McCormick Falls Victim to Mounting Cost and Macro Pressures, but Competitive Edge Unwavering

As the leading player in the $11 billion global spices and seasoning market--with 20% share, 4 times the next-largest operator--McCormick is a valuable partner for retailers. However, competitive and macro headwinds abound. For one, McCormick is facing a pronounced acceleration in costs (related to commodities, packaging, freight, and labor, which management has alluded to as being the highest in the past decade or two) that has ensnarled firms of all stripes. Although it is still toeing the industry line that volumes are holding up, we think consumers (particularly those with lower incomes) will start to tighten spending, given the onslaught of unrelenting angst (including stepped up prices at the pump and rising interest rates).