HUNT VALLEY'S McCORMICK
McCormick pivots to reflect ‘new reality’ in pricing
Responding to recent changes in consumer behavior, McCormick & Co., Inc. is pivoting its approach to marketing and innovation, Brendan Foley, president and chief operating officer of McCormick, said Sept. 8 in a presentation at the Barclays Consumer Staples Conference in Boston.
Mr. Foley said the company has seen consumer behavior change significantly in the first half of 2022, with an “inflection point in consumer sentiment” in the last three months. He said the company’s most recent data showed a substantive increase in the percentage of consumers thinking about ways to save money. In August, 70% of consumers said they were looking for ways to cut spending compared to 50% in May, he said.
“That’s a big jump,” Mr. Foley said. “And there’s a real effort to just tighten the budget across all aspects of where they see their household spending.
“But the biggest pain points, and this is not going to be a surprise to anybody in this room, has been really at the gas pump and at grocery stores. And having said all of that, still, there are even more consumers now today than before saying it’s still more economical to cook at home more often and eat at home more often.”
McCormick is reckoning with these data by pivoting its strategies in marketing and innovation, Mr. Foley said.
He said the company has increased A&P for the remainder of 2022 to enhance messaging that speaks to the pressures consumers are facing.
“We keep reminding consumers, and it’s important to do so, that, frankly, the joy of any meal is flavor,” he said. “And that flavor really just costs pennies per meal.”
The company is also focusing on “value innovation,” Mr. Foley said.
“We’re just launching this month what is an opening price point using the Lawry’s brand on 10 everyday spices,” he said. “But what’s great about that is, as we’ve seen inflation move around the shelf, opening price points and price pockets change.
“So we almost have to now reflect what is the new reality in terms of the pricing range in shelf. And this is an opportunity to kind of come in with something at a lower level for consumers. And that brand really resonates, certainly with middle-and low-income households.”
Earlier this summer McCormick launched a dollar price point with a resealable pouch for its Montreal Steak, Old Bay and Lawry’s seasoning blends. Mr. Foley said the company has seen success with this introduction in the discount channel.
He also noted growth in the large-pack format, Super Deal. While the large-pack format is not a new product launch, the company is seeing 10% unit growth for the product, he said.
“People are looking just for more value,” Mr. Foley said. “And so we’re driving a lot more increased distribution behind sizes like that.
“We definitely believe that there will continue to be a lot of pressure on the consumer, especially lower- and middle-income households. Definitely, it will continue in the near term but probably a little bit longer than that actually, depending on what your position is on the economy.”