McCormick See PL Sales Rise As it Increases Brand Support

September 30, 2011
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McCormick & Company Inc. saw sales of its private label and branded products rise in its third quarter even as it increased prices in both segments and stepped up marketing for its branded offerings to regain market share lost to private label. Marketing spending rose 27 percent in the quarter compared with the same period last year, the spice company said.
“In the third quarter, we…had a pickup in sales of private label, due in part to our distribution gains in 2011. We are monitoring consumption trends closely and are developing new tools to help optimize price and promotions on brand and private label,” said Gordon Stetz, McCormick’s CFO, during an earnings conference calls Sept. 28.
 “Many consumers are struggling in this economy,” McCormick CEO Alan Wilson told analysts. “They're making tough choices and some are altering their shopping patterns. In the U.S. and the U.K., we've seen a shift in private label sales for basic ingredients like pepper, garlic and cinnamon, and we've seen a shift in our sales towards alternative channels like dollar stores and warehouse clubs. In response, we continue to gain new distribution in all channels.”
McCormick’s sales volume have risen this year despite a 5 percent hike in prices, he added.  “The increase was led by our Americas business and was broad-based with increases in grilling products, dry seasoning mixes, authentic ethnic cuisines, Zatarain's, Simply Asia and Thai Kitchen, as well as our sales of the private label products that we produce for some of our major customers,” Wilson said. “We've begun to implement additional price increases in both brand and private label items. In North America, the average increase will be about 5 percent.“

Sparks, Md.-based McCormick reported quarterly net income of  $92 million compared with $102.4 million in the same quarter last year, a drop attributable to tax-related matters. Net sales for the quarter rose to $930.4 million compared to $794.6 million in the same period last year.

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