McCormick utilizing ‘system of advantages’

PARIS — A leading consumer portfolio as well as a successful flavor franchise give McCormick & Co., Inc. a unique place in the landscape of food and flavor companies.

“We are what we call ‘end-to-end flavor,’” Lawrence E. Kurzius, chairman and chief executive officer of McCormick & Co., said during a June 14 presentation at the Deutsche Bank dbAccess Global Consumer Conference. “And what that means is whether it is the consumer using flavoring products in the home to prepare meals, or the restaurateur in the back of house, front of house or for takeaway, or for complex flavor solutions for the food, beverage, performance nutrition and health industries, we are anywhere that flavor matters.”

The breadth of offerings that McCormick provides gives the company a “distinct advantage,” Mr. Kurzius said.

“We’ve chosen to be in categories within flavor also that are experiencing strong category growth, so we can benefit from the tailwind of that category growth,” he noted.

Mr. Kurzius said the company’s legacy categories — herbs, spices and seasonings — are part of a strong global growth trend. Meanwhile, McCormick’s recent acquisitions of Frank’s RedHot and Cholula have given the company a foothold in a growth-oriented, highly branded and differentiated category that benefits both the consumer segment and the flavor solutions segment.

“The two segments together give us enormous scale because there are great synergies between those segments,” he said. “We source over 15,000 raw materials from over 80 countries globally. And both of the segments share that global sourcing organization that we believe is a competitive advantage, and sourcing of these raw materials is definitely a challenge, and we’re well positioned to do it. In many cases, we have generation long partnerships and sources of origin that give us an advantage there.

“In our supply chain, our manufacturing facilities tend to produce for both segments as well, and so we get a scale benefit from having the two segments. A bit of a hidden scale benefit is that we also get insights from the consumer in both of those segments that we can apply back and forth across our business. We develop our own insights with proprietary research with consumers for our brands. We benefit from the experience and insights that we get through the restaurant industry where a lot of cutting-edge trends and flavor tend to emerge. And we also get the benefit of consumer insights that are developed by our flavor solutions clients.

“And so we’re really at the center where all of those insights come together, which we think gives us a privileged view into the consumer, a well-informed view into the consumer and really an advantaged view into the consumer.

“So, all of those to work together, I think, to create a differentiated advantage for McCormick. A competitive moat doesn’t come from any one advantage. It comes from a system of advantages that work together. And I think that these two segments show that we have a real system of advantages.” 

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