Supplier insights: four consumer trends driving an improved sales outlook at McCormick

Date : 31 March 2021

Stewart Samuel

Program Director - Canada

Following a strong first quarter, with sales up 22% and operating income up 35% year-on-year, McCormick has increased its sales outlook to expected growth of 8-10%. The strong performance reflects its efforts to capitalise on four accelerating consumer trends which the company expects to persist beyond the pandemic.

1. A continued sustained consumer preference for cooking more at home, including preference for clean and flavourful eating

The company’s research has indicated that consumers enjoy cooking as a creative outlet, stress reducer and family connector. Many feel that home prepared meals are safer, healthier, better tasting and cost less than eating out-of-home. Its most recent survey indicated that consumers’ interest in cooking has increased in recent months, versus the end of last year. Approximately 50% of survey respondents stated that they are cooking more to try something new, around 40% aim to re-create restaurant meals at home and over two-thirds would maintain or increase their current cooking level upon a return to normalcy.

Source: McCormick

2. Increased digital engagement

Global ecommerce sales increased 90% in the quarter, driven by omnichannel retailers. The business is investing in content, retail research and ecommerce specific innovation. This includes new packaging initiatives, launches into the direct-to-consumer channel and variety bundle packs.

3. The flight to trusted brands

The company plans on capitalising on the flight to trusted brands with increased marketing efforts, focused on retaining the millions of new households it has attracted in the last year, and a robust programme of new product introductions. Many of these are focused on bolder flavours, convenience and health. The company is supporting this through category management initiatives which are designed to strengthen its category leadership. Last year, it began to reinvent the in-store experience for spices and seasonings by introducing new merchandising elements to improve navigation and drive inspiration. This has brought clarity to what can be a confusing part of the store.

4. Purpose-minded practices

As part of its on-going sustainability journey, it has also converted to 100% renewable electricity at its Maryland and New Jersey facilities, which will results in a 11% reduction its global greenhouse gas emissions. In the UK, the company is building on its sustainable packaging commitments with sachet packaging that is 100% recyclable for its Schwartz brands.

Planning for foodservice recovery

McCormick expects the shift in consumer demand to at-home consumption to be sustained at higher than pre-pandemic levels. Growth will also be supported by a gradual recovery in the demand from restaurant and other foodservice customers which have been impacted by restrictions on out-of-home dining. In markets such as China and Australia, where restaurant restrictions have eased, at-home consumption has remained elevated. In EMEA and the Americas, the focus has shifted from adapting operating models to supply chain preparedness for the second half. It is collaborating with its foodservice customers to ensure that any pent-up demand will be met.

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