still retaining value for shareholders. For McCormick, it removes the need to acquire a business that is, on many measures, larger than itself, while still achieving rapid expansion.
The assets involved are substantial. Unilever’s food portfolio, valued at roughly €28bn–€31bn including debt, brings brands such as Hellmann’s, Knorr, Marmite and Colman’s, although some markets, including India, may sit outside the deal. McCormick contributes its own growing condiments and flavour portfolio, including Frank’s RedHot, French’s and Cholula, alongside its global flavour systems business.
This would create a business with reach across ingredients, flavour solutions and branded products, giving it a very different position within the industry. Control of flavour shapes how products are built; control of brands shapes how they are sold, and bringing those together shifts where influence sits.
Competitors such as Kraft Heinz, Nestlé and Ajinomoto will be watching closely. Each operates across parts of this space, but not necessarily in the same integrated way. A move of this scale could prompt further consolidation as companies look to defend their positions.
There are also hurdles. A transaction of this size would almost certainly face regulatory scrutiny, particularly in categories where the combined business would hold significant share. Integration, too, is rarely straightforward, as recent deals across the sector have shown. Timing is now less about whether an agreement is reached and more about how long it would take to complete.
Scale is starting to look like a safeguard
Step back, and the logic becomes difficult to ignore. The food landscape has shifted; cost pressures are no longer a short-term disruption but part of the operating reality; consumers are more cautious; pricing power has limits.
At the same time, the structure of the industry is loosening. The lines between ingredient suppliers, manufacturers and branded players are becoming less distinct, as companies look to capture more value and reduce exposure to volatility. Recent moves across the sector – including large-scale transactions such as Mars’ planned acquisition of Kellanova – point to an industry actively reshaping itself.
Unilever’s willingness to rethink its food business fits squarely within that trend. So does McCormick’s apparent openness to something bigger. Because scale now offers something beyond growth. It brings optionality – more control over inputs, more routes to market, and more leverage when conditions tighten.
Which brings it back to the critical questions. Stick with a model that works but is under pressure, or step into something larger, more complex, but potentially more resilient? Neither path is straightforward, but standing still is starting to look like the riskier choice.
McCormick’s latest results don’t answer that. What they do is set the stage for what comes next.