Company Reports

McCormick reported 1.9% organic sales growth on higher prices in its fiscal third quarter. This came alongside a 70-basis-point increase in adjusted gross margin to 17.7%, as cost savings offset inflation in inputs and freight costs.

While McCormick is the dominant player in the $17.5 billion global spices and herbs market—with about 17% share, nearly 4 times the next-largest branded operator (per Euromonitor)—it hasn't been immune to macro and competitive challenges. We don't think the combination with Unilever's food brands (primarily Knorr cooking aids and Hellmann's mayonnaise) negates these headwinds. Rather, we think the massive deal, which stands to more than double McCormick's sales base to around $20 billion, brings significant integration risk. However, we're encouraged that Unilever intends to own around 10% of shares outstanding while maintaining board and executive leadership representation, which we think could facilitate a more seamless combination.

Although McCormick is the leading player in the $17.5 billion global spices and herbs market—with about 17% share, nearly 4 times the next-largest branded operator (per Euromonitor)—it hasn't been immune to macro and competitive challenges. We don't think the combination with Unilever's food brands (primarily Knorr cooking aids and Hellmann's mayonnaise) negates these headwinds. Rather, we think the massive deal, which stands to more than double McCormick's sales base to around $20 billion, brings significant integration risk. However, we're encouraged that Unilever intends to own around 10% of shares outstanding while maintaining board and executive leadership representation, which we think could facilitate a more seamless combination.

McCormick's organic sales grew nearly 2% in the fiscal second quarter, driven by higher prices. Adjusted gross margin expanded 270 basis points to 40.2%, including a 140-basis-point tariff refund benefit, as cost savings offset inflationary pressures. Shares rose about 5% in early June 25 trading.

McCormick's first-quarter organic sales growth of 1% and 100-basis-point adjusted gross margin gain to 38.6% were overshadowed by the $44.8 billion tie-up with Unilever's food arm, equating to 14 times 2025 EBITDA. The deal is set to close in mid-2027. McCormick shares are down midsingle digits.

Although McCormick is the leading player in the $17.5 billion global spices and herbs market—with about 17% share, nearly 4 times the next-largest branded operator (per Euromonitor)—it hasn't been immune from macro and competitive challenges. We don't think the combination with Unilever's food brands (primarily Knorr cooking aids and Hellmann's mayonnaise) negates these headwinds. Rather, we think the massive deal, which will more than double McCormick's sales base to around $20 billion, brings significant integration risk. However, we're encouraged that Unilever intends to own around 10% of shares outstanding while maintaining board and executive leadership representation, which we think could facilitate a more seamless marriage.

Following a Wall Street Journal report, McCormick and Unilever separately confirmed talks about a potential deal to combine Unilever's food brands with McCormick's leading global spice and seasoning business. It's unclear whether a transaction will ultimately happen.

As the leading player in the $17.5 billion global spices and herbs market—with about 17% share, nearly 4 times the next-largest branded operator (Euromonitor)—McCormick is a valuable partner for retailers. However, competitive and macro headwinds abound. For one, cost pressures related to raw materials, transportation, labor, and tariffs have ensnared firms of all stripes. Further, we think consumers (particularly those with lower incomes and/or on a fixed budget) have tightened their spending, given stepped-up grocery prices and elevated interest rates, which could constrain results if consumers trade down or out of the category. However, we posit that its position as the leading private-label spice and seasoning producer bolsters its relationships with retailers and solidifies its wide economic moat.

The market soured on McCormick following mixed fourth-quarter marks (2% organic sales growth against a 120-basis-point downdraft to 39% in adjusted gross margin). The stock sank by a high-single-digit percentage Jan. 22.

As the leading player in the $16.5 billion global spices and herbs market—with nearly 20% share, 4 times the next-largest branded operator, according to Euromonitor—McCormick is a valuable partner for retailers. However, competitive and macro headwinds abound. For one, McCormick continues to face cost pressure (related to select raw materials, transportation, labor, and the potential tariff hit) that has ensnared firms of all stripes. Further, we think consumers (particularly those with lower incomes and/or on a fixed budget) have tightened their spending, given stepped-up prices at the grocery store as well as elevated interest rates, which could constrain results if consumers trade down or out of the category. However, we posit that its position as the leading private-label spice and seasoning producer bolsters its retailer relationships and solidifies its wide economic moat.

McCormick served up 1.8% organic sales growth in its fiscal third quarter, buoyed by 1.2% higher volumes and favorable mix. However, the adjusted gross margin declined 120 basis points, as the combination of higher commodity costs and incremental tariffs offset the firm's cost-saving endeavors.

McCormick is acquiring an additional 25% stake in its Mexican joint venture, which will bump its ownership to 75%. The price tag attributable to the incremental position is $750 million, which equates to 12 times on an EBITDA basis. The deal is expected to close in early 2026.

As the leading player in the $16.5 billion global spices and herbs market—with nearly 20% share, four times the next-largest branded operator, according to Euromonitor—McCormick is a valuable partner for retailers. However, competitive and macro headwinds abound. For one, McCormick continues to face cost pressure (related to select raw materials, transportation, labor, and the potential tariff hit) that has ensnared firms of all stripes. Further, we think consumers (particularly those with lower incomes and/or on a fixed budget) have tightened their spending, given stepped-up prices at the grocery store as well as elevated interest rates, which could constrain results if consumers trade down or out of the category. However, we posit that its position as the leading private-label spice and seasoning producer bolsters its retailer relationships and solidifies its wide economic moat.

In its second quarter, McCormick cooked up 1.6% organic sales growth due to higher volumes. This was driven by 3% growth in its consumer arm (nearly 60% of sales) as flavor solutions was flat. Adjusted gross margin contracted 20 basis points to 37.5%.

The US Department of Health and Human Services and the Food and Drug Administration plan to eliminate a wide range of petroleum-based food dyes in packaged foods by the end of 2026. This builds off of pending statewide bans, including in California.

As the leading player in the $17 billion global spices and herbs market—with nearly 20% share, 4 times the next-largest operator, according to Euromonitor—McCormick is a valuable partner for retailers. However, competitive and macro headwinds abound. For one, McCormick continues to face cost pressure (related to select raw materials, transportation, and labor) that has ensnarled firms of all stripes. Further, we think consumers (particularly those with lower incomes and/or on a fixed budget) have tightened their spending, given stepped-up prices at the grocery store as well as elevated interest rates and gas prices, which could serve to constrain results if consumers trade down or out of the category. However, we posit its position as the leading private-label spice and seasoning producer bolsters its retailer relationships and solidifies its wide economic moat.

McCormick started the year with 2% organic sales growth (as a 2.2% uptick in volumes and favorable mix were partially offset by a 0.2% downdraft in prices) and a 20-basis-point bump in the adjusted gross margin to 37.6%.

As the leading player in the $17 billion global spices and herbs market—with nearly 20% share, 4 times the next-largest operator, according to Euromonitor—McCormick is a valuable partner for retailers. However, competitive and macro headwinds abound. For one, McCormick continues to face cost pressure (related to select raw materials, transportation, and labor) that have ensnarled firms of all stripes. Further, we think consumers (particularly those with lower incomes and/or on a fixed budget) have tightened their spending, given stepped up prices at the grocery store as well as elevated interest rates and gas prices, which could serve to constrain results if consumers trade down or out of the category. However, we posit its position as the leading private-label spice and seasoning producer further bolsters its retailer relationships, solidifying its wide moat.

McCormick closed out the fourth quarter with 1.8% organic sales growth (reflecting a more than 2% bump from higher volumes and favorable mix that was partially offset by lower prices) and a 60-basis-point retraction in the adjusted operating margin to 17.1%.

After just more than a year at the helm, CEO Brendan Foley hosted his first investor day at the firm's headquarters in Hunt Valley, Maryland. With his leadership team, he sought to convey how McCormick is poised to withstand unrelenting macro and competitive angst.