McCormick & Company (NYSE: MKC) is the largest spice company in the world with $2.9B in sales (2007), 40% of which were generated outside of the U.S. It produces and supplies spices, herbs, flavorings, and seasonings to consumers and food-service providers around the world.
In the spice business size matters, and with twice the revenue of its next largest competitor MKC has a decided advantage over other spice companies. Consumers of spice tend to be very price sensitive, and McCormick also competes with private label brands. MKC has been able to distinguish its branded offerings from those of its lower priced private label competitors by spending substantial amounts on R&D to come up with new products and by increasing spending on advertising to convince consumers that its products are worth the premium. Products introduced since 2004 contributed 10% to 2007 sales. Ironically, the company is also the largest producer of private label spices and seasonings in North America. According to analysts, its large presence in this market allows it, at least to an extent, ensure that private label brands do not price their brands so low that its branded products appear overpriced by comparison.  Finally, the company's size means that it can fuel its growth by making frequent acquisitions. In 2008, the company announced plans to acquire Unilever's Lawry's, its last major branded competitor in the consumer seasonings market. The year before, it acquired to Simply Asia, a company that specializes in Asian spices-- Asian spices are one of the fastest growing spice segments. In the short-term, however, rising prices for the raw materials and spices MKC uses for its products have decreased profitability margins and forced McCormick to raise their prices.
[[Image:MKCSegmentSales.PNG |thumb|380px|right| MKC MKC's Consumer sales have remained constant at approximately 57% of sales over the past three years, but the Lawry's acquisition will boost Industrial sales since it has the largest industrial wet marinades market share. 
[[Image:MKCGeoSales.PNG |thumb|380px|right| U.S. sales have decreased slightly (approximately 2%), while Europe and Other Countries' sales increased approximately 3% total.
McCormick operates in three geographic segments: the U.S., Europe, and Other Countries. Europe and Other Countries represented approximately 40% of its $2.9 B in sales. MKC has production and distribution facilities on six different continents to serve over 100 countries, such as the U.S., Australia, China, and Mexico.
McCormick & Company operates in two segments:
|Annual income data, in millions||2003||2004||2005||2006||2007|
|Earnings Per Share (basic)||$1.51||$1.57||$1.60||$1.53||$1.78|
McCormick & Company has a broad range of customers and buyers because it serves both everyday consumers and the industrial food market. Examples of its customers by segment include:
To maintain its market share in the spice and seasonings market, MKC is constantly acquiring new brands and developing new products. Recent acquisitions include:
[[Image:MKCNewGraph.PNG |thumb|375px|left| MKC has increased Research and Development costs 57% since 2002. This graph demonstrates the increase over the past three years.
McCormick & Company has maintained its majority market share on the consumer spice and seasonings market by acquiring rival brands, developing new products, and advertising effectively. In order to differentiate itself from private, unbranded, and cheaper products, MKC has made an effort to focus on advertising and research & development (R&D) for new products. The spice and seasonings market is extremely price sensitive, especially on the consumer side. With MKC products side-by-side with similar, cheaper products, MKC must distinguish itself as a premium brand. In order to do so, MKC spent $55M in 2007 on advertising, compared to just $27M in 2002. Also, 10% of its $2.9 B in sales was attributed to new products launched within the past three years and contributed to a 6% increase in U.S. consumer sales.
McCormick and Company does not directly compete with any one company, and its main competitors are mostly private label brands who compete with low prices. MKC is the largest company in both the consumer and industrial spice markets, and has built a wide economic moat. MKC is at least two times larger than its next largest competitor, so pricing pressure does not pose a problem for MKC because it competes on sheer volume of products sold. MKC has a strong, reputable brand name over its unbranded competitors and has the majority of the consumer and industrial spice markets.
Companies invested in the spice and seasonings market include:
|Company||Revenue||Net Income||Profit Margin||Operating Margin|
|McCormick & Company||$2.9 B||$230 M||7.21%||12.15%|
|International Flavors & Fragrances (IFF) ||$2.3B||$240.4||10.42%||15.99%|
|ACH Food Companies (Private)||-||-||-||-|
|Tone Brothers (Private) ||$61.3 M||-||-||-|