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McCormick (MKC) Benefits From Acquisitions & Cost Savings
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McCormick & Company (MKC - Free Report) is increasing its presence through acquisitions to enhance its portfolio. The global leader in flavors is capitalizing on a sustained shift to cooking more at home, higher digital engagement, clean and flavorful eating and trusted brands. Its effective cost-saving plans are yielding amid rising inflationary pressure.
Let’s delve deeper.
Prudent Acquisitions Driving Growth
The Zacks Rank #2 (Buy) company has been undertaking strategic acquisitions to drive growth. 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.
Image Source: Zacks Investment Research
Several other companies in the food space, like The Kraft Heinz Company (KHC - Free Report) , Hormel Foods Corporation (HRL - Free Report) and Tyson Foods, Inc. (TSN - Free Report) , are benefiting from acquisitions.
In April 2022, Kraft Heinz acquired a majority stake in a Brazil-based condiments and sauces company — Companhia Hemmer Industria e Comercio ("Hemmer"). The buyout widened Kraft Heinz's International Taste Elevation platform and enhanced its presence across emerging markets. In January 2022, KHC acquired an 85% stake in Germany-based Just Spices GmbH (“Just Spices”). The buyout enhanced its direct-to-consumer operations and go-to-market expansion.
Hormel Foods is strengthening its business through strategic acquisitions. In June, HRL acquired the Planters snacking portfolio from Kraft Heinz. Prior to this, it acquired Texas-based pit-smoked meats company Sadler's Smokehouse in March 2020. The buyout was in sync with Hormel Foods’ initiatives to strengthen its position in the foodservice space.
Tyson Foods is focused on expanding into international markets as part of its strategic growth plan. In Jul 2022, TSN announced its strategic partnership with Tanmiah Food Company (Tanmiah) — a leading Middle East provider of fresh and processed poultry, other processed meat products, animal feed and health products. The acquisitions will allow Tyson Foods to access poultry supplies across Saudi Arabia to cater to the rising protein demand in the Middle East and other markets.
What Else is Working Well for McCormick?
Meanwhile, McCormick regularly enhances products through innovation to remain 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. Additionally, the company is on track to augment robust marketing support for its products. New product launches are integral to the company’s growth. Management is leveraging its broad technology platform to develop clean-label, organic and better-for-you solutions amid rising consumer’s health consciousness.
McCormick’s cost savings are likely to keep aiding growth. The company is focused on saving costs and enhancing productivity through the ongoing Comprehensive Continuous Improvement (“CCI”) program. Started 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 well-chalked saving efforts and the aforementioned upsides will likely keep McCormick well-positioned in the food space.
MKC’s stock has increased 7.2% in the past three months compared with the industry’s 7.9% growth.
Image: Bigstock
McCormick (MKC) Benefits From Acquisitions & Cost Savings
McCormick & Company (MKC - Free Report) is increasing its presence through acquisitions to enhance its portfolio. The global leader in flavors is capitalizing on a sustained shift to cooking more at home, higher digital engagement, clean and flavorful eating and trusted brands. Its effective cost-saving plans are yielding amid rising inflationary pressure.
Let’s delve deeper.
Prudent Acquisitions Driving Growth
The Zacks Rank #2 (Buy) company has been undertaking strategic acquisitions to drive growth. 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.
Image Source: Zacks Investment Research
Several other companies in the food space, like The Kraft Heinz Company (KHC - Free Report) , Hormel Foods Corporation (HRL - Free Report) and Tyson Foods, Inc. (TSN - Free Report) , are benefiting from acquisitions.
In April 2022, Kraft Heinz acquired a majority stake in a Brazil-based condiments and sauces company — Companhia Hemmer Industria e Comercio ("Hemmer"). The buyout widened Kraft Heinz's International Taste Elevation platform and enhanced its presence across emerging markets. In January 2022, KHC acquired an 85% stake in Germany-based Just Spices GmbH (“Just Spices”). The buyout enhanced its direct-to-consumer operations and go-to-market expansion.
Hormel Foods is strengthening its business through strategic acquisitions. In June, HRL acquired the Planters snacking portfolio from Kraft Heinz. Prior to this, it acquired Texas-based pit-smoked meats company Sadler's Smokehouse in March 2020. The buyout was in sync with Hormel Foods’ initiatives to strengthen its position in the foodservice space.
Tyson Foods is focused on expanding into international markets as part of its strategic growth plan. In Jul 2022, TSN announced its strategic partnership with Tanmiah Food Company (Tanmiah) — a leading Middle East provider of fresh and processed poultry, other processed meat products, animal feed and health products. The acquisitions will allow Tyson Foods to access poultry supplies across Saudi Arabia to cater to the rising protein demand in the Middle East and other markets.
What Else is Working Well for McCormick?
Meanwhile, McCormick regularly enhances products through innovation to remain 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. Additionally, the company is on track to augment robust marketing support for its products. New product launches are integral to the company’s growth. Management is leveraging its broad technology platform to develop clean-label, organic and better-for-you solutions amid rising consumer’s health consciousness.
McCormick’s cost savings are likely to keep aiding growth. The company is focused on saving costs and enhancing productivity through the ongoing Comprehensive Continuous Improvement (“CCI”) program. Started 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 well-chalked saving efforts and the aforementioned upsides will likely keep McCormick well-positioned in the food space.
MKC’s stock has increased 7.2% in the past three months compared with the industry’s 7.9% growth.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.