McCormick at Barclays Conference: Strategic Expansion and Innovation

On Wednesday, 03 September 2025, McCormick & Company (NYSE:MKC) presented at the Barclays 18th Annual Global Consumer Staples Conference 2025. The company highlighted its strategic initiatives, including an acquisition in Mexico, while addressing market challenges such as tariffs and consumer trends. McCormick’s focus on innovation and digital transformation aims to sustain its growth in a competitive landscape.

Key Takeaways

• McCormick plans to acquire an additional 25% ownership in McCormick de Mexico, boosting emerging market sales.
• The company is mitigating a $90 million tariff impact through cost efficiencies and pricing strategies.
• Year-to-date performance shows 4% growth in operating profit and strong volume growth in the consumer segment.
• McCormick emphasizes innovation, digital transformation, and a strong company culture for future success.
• The company aims to maintain financial discipline while investing in strategic areas.

Financial Results

• Acquisition of McCormick de Mexico:

- Expected to add over $800 million in net sales and $180 million in operating profit.

- Accretive to gross and operating margins by approximately 60 basis points.

- Mexico’s sales contribution will exceed 10% of McCormick’s total sales.

- The U.S. portfolio share will decrease from 60% to 55%, while emerging markets increase from 20% to 25%.

• Tariff Impact:

- The gross annualized tariff impact is approximately $90 million, with a $50 million impact expected in 2025.

• Year-to-Date Performance:

- Total organic growth is at the midpoint of the constant currency guidance range.

- Operating profit has grown by 4%, with volume growth in the consumer segment across all regions.

Operational Updates

• Consumer Trends:

- 86% of meals are mostly cooked at home, reflecting a 2-point increase from pre-pandemic levels.

- Focus on value, health & wellness, and convenience, with strong demand for flavors.

• Pricing Strategy:

- Investments in pricing behind the most elastic SKUs are showing positive results.

- CCI programs, efficiencies, and alternative sourcing are addressing tariff impacts.

• China Business:

- Anticipating slight growth in 2025, with consumer weakness and value-seeking behaviors.

- Growth in herbs and spices and the foodservice business.

• High-Growth Innovator Customers:

- Growth in health and wellness categories, driven by smaller, faster-growing companies.

Future Outlook

• Tariff Mitigation:

- Focus on CCI productivity savings and data analytics for sourcing and revenue management.

• M&A Strategy:

- Exploring bolt-on and transformational opportunities to strengthen flavor leadership.

- Emphasis on talent and technology in Flavor Solutions acquisitions.

• Long-Term Trends:

- Flavor remains central to McCormick’s strategy, with a focus on organizational and operational resiliency.

- Continued innovation in R&D and digital transformation.

Q&A Highlights

• Volume Growth: Strong consumer segment performance over the last five quarters.
• Pricing: Investments in pricing are yielding elevated velocities in SKUs.
• Private Label Brands: Growth through health and wellness offerings.

In conclusion, McCormick’s strategic initiatives and focus on innovation position it well for future growth. For more details, refer to the full transcript below.

Full transcript - Barclays 18th Annual Global Consumer Staples Conference 2025:

Andrew, Analyst: Thanks a lot. Brendan and Marcos, maybe a good place to start. You had some recent news. You recently announced the acquisition of an incremental 25% ownership in McCormick to Mexico. Maybe you can walk through the sort of the strategic rationale for the deal, financial impact on total McCormick following the close of the transaction.

Brendan Foley, CEO, McCormick: We’re excited about this transaction, and it’s been part of our pipeline for a long time, so we were really thrilled to get it off and running. It’s very much aligned with our strategic priorities, and it really allows us to sort of strengthen our global flavor leadership but also participate in fast growing markets. And this also really does a nice job of sort of really diversifying our geographic mix. So just to give you some numbers to give it some context, after we close on this transaction, Mexico will be greater than 10% of our overall sales. The U.

S. As a percentage of our total portfolio moved from 60% to 55%. And emerging markets will move from 20% to 25%. So it really does a nice job in sort of providing some diversity across our portfolio, which we think is healthy overall for our business. Near term, we like this because it allows us to participate even more fully in a strong and fast growing market.

It allows us to increase our exposure, our participation in condiments and sauces through the strength of Mayonesa in that part of our business. And also, it allows us to allocate, I think a little bit more freely, the resources and the capabilities to continue driving growth in McCormick in Mexico overall. And plus those are things that we can as we set that up, we can start to think about bringing more McCormick products into the market. And it also really strengthens our flavor solutions business, particularly with the strength of that foodservice business that we have there. So those are initial reasons that we felt really good about this.

From a mid to long term perspective, this is about really I think providing us more of a foundation for growth in the Latin America region. We already have a presence in Central America directly, but this plus McCormick de Mexico just allows us to use those resources to think about growth more aggressively overall. And it also opens up the door for us to think more holistically about growth in the Latin America region, both organically and also inorganically. Overall, ultimately, what this does is it opens up a very attractive market for us. It’s a business that we know well and also it’s with a proven brand in the region.

McCormick has a lot of consumer loyalty in Mexico and on top of that a lot of household penetration. And we think the brand travels very well within the region overall. So when we think broadly about this acquisition, this really lines up very nicely with what we’re trying to accomplish. Mean, Marcos, do you want to Yes. Cover anything I

Marcos Regalo, CFO, McCormick: mean, in addition to the strategic benefits that Brendan just mentioned, the transaction delivers solid financial upside. It is accretive throughout the P and L. It maintains the strength of our balance sheet, right? So if let me walk you through the P and L a little bit. So it adds more than $800,000,000 in net sales in emerging markets, dollars 180,000,000 of operating profit and it is margin accretive, about 60 basis points gross margin and operating margin accretive.

From an EPS perspective, it is also accretive on year one, Delivered a strong cash conversion cycle, which is incremental to total McCormick’s cash from operations. And finally, has a minimal impact on leverage ratio. I mean, we are at three times today. Upon close in the beginning of next year, we’re going to be continue to be within that range below three times. And the ROIC metric is also really not impacted by this deal.

So it adds a meaningful scale, as Brendan mentioned, creates a strategic platform for us to continue to grow in LatAm and maintain the balance sheet flexibility that we have to pursue other investments in the future.

Andrew, Analyst: Great. Thank you for that. Brendan, maybe you could share your perspective on sort of what you’re seeing in terms of consumer trends, especially in The U. S. How have consumer shopping behaviors and sentiment evolved even over the past few months?

And how does it influence the growth strategy going forward?

Brendan Foley, CEO, McCormick: Well, from a very high level perspective, the demand for flavors continues to be pretty strong. And that just really fuels, I think, the foundation of our growth trajectory overall. And our growth strategy is aligned with where consumers are going. They’re looking for value. They’re looking for health and wellness.

They’re also looking for convenience. We see those three as really occupying like kind of the key themes that we’re seeing out there in the marketplace. Right now, I’d say broadly, environment remains pretty challenged in The U. S. We definitely see continued and we talked about this even earlier this year.

There’s continued sort of weakness in consumer sentiment and pressure especially on the middle to lower income consumer. We still see a lot of value seeking behaviors out there. We would characterize that as shorter shopping trips, smaller baskets or more frequent shopping trips, should say. And those things continue to kind of characterize what we’re seeing out there in the marketplace overall. And consumers are intentionally they’re being very intentional in their spending habits.

They’re trying to balance value with health and wellness and also convenience at the same time. And so these are the factors that we see playing out. When consumers are pressured, they tend to cook at home more often. They also shop the perimeter of the grocery store for fresh food. And that allows them to make meals cheaper at home overall.

And so that continues to reinforce this demand for flavor. We see that in our categories overall. The other thing, we research this every quarter. We kind of look try to understand consumer sentiment and behaviors. And flavor is still the most important thing to think about when they think about putting a meal on the table.

And so that is regardless of income level or health preferences, that’s still one of the most important things that they’re trying to accomplish. So these are some of the insights that are really affecting everything. Now consumer is really focused on health and wellness at the same time. Those two sort of broad trends put together really kind of illustrate what’s going on in the marketplace. 86% of meals are still mostly cooked at home.

That still remains about two points higher than the pandemic. We’ve always talked about this as a long term secular trend. It just sort of accelerated during that period of time. In the last few years, consumers increasingly learn

Andrew, Analyst: how

Brendan Foley, CEO, McCormick: to cook, and they like it, so they’re getting better at it. And we think that’s also good for our portfolio and our business, and they’re making healthier and cheaper meals. And so this is where we see consumers kind of finding their way through that resiliency that we’ve talked about. We’re also seeing a lot of growth in functional foods, a lot focused on health and wellness benefits. And we start to see that in categories like snacks and beverages, where they’re trying to add fiber or they’re trying to add protein or they’re putting a lot more focus on areas like hydration.

We’re also seeing in areas like we’re looking for more energy or even just better sleep. All of that needs flavor, the way we look at it. And so those are opportunities for growth that we see in the marketplace. The other thing I just want to add is that convenience is definitely accelerating too, the need for that. We’re seeing in our e commerce numbers.

The percentage of sales that’s coming from e commerce continues to grow in our portfolio. We don’t see that stopping. And it’s interesting that’s happened as they’re also seeking for value. So they’re ready to pay for it. And that’s kind of I think when you think about sort of the trends in all of this together, they’re sort of all having to come together and the consumers find their way to make it all work.

And where McCormick lands in all of this is we have a broad portfolio with a very focused innovation agenda up against these trends. And we think that’s been really been driving I think the health of our business overall in our consumer business. And the other thing I would say is that we’ve been very aggressive in making sure that we meet consumers with where they are. And this has really, I think, really helped us. And we think that’s the right thing to do in this environment.

It creates consumer loyalty, and it’s the foundation of really sustainable long term growth. Thank

Andrew, Analyst: you for that. I guess for Brendan and Marcos, McCormick has been differentiated frankly from a lot of your peers with its volume growth over the last several quarters. What gives you the confidence that this momentum can continue, particularly in light of upcoming tariff related price increases? Do you see opportunities for incremental price investments in the future to help drive growth? And will innovation be a larger driver going forward as well?

Brendan Foley, CEO, McCormick: Well, all of those are factors that we’re going to have to think about as we move forward. But if we just look at our performance so far, I mean, first of all, we operate in great categories. It starts with that. And I just talked about the consumer trends that are really influencing the marketplace and the categories that we operate in, and we think those trends are pretty sticky overall. Our Consumer segment performance has been strong for the last five quarters, and we’re doing what we said we would do.

We’re seeing the results from our plans. We’re growing share. We’re growing volume in many of the key categories in a lot of our key markets overall. McCormick unit consumption in The U. S.

Is beating total grocery. And so we do like the trends that we’re seeing. As we move into the second half, we’re continuing to see that momentum. And a lot of that is driven by the continued increase in A and P. Our messaging is resonating.

It’s targeted. It’s digitally enabled. We’re also seeing a lot of focus and reward right now from the innovation that we launched in 2024. Mean a good example of that is like Cholula Extra Hot. That’s doing really well is one example.

And the price cap management plans that we put in place back in early sort of late twenty twenty three, those are now part of the baseline that we talked about. On top of that, what we have going on is expanded distribution across our core categories overall. We’re seeing the benefit of even new innovation now coming out in 2025. And so you see that in continued expansion of the Cholula line. For example, we’ve just launched Cremosa’s.

The McCormick brand this summer launched finishing salts as part of our portfolio. And then we’re doing another wave in both the fall and the holiday on finishing sugars, and those have been very popular. In EMEA, we’re seeing a lot of growth right now from air fryer seasonings, all purpose seasonings. And then we’re relaunching our whole gourmet line right now, starting to sort of appear on shelf bottle by bottle. That will be a flow in.

And that’s that countertop worthy sort of benefit that consumers are looking for. And so that’s really, I think, driving a lot of growth. And so throughout this we have a lot of confidence in terms of how our consumer business is performing. And that aggressive posture that I talked about earlier, it’s kind of reflected in all those plans and those activities. When you think about pricing, think as you know we started investing in price in late twenty twenty three, and we’re really early in identifying the need for value and delivering that for consumers.

And so these are plans that have been working not only for us, but most importantly for our customers. And that’s put us in a pretty neat situation as we continue to move forward in this current environment. Now I’ll let Marcos talk a little bit more about pricing.

Marcos Regalo, CFO, McCormick: Yes. I’ll add some color on that. So growth in our consumer business is driven by multiple levers, right? Pricing is one area and that is part of our base right now. So as Brendan alluded to, last year we invested in price behind the most elastic SKUs.

We fully lapped these investments in Q2 and these SKUs continue to perform really well. I mean we have elevated velocities out of that these SKUs. So that’s a very positive for us. As we look to the remainder of the year, I mean, it is important to address the tariff environment. New tariffs have been introduced since our last earnings call.

And as you know, it is a fluid environment. But our approach in principle remains the same. We’re going to offset as much as we can with the use of CCI programs, efficiencies across the P and L, alternative sourcing and obviously pricing for the residual impacts. And you will see some of that starting in 2025. We do have a very experienced revenue growth revenue management team in place, supported by data and analytics.

And they have to they continue to have a disciplined approach towards pricing as we think about all the moving parts there. But then in Q4, we anticipate some elasticity impact, but still we expect volume growth in the consumer segment. And we’ll be monitoring elasticities obviously to help inform our plans beyond 2025. Additional context I would say is that price gaps they continue to narrow as we see prices climbing on private label and we are monitoring that very closely. And then finally, would say that as Brendan said, I mean, our approach is really aligned to the strategy of meeting the consumer where they are, being relevant in the moment.

And we’ll remain balanced in terms of our execution to sustain our volume momentum as well as protect our profitability.

Andrew, Analyst: Great. Brendan, maybe you can frame the opportunity you have with some of the high growth innovators that you talk about in the flavor business. How big is the opportunity? Do you expect to continue to soften the volume weakness we continue to see across the larger CPG customers as well as the weakness across the QSR channel?

Brendan Foley, CEO, McCormick: Our view of the food industry is there’s constant innovation going on at all times to really address what are the latest in consumer trends. And right now we’ve talked about that as prioritizing health and affordability. And you see that certainly play out in the regulatory landscape or also in health and wellness trends and that is helping to shape the competitive landscape in food broadly overall. And companies are responding with faster innovation and trying to meet this agenda and these needs and these trends. And they’re focused on better for you offerings, more regional flavors, even premiumization.

And there that’s where we’re seeing a lot more activity, I think, in the food industry overall. And in this environment, we’re leveraging what is strong flavor capabilities and innovation to make sure that we can help our customers continue to grow. And that’s the environment that we feel like we’re operating in right now. For McCormick, if I could just describe a little bit of how we look at our customer base because it’s very diverse in a lot of ways. So think about it as a combination of large global CPG companies, foodservice operators and QSRs, regional CPG leaders that might not operate around the world but certainly are strong within the markets in which they operate in.

And we also operate a lot with private label brands as customer part of our customer base and then what we’re calling high growth innovator customers, which tend to be smaller, faster growing sort of emerging, particularly in sort of fast growing categories. And so we see broadly a lot of this growth happening across these health and wellness categories being right now driven by those high growth innovator customers and private label brands. And that’s what we’re seeing. So let me talk a little bit about sort of each group individually just to provide some context overall on them. On the high growth innovator customers, these are companies right now that are distinguished by just certainly very high growth rates compared to the categories in which they’re operating in.

So they’re growing volume within the industry. They’re grabbing share. And they’re disruptive with innovation and unique positioning overall. I called out some of these examples before, but it’s probably worth talking about it because it’s a very large group of activity. But snacks, hydration, bars, energy drinks, gummies, that recently was in the news, think, in the last twenty four hours, but flavoring those.

And we see even pet food. So we’re seeing a lot of flavor opportunities in some of these fast growing emerging brands. And that helps fuel our growth and definitely helps offset what we’re seeing in terms of trends with other customer bases overall. But we’re not only just helping them reformulate, we’re also helping them innovate and scale for growth because they’re smaller operations. And so we’re gaining share in that customer segment.

Private label is also another area. I don’t think it’s growing necessarily as fast, but it’s definitely providing us some pretty nice growth. And those types of customers right now are certainly putting a lot of momentum around sort of health and wellness offerings overall in their portfolio. And this is a pretty broad set of categories that we would participate in. What gives us a kind of strategic advantage in this part of the marketplace is they also have to be our customers in our consumer segment.

And so we know them well. We talk with them a lot about how we can help them with flavor across their store. And so that tends to be a growing area. And then I kind of conclude lastly with these large growing CPG these large growing sort of CPG customers at a global level. And definitely, there’s been some softening certainly within this last year.

But historically, we’ve driven growth with this group, and we believe that we will in the future. And the way we measure success is are we gaining share with them? Are we driving sort of being on the core list of some of these companies more often? Are we driving innovation and reformulation for them overall? Or are we cross selling our technologies with these customers?

And that allows us to often soften the blow, but we’re seeing just an overall Surcana data coming through in terms of overall consumption happening in the market. So when we take a look, ultimately, we remain, I think, pretty positive about how we look at this part of our business moving forward. Across these customer segments, we believe our results are better than the food industry at large. And so we believe that we’re performing pretty well in what has been a soft marketplace right now, but it is the combination of all these different customer segments and this diversity that’s helping us deliver the type of performance that we’re delivering right now.

Andrew, Analyst: Got it. Got it. Thank you. Brendan, can you speak to the current trends in your China business? Is the pace of recovery still in line with your expectation?

And sort of what are your perspectives over the longer term on China, which is a significant business for McCormick?

Brendan Foley, CEO, McCormick: Yes. As we said at the beginning of the year, we expect that market to remain challenged, but we are expecting sort of this we called it slight to gradual growth in 2025. And broadly, I will tell you is what we’re seeing. But just some context in terms of our thoughts on China. With our team on the ground and also Marcos and I were just there earlier this year, we still can see sort of consumer weakness in their sentiment overall.

A lot of activity in those. Value seeking behaviors is also present there too. I think what’s even more fascinating is just the shaping of the retail environment there. We still see a lot of change happening. A lot of growth in the small format stores, especially also in smaller cities.

And there’s been more of a move away from the large format, sort of hyper stores and even in the large cities overall. So our team has been doing a really good job in execution and trying to pivot on how we sort of respond to this change in the marketplace that we’ve seen over the last two years. And so importantly, think we’re seeing some good execution there. Year to date, our business in China has been performing relatively close to what we said we thought would happen overall. In our consumer business, we’re seeing growth in herbs and spices driven by a lot of strong brand marketing as well as this new penetration in these new formats.

And in our foodservice business, we’re seeing growth there too through a lot of sort of limited time offer type and promotions that we’re seeing in the marketplace with existing but also new QSR customers that we’re finding in the market there. So broadly speaking, we think we’re performing year to date with the way we thought we would, that gradual level of growth. But in this market, it’s kind of unique. Public policy can really change things pretty quickly. And so we watch that very closely just to make sure that we’re staying very close to what the trends are.

But so far, we think it’s performing like we thought it would. Great.

Andrew, Analyst: Marcos, McCormick’s delivered solid year to date results, particularly on the top line. How do you think the business is performing both in Consumer and Flavor Solutions? And sort of what are your expectations for the remainder of the year, which is admittedly, as you’ve all acknowledged, fourth quarter weighted in terms of Yes.

Marcos Regalo, CFO, McCormick: That’s right. So as you know, Andrew, we cannot speak to the current quarter. We are closing the books right now and we’re reporting in about a few weeks from now. So but just to give a little bit of context, I mean year to date, we have we continue to accomplish the things that we said we would accomplish. We delivered total organic growth at the midpoint of our constant currency guidance range.

In Consumer segment, we drove volume growth across all regions. In Flavor Solutions, despite softer industry trends, would say that we’re performing well in this environment. And then we delivered operating profit growth of 4%. So year to date, we delivered top line and we expanded margins at the same time. As you think about the third and fourth quarters, some of the things that we you can have to keep in mind, I would say, which is pretty much consistent with what we said at Q2 earnings call.

Starting with the top line. First, in the consumer segment, we expect to continue volume growth for both quarters as consumption remains strong. And in addition to that, we’re going to realize additional benefit from pricing, surgical pricing due to tariffs that’s going to kick in, in Q4. In Flavor Solutions, as we said for both quarters, we expect softness in customer volumes driven by large CPG customers as well as the QSR channel softness particularly in EMEA. This is being offset by high growth innovators as well as the QSR channel in APAC, which is performing well, right?

Also in Flavor Solutions, will see benefits from FX and tariff related pricing in Q4. So you’re going to see pricing in Q4 for both segments coming in and benefiting the P and L. So that is on top line. In terms of profitability, Q3 results will be impacted by increased commodity costs and tariffs as well as continued SG and A investments. We continue to invest behind our brands in brand marketing and continue to invest behind our digital transformation agenda around technology, digital transformation in general, I would say.

In the fourth quarter though, we expect the benefits from the pricing plans that we have in place as well as increased productivity savings. This is why the profitability is expected to be more weighted towards Q4 than Q3. Also, we want to maintain our flexibility to continue to invest behind our proven strategies that have yield great results so far. We’re making investments in supply chain for capacity, optimizing our operations there. We’ll continue to make investments in brand marketing, in R and D and in technology.

And as always, our CCI program is very robust and will continue across all lines of the P and L, including the SG and A space, to generate fuel for these investments.

Andrew, Analyst: Great. And maybe, Marcos, sticking with you for a minute. How do you see the trajectory of your gross and operating margins over the next few quarters, just given commodity cost trends, tariffs, which are still a moving target to some extent, productivity initiatives, SG and A streamlining and the pricing dynamics? And then perhaps also you can remind us of what tariff impacts are currently embedded in your outlook and how the mitigation actions are taking hold. And Ken, given it’s a bit of a moving target, I guess when might you be in a position to provide any update around incremental tariff impact to the extent updates are needed?

Marcos Regalo, CFO, McCormick: Yes, absolutely. Yes, sure. So near term, there’s certainly pressure on gross margin driven by raising commodity causes and tariffs. But we’re staying agile with mitigation plans in place across all lines of the P and L and with the goal of maintaining our volume momentum, but also protecting profitability. In terms of tariffs, we remain well positioned with our manufacturing and sourcing strategies.

Our exposure is primarily related to raw materials, ingredients that are now grown in The U. S. That we have to bring from over 80 countries into The U. S. And just for perspective, more than 90% of what we sell in The U.

S. Is manufacturing in The U. S, right? So it’s really about the raw materials piece that we’re bringing from outside of The U. S.

We do have a dedicated cross functional team, monitoring developments and mitigate and developing mitigating strategies. Brendan and I meet with this team on a very regular basis, and we are always considering options on how to go about it and always having the consumer in mind that how we can continue to protect that volume that we earned over the last eighteen months, but also with an eye on profitability. So we’re going to remain balanced as I said. I mean first, we’re going to use CCI productivity savings And we’re pulling all the levers that we can across the P and L to be able to offset as much as we can of the tariffs impact. Data analytics will continue to play a role in terms of our sourcing capabilities

Brendan Foley, CEO, McCormick: as

Marcos Regalo, CFO, McCormick: well as the revenue management capabilities. So data analytics is playing a very important role these days for us. But then obviously, there’s going to be some surgical price increases. And we’re going to be very specific and very surgical to those increases. To the point about the impact that we mentioned in the Q2 call, so we said that our gross annualized impact from tariffs is about $90,000,000 of which $50,000,000 impact in 2025, right?

And this projection assumed an incremental 30% from China, 10% from rest of the world. And then we also assume USMCA compliant for imports from Canada and Mexico. So that goes to zero. So since then, tariffs have continued to evolve, continue to change. We’re right now fully assessing the impact of those tariffs, and we’ll be in a position to provide an updated on the exposure as well as the mitigating strategies for our Q3 earnings call in about a few weeks.

Andrew, Analyst: Got it. Great. Maybe a question for both of you. With balance sheet flexibility that you have, even following the close of the McCormick, New Mexico transaction that we talked about earlier, what are you focused on in terms of M and A? Is there a segment or a market focus?

And will you be looking to pursue larger transactions or smaller ones? McCormick has considered both in the past. Just trying to get a little bit more sense of how you’re thinking about it. I know M and A is obviously part of your sort of DNA, but if that’s changed or evolved at all over the last couple, call it, two years.

Brendan Foley, CEO, McCormick: Indeed, it is. And I don’t think our attitude towards M and A has really changed broadly in the last two years. It’s been pretty consistent. But let me just, from a high level, first start off, and that is when we think about M and A, we believe there are opportunities across the world geographically but also across a lot of the flavor categories in which we compete. And we always view McCormick as having a very broad set of opportunities as we think about what we’re focused on overall.

And our pipeline reflects this overall. We look for opportunities that give us greater penetration in existing markets or in existing categories. And that’s certainly something that we try to do. But we also consider when we look at all that, consider bolt on opportunities and we consider transformational opportunities at the same time because we have done both overall. But importantly, our focus is on that long term organic growth.

Can we still deliver on that based on the acquisitions that we bring in? So that’s kind of an important principle, if you will, that we focus on. Geographically, we like the places that we are, and we look to expand our scale in the markets that we already operate in. But having said that, there are many opportunities around the world where we don’t have really a strong presence that has high flavor growth. And so that becomes an opportunity too, which includes emerging markets.

And I’d point to the transaction with McCormick de Mexico is a good example of that type of application of our thinking and our strategy overall. From a category perspective, we’re looking to advance our flavor leadership across both segments, both consumer and also flavor solutions. And as we talked about before, our broader M and A strategy is underpinned by a couple of things. One is it’s onethree of our growth algorithm. So that’s one of things to keep kind of keep in mind long term.

And we’ve delivered on that historically overall. I think the targets need to strengthen our flavor leadership globally, first and foremost. We also need to they need to be accretive or at least match the type of sales growth rate and margin that we currently operate at. And then it also has to be sort of financially sound and create value overall across our portfolio. So those are the kind of the underpinnings.

And we typically ask ourselves, are we the right owner for either this particular business or brand? Or said another way, what is this business or brand going to do for McCormick? And what will McCormick be able to do that business or brand? When we look at consumer, we’re looking for brands that operate in the seasonings and spices and herbs category and also condiments and sauces. And ideally, we’re looking for brands that offer still a lot of upside in terms of household penetration growth.

But we’ve also looked at brands also that offer that are still kind of fundamentally healthy, but we think we can really drive and improve the growth rate of those businesses. And so we look at both of those and that kind of is how we think about what is the right asset for us to go after, whether it be bolt on or transformative. On the flavor solutions side of our portfolio, we kind of look at three things.

Marcos Regalo, CFO, McCormick: And we

Brendan Foley, CEO, McCormick: call them the three Ts. That’s little bit of a thing we found out more recently is they all started with a T. And that is, first of all, does it reinforce our taste competencies? We’ve been very clear. We have a lot of focus in savory, heat, naturally sweet and also in an emerging area, we think, in citrus overall.

The third area is does it really allow us to that is so critical for us in the flavor industry is without really strong talent, it’s hard to compete really well. And so we’re always looking to upgrade from a talent perspective. And then lastly, it’s technology. And are we able to acquire technologies that add to our capabilities overall? Sometimes when you’re looking at assets and we see one of those three missing, and then that doesn’t really starts to fall apart for us.

But when we hit all three, it really does become the right target. Phono was a good example of that overall. And so that’s probably how we look at M and A and what’s interesting to us and whether or not it needs to be a bolt on or transformational. And am I missing anything, Mark? Yes.

Marcos Regalo, CFO, McCormick: Mean just building on what you said, I mean we are going to continue to be focused on growing in all of our core categories, Consumer, Flavor Solutions in The U. S, outside of The U. S. And this growth is going to be both organic and inorganic. It is difficult to speculate on future deals or size.

But as we have demonstrated in our most recent transaction, McConnell transaction, we are going to stay very disciplined. It depends on obviously on the opportunities being presented and the integration required. We evaluate assets as they come available. And we have been successful in both bolt on and transformative acquisitions in the past. And we do have a track record of selecting the right assets and integrating them well right away and getting the synergies right away.

Andrew, Analyst: So we’re going to continue with that playbook going forward. So perhaps in our remaining moments, Brendan, guess looking longer term over the next sort of five to ten years, what are the sort of two or three trends that would be top

Brendan Foley, CEO, McCormick: of mind for you? I’m frequently thinking about five, so it’s not two or First is the role of flavor. That’s central to our company. And trends are constantly changing. Consumer behavior constantly changing.

So I think about the role of flavor is almost an evergreen opportunity for us because it’s always at the top of the list for consumers. It’s something that you never give up or compromise on. And so that’s really important because it shapes culinary trends and it’s all about us being the forefront of that and making sure that we’re leading the thinking when it comes to flavor in terms of what trends are emerging or how do we mainstream them overall. More recently, I think what’s really occupying a lot of my thinking right now from a trend standpoint is how we think about organizational and importantly operational resiliency. And I would say even more pointed, it’s about sourcing agility overall.

There’s a lot of change going on in the marketplace, whether it be climate, geopolitical, trade policies. And this is an area we spend a lot of time on. We think we’re one of the best out there in the industry on this. But you can’t be complacent about that because there’s always a lot of constant change there, and we expect it to continue. But that supply integrity for our part of the for our business is really pretty important.

And so that could be agricultural practices or different sources of supply or it could be I mean a lot of things. And we have a lot of active effort going on there. I think digital transformation really impacts the way we think we work, the way we compete overall. The speed of technology is certainly awe inspiring at times overall. But right now, we have a very focused agenda.

It’s platform. It’s data synchronization. It’s analytical maturity. And these are trends that I think I spend a lot of time thinking about and talking about with our leadership team. And I’ll just wrap it up.

Our business is really driven by innovation. And so from a flavor company standpoint, what new platforms through our R and D organization are we going to create and develop for the future to address those needs of the future. And so that’s a big area that we focus on. And I’ll just wrap it up. It is McCormick, it’s a lot about culture of the company.

And when you think about our ambition to get bigger, how do you retain the culture as you try to get bigger overall? And within that, we’re trying to develop those leaders and those capabilities that we’re going to rely on in the future. At the same time, we need to make that entire workforce future ready, if you think about really the impact of that digital has on all of our organizations. So those are the trends I keep thinking about. It’s those five.

Sometimes they morph into four, sometimes less than that, but they’re always around those four, it seems. Great. Perfect.

Andrew, Analyst: All right. I think that’s a great time to cut it there. Just a reminder, McCormick is not holding a breakout session given where they are in their fiscal quarter. And please join me in thanking Brendan and Marcos for being here.

Brendan Foley, CEO, McCormick: Appreciate it. Thank you. Thank you.

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