Key Takeaways
- Spice giant McCormick said consumers are “challenged” but “resilient” as it reported its latest quarterly results.
- CEO Brendan Foley said consumers are cooking more at home to be more value conscious, which is driving demand for spices.
- Gen Z in particular is drawn to higher quality and premium items, Foley noted.
Americans are going to the grocery store more often—but buying less—according to executives at spice giant McCormick & Co. (MKC).
The company on Tuesday turned in quarterly results that beat expectations, which CEO Brendan Foley attributed in part to consumers cooking more at home.
“Consumers are resilient but remain challenged,” Foley said on the company’s earnings call, according to a transcript provided by AlphaSense. “They are exhibiting value-seeking behavior making more frequent trips to the grocery store with smaller baskets and shopping just for what they need.”
Among the other trends McCormick noted:
- Foley pointed to rising demand for larger sizes of spices, a signal that people plan to cook multiple meals rather than just the one they’re shopping for at the moment. (But there was higher demand of single-use recipe mix items too.)
- Foley also highlighted the impact of younger consumers. Gen Z customers are drawn to “higher quality and premium flavor items” as they cook at home more. “We’re seeing velocity pick up on our gourmet line, and it’s coming from Gen Z, as they seek to recreate restaurant quality meals,” he added.
- Foodservice traffic remains soft across most restaurant types, particularly in QSRs. These trends are starting to benefit growth in food at home, and this shift is driven by older generations as well as lower income households.
In the fiscal third quarter ended Aug. 31, McCormick’s consumer segment, which includes its spices and herbs, saw 1% volume growth and flat sales of $937.4 million. Shares of the company were recently up a bit less than 1%, ahead roughly 20% this year.