One of the world's largest spice companies, McCormick said that acquisitions, higher volumes, and favourable exchange rates had all contributed to the company's $38.1 million profit for the quarter, up from the prior year's $35.1 million profit.
"We are benefiting from our 2003 acquisition activity and distribution gains along with recent new product success. With this momentum and the favourable foreign exchange environment, we expect to exceed our initial objective to increase sales 7-9 per cent," said Robert J. Lawless, chairman and CEO of the Sparks-based firm that distributes its products to manufacturers, supermarkets and restaurants.
A key driver behind the growing figures for McCormick is the burgeoning trend for ethnic foods in the US and Europe, itself driven by globalisation, travel and more adventurous tastebuds. In the US alone, Americans consumed more than a billion pounds of spices in 2000, according to the American Spice Trade Association's most recent statistics, while the market for ethnic frozen foods reached $2.2 billion in 2001, says the American Frozen Food Institute.
Parallel to the increasing desire for spices and seasonings in our foods is the growing interest in diet. The consumer or manufacturer's need to 'pep-up' the flavour of health-conscious driven food products is a clear opening for spice suppliers like McCormick.
Sales for the company jumped 18 per cent to $572.4 million from $485.4 million attributed to higher volume in the consumer and industrial businesses, favourable foreign-exchange rates and the purchase of the Zatarain's New Orleans-style food brand.
Formed in 1889, the company mostly sold raw ingredients to consumers and food manufacturers until, inspired by the 'eat-and-run' trend, the firm saw an opportunity to sell not only spices, but also ready-made products and compound flavours - a breaded-chicken coating, a fajita seasoning kit - that combined various low-margin ingredients into a so-called 'value-added' product.
McCormick markets these products to consumers and industrial food manufacturers. In 2002, two-thirds of McCormick's $2.3 billion in sales came from such products, while the rest came from raw ingredients such as oregano and cinnamon.
Competition in the flavours and seasonings domain is tough - notably from number one flavours and fragrance US firm International Flavours and Fragrances (IFF). But good news for the spice maker came recently from Australian rival Burns Philp that said it is preparing to sell its Tone Brothers unit, which is second to McCormick in the North American spice trade.
Last year the firm bought the UK condiment business Uniqsauces for £12.15 million (€18.5m) cash from Uniq, the European chilled convenience food group.