McCormick and Co 1Q14 Earnings Call Notes

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This post is part of a series of posts called “Company Notes.” These posts contain quotes and exhibits from earnings calls, conference presentations, analyst days and SEC filings.

Weather was unfavorable for grilling

“There was a later start to the grilling season. The weather was not favorable for grilling. We’re expecting a pretty good grilling season as we go through the summer and we’re planning to extend it through the third quarter and even through Labor Day and to tailgate season so we’re pretty encouraged.”

Seeing some share creep from tiny branded spice companies

“Private label is more flat. Most of the — we have one larger branded competitor and that competitor is relatively flat. And so what we are seeing is very small inroads from a number of small and regional competitors that are gaining one-tenth of a share point or two-tenths of a share point. Their overall share base is still less than 1% or 2%, I think as I looked at the most recent period.”

Strong growth international, weak growth domestic

“We had the strong growth in the international markets and then we had obviously the U.S. consumer results that you saw as we reported. It’s too early for us to be that specific”

Half TV half digital and PR for marketing spend

“Where we are spending our money is about half in TV half in digital and PR and so we are encouraged by what we are seeing. What you’ll see in the back half is additional support for our big programs like holiday, fall cooking and also some digital initiatives that will help to drive some of our new product sales.”

UK is particularly tough for them

“Yeah the UK market is specifically tough market. There has been a lot of press on the large customers there and some of their challenge is specific to what we’re doing in our business. It’s very similar to what we’re doing in the U.S. with new products and with supporting our brands with advertising.”

There is some inflation, but not anticipating taking price

“we’re not anticipating any near term pricing, any new near term pricing in our consumer business at this point…There is some upward cost inflation specifically in commodities like pepper and vanilla and we’re working with our CCI programs to help to try to offset those. Obviously if it gets excessive then we’ll readjust our thinking. But certainly we’re not anticipating anything before the end of 2014.”

Anticipating 2-3% inflation

“We said it was in the low single digits, 2% to 3%.”

Snack foods customers innovating

“Our snack customers are continuing to do pretty well and continuing to innovate and we’re seeing that reflected.”

Packaged foods not doing so well

“Our packaged food customers are struggling with core volume and part of the way that they are trying to overcome that is with new product innovation that we are working with them on.”

Customers are pushing more innovation into the pipeline

“We have a stronger innovation pipeline this year than we had at this time last year. So we continue to have a good outlook on that obviously as customers adjust their thinking and focus more on promotional spending or on driving different core products, they may change that.”

Recovery in China QSR

“In China what we are seeing is a recovery in QSR, driven I think a lot by our customers having an increased frequency promotions and limited time offers to bring consumers back to the stores. ”

New businesses should be grown with a pay as you go philosophy

“we think India is certainly a longer term play…We’ve again taken the philosophy that we generally take in a market like this that we pay as we go. So as the business earns its ability to invest then we’ll make the investment”