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McCormick (MKC) Poised on Innovations & Prudent Acquisitions
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McCormick & Company (MKC - Free Report) is capitalizing on healthy and flavorful cooking, increased digital engagement and purpose-minded practices. The global leader in flavor is benefiting from a robust recovery in the away-from-home demand. The Zacks Rank #2 (Buy) company’s strategic buyouts and effective cost-saving plans are yielding.
McCormick regularly enhances products through innovation to stay competitive and tap the evolving demand for new flavors, spices and herbs. Aided by a sturdy brand image, McCormick enjoys strong retail acceptance for its new products. The company is on track to augment robust marketing support for its products. New product launches are an important part of the company’s growth. The company is optimistic about its robust pipeline of innovation in 2022. Management is leveraging its broad technology platform to develop clean label, organic and better-for-you solutions amid rising consumer’s health consciousness. The company remains well aligned with consumer demand for flavorful, healthy eating and developed a range of natural and organic offerings. In this regard, the company’s Flavor Real platform offers organic, non-GMO and gluten-free products. The acquisition of FONA (December 2020) has bolstered the company’s clean and natural platform.
Expansion through Acquisitions
McCormick increased its presence through acquisitions to enhance its portfolio. The company bought a 100% stake in FONA International, LLC and some of its affiliates. FONA’s diverse portfolio helps McCormick bolster its value-add offerings and expand the flavor solutions segment into attractive categories. In November 2020, McCormick completed the acquisition of the parent company of Cholula Hot Sauce — a premium Mexico-based hot sauce brand. McCormick believes that the buyout of Cholula accelerates its growth potential across the condiment platform and widens the product portfolio in the hot sauce category.
Several other companies in the food space are benefiting from acquisitions like Post Holdings, Inc. (POST - Free Report) , Hormel Foods Corporation (HRL - Free Report) and The Hershey Company (HSY - Free Report) .
During the second quarter of fiscal 2022, Post Holdings’top line included $102.1 million in net sales from acquisitions. These acquisitions include the Private label ready-to-eat (PL RTE) cereal business, the Egg Beaters liquid egg brand, the Almark Foods business and related assets and the Peter Pan nut butter brand. On Apr 5, 2022, POST acquired Lacka Foods Limited. Lacka Foods is a U.K.-based marketer of high protein, ready-to-drink (RTD) shakes under the UFIT brand. Also, on Feb 1, 2021, POST acquired Almark Foods, which is renowned for its hard-cooked and deviled egg products and provides conventional, organic and cage-free products. On Jan 25, Post Holdings acquired Conagra Brands’ Peter Pan peanut butter brand.
Hormel Foods is strengthening its business on the back of strategic acquisitions. In June 2021, the company acquired the Planters snacking portfolio. Prior to this, HRL acquired Texas-based pit-smoked meats company Sadler's Smokehouse in March 2020. The buyout is in sync with Hormel Foods’ initiatives to strengthen its position in the foodservice space.
Hershey is undertaking buyouts to augment portfolio strength and boost revenues. In December 2021, Hershey acquired Dot’s Pretzels LLC — the owner of Dot’s Homestyle Pretzels — a leading brand in the pretzel category. The addition of Dot’s Pretzels is a perfect match for HSY’s growing salty snacking portfolio. The company also acquired Pretzels Inc. from an affiliate of Peak Rock Capital. The acquisition expands Hershey’s snacking and production capabilities.
Savings Fuel Growth
McCormick is focused on saving costs and enhancing productivity through the ongoing Comprehensive Continuous Improvement (CCI) program. Starting in 2009, McCormick’s CCI program helped the company reduce costs and enhance productivity. It has used CCI savings to increase investments, leading to higher sales and profits. Management expects to achieve CCI-led cost savings of nearly $85 million in 2022.
We believe that such cost savings and the aforementioned upsides are likely to help the company keep its growth story going. MKC’s stock has increased 4.3% in the past year against the industry’s 7.4% decline.
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McCormick (MKC) Poised on Innovations & Prudent Acquisitions
McCormick & Company (MKC - Free Report) is capitalizing on healthy and flavorful cooking, increased digital engagement and purpose-minded practices. The global leader in flavor is benefiting from a robust recovery in the away-from-home demand. The Zacks Rank #2 (Buy) company’s strategic buyouts and effective cost-saving plans are yielding.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Image Source: Zacks Investment Research
Product Innovations Fuel Growth
McCormick regularly enhances products through innovation to stay competitive and tap the evolving demand for new flavors, spices and herbs. Aided by a sturdy brand image, McCormick enjoys strong retail acceptance for its new products. The company is on track to augment robust marketing support for its products. New product launches are an important part of the company’s growth. The company is optimistic about its robust pipeline of innovation in 2022. Management is leveraging its broad technology platform to develop clean label, organic and better-for-you solutions amid rising consumer’s health consciousness. The company remains well aligned with consumer demand for flavorful, healthy eating and developed a range of natural and organic offerings. In this regard, the company’s Flavor Real platform offers organic, non-GMO and gluten-free products. The acquisition of FONA (December 2020) has bolstered the company’s clean and natural platform.
Expansion through Acquisitions
McCormick increased its presence through acquisitions to enhance its portfolio. The company bought a 100% stake in FONA International, LLC and some of its affiliates. FONA’s diverse portfolio helps McCormick bolster its value-add offerings and expand the flavor solutions segment into attractive categories. In November 2020, McCormick completed the acquisition of the parent company of Cholula Hot Sauce — a premium Mexico-based hot sauce brand. McCormick believes that the buyout of Cholula accelerates its growth potential across the condiment platform and widens the product portfolio in the hot sauce category.
Several other companies in the food space are benefiting from acquisitions like Post Holdings, Inc. (POST - Free Report) , Hormel Foods Corporation (HRL - Free Report) and The Hershey Company (HSY - Free Report) .
During the second quarter of fiscal 2022, Post Holdings’top line included $102.1 million in net sales from acquisitions. These acquisitions include the Private label ready-to-eat (PL RTE) cereal business, the Egg Beaters liquid egg brand, the Almark Foods business and related assets and the Peter Pan nut butter brand. On Apr 5, 2022, POST acquired Lacka Foods Limited. Lacka Foods is a U.K.-based marketer of high protein, ready-to-drink (RTD) shakes under the UFIT brand. Also, on Feb 1, 2021, POST acquired Almark Foods, which is renowned for its hard-cooked and deviled egg products and provides conventional, organic and cage-free products. On Jan 25, Post Holdings acquired Conagra Brands’ Peter Pan peanut butter brand.
Hormel Foods is strengthening its business on the back of strategic acquisitions. In June 2021, the company acquired the Planters snacking portfolio. Prior to this, HRL acquired Texas-based pit-smoked meats company Sadler's Smokehouse in March 2020. The buyout is in sync with Hormel Foods’ initiatives to strengthen its position in the foodservice space.
Hershey is undertaking buyouts to augment portfolio strength and boost revenues. In December 2021, Hershey acquired Dot’s Pretzels LLC — the owner of Dot’s Homestyle Pretzels — a leading brand in the pretzel category. The addition of Dot’s Pretzels is a perfect match for HSY’s growing salty snacking portfolio. The company also acquired Pretzels Inc. from an affiliate of Peak Rock Capital. The acquisition expands Hershey’s snacking and production capabilities.
Savings Fuel Growth
McCormick is focused on saving costs and enhancing productivity through the ongoing Comprehensive Continuous Improvement (CCI) program. Starting in 2009, McCormick’s CCI program helped the company reduce costs and enhance productivity. It has used CCI savings to increase investments, leading to higher sales and profits. Management expects to achieve CCI-led cost savings of nearly $85 million in 2022.
We believe that such cost savings and the aforementioned upsides are likely to help the company keep its growth story going. MKC’s stock has increased 4.3% in the past year against the industry’s 7.4% decline.