Wide-Moat McCormick Bakes Up Products and Messaging to Appeal to Value-Conscious Consumers

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 continues to face heated costs (related to commodities, packaging, freight, and labor, which management has alluded to as being the highest in the past decade or two) that have ensnarled firms of all stripes. Further, we think consumers (particularly those with lower incomes and/or on a fixed budget) are beginning to tighten spending, given stepped up prices at the grocery store as well as rising interest rates, which could serve to pressure its results if consumers trade down or out of the category.