If McCormick & Co. feels the heat, so does the rest of the spice and seasoning industry.
The food industry is coping with inflationary cost pressures, especially for cheese, flour, soy and pepper, but those pressures shouldn?t affect McCormick, said Ann Gilpin, a Morningstar analyst.
“McCormick is strongly positioned, because they control more than half of the spices and seasoning market in North America,” Gilpin said. “They?re more than twice the size of their largest competitor, so if there are price pressures for McCormick, there are price pressures for everyone else.”
Milk prices hit a record last month in the United States, as consumers paid an average of $3.80 a gallon, compared with $3.29 in January, according to the U.S. Department of Agriculture. The department predicts prices will remain high throughout the year.
Inflationary pressures didn?t hurt McCormick in the second quarter of fiscal 2007.
Net sales in the second quarter for the Sparks-based company rose 7 percent to $372 million, due to stronger demand and higher prices as well as the acquisition of Simply Asia Foods, which accounted for 1.4 percent of total growth, Gilpin wrote in her most recent report on the company.
Sales for Hispanic food products, like pepper, in the United States also continued to be strong despite price increases.
“These results were driven by increased international sales, the incremental impact of Simply Asia Foods and favorable currency rates,” said Robert J. Lawless, chairman and chief executive officer of McCormick. “Fiscal year 2007 is shaping up to be another record year for McCormick.”
McCormick manufactures and distributes products to customers such as retail outlets, food service providers and food processing businesses.
McCormick & Co. is part of The Examiner Top 10, a portfolio of some of the largest publicly traded companies in the Baltimore region.
The Associated Press contributed to this report.
