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McCormick & Co. seeks a boost from iconic hot sauce and mustard brands

McCormick & Co. is aiming to leverage its newly acquired brands of French's mustard and Frank's RedHot sauce with new products carrying those brand names.
McCormick & Co. is aiming to leverage its newly acquired brands of French's mustard and Frank's RedHot sauce with new products carrying those brand names.(HANDOUT)

When consumers think of McCormick & Co., they think spices on the grocery shelf in little bottles with a red top and red-and-yellow label.

But the Sparks-based flavorings giant, which sells to everyone from consumers to restaurants and industrial food makers, has evolved into a family of brands with such well-known names as Old Bay, Zatarain's, Stubb's and now French's and Frank's RedHot.

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McCormick folded those two iconic brands into its stable of products in a $4 billion deal last year, making its first big push into the U.S. condiment market. French's became its No. 2 brand and Frank's No. 3 behind McCormick-branded spices in terms of sales.

Now as McCormick seeks to capitalize on the acquisition that gave it the No. 1 U.S. mustard and the No. 1 U.S. hot sauce, it plans to leverage those brands and their popularity into greater sales not just in the United States, but around the world. Through new takes on old products, new advertising campaigns and expanded distribution, McCormick hopes U.S. and global consumers will take a fresh look at the mustard and hot sauce.

"Our company is very focused on the growth agenda for French's and Franks," said Jill Pratt, vice president of marketing for U.S. consumer products.

Young consumers are expected to drive that growth.

"Millennials are really interested in bold and spicy flavors," said Jill Pratt, vice president of marketing for U.S. consumer products. "They like to have new flavor experiences. And they like products with natural and clean ingredients."

McCormick & Co. will move into its newly constructed headquarters in Hunt Valley this summer.

McCormick wants to extend uses for each brand and is touting the condiments' natural ingredients, health benefits and versatility for use as is or in recipes. When the company announced first-quarter earnings last month, CEO Lawrence Kurzius told investors that a new consumer campaign will reinforce French's as "pure" and "the trusted family favorite."

"We will go beyond the bun and reframe mustard as better for you," Kurzius said.

This summer, McCormick is launching its biggest grilling campaign ever for Memorial Day across all its condiment brands, both in stores and on social media channels. It will include products such as Grill Mates marinade mixes and Lawry's and Stubb's barbecue sauces and marinades, with French's and Frank's playing a big role. It will include the irreverent Frank's ads that for about a decade have featured the tagline, "Frank's RedHot. I put that [bleep] on everything."

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Beyond the grilling campaign, Pratt said, McCormick is developing new creative campaigns for both Frank's and French's that likely will be out within the next six months.

McCormick also plans to boost Frank's online presence, which Kurzius said had been almost non-existent under its previous owner.

Consumers soon will see the familiar French's and Frank's label on a range of new products.

French's is offering packaged crunchy veggie toppings, one made with cucumbers and another with red peppers, and flavored mustards including Stone Ground Dijon and Honey Mustard Dipping Sauce.

Frank's new products include a refrigerated Buffalo Chicken Dip, sold at warehouse club stores, Ranch Dip and Queso Dip recipe mixes, and a dry seasoning blend suggested for spicing up fries, baked potatoes and eggs. Those products are part of a strategy to offer new flavors and expand beyond liquid hot sauce with the dry seasoning and recipe mix lines, Kurzius said during the conference call.

McCormick & Co. sees a global market for Frank's hot sauce and French's mustard brands as part of its $4 billion acquisition of Reckitt Benckiser's food division.

McCormick took on the brands when it made its biggest acquisition ever last year, buying the food business of United Kingdom-based Reckitt Benckiser Group for $4.2 billion and betting big that brands well known in the U.S. would appeal to consumers around the world.

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"It was a good and complementary acquisition for them," said Brittany Weissman, a consumer analyst with Edward Jones, "It can be a nice tailwind for sales over the next couple of years.

The deal gave McCormick a more diverse product mix and less exposure to the ups and downs of the increasingly competitive U.S. spice market, experts have said. With Frank's and French's, products in the McCormick's condiment portfolio now can be found in two-thirds of American homes, McCormick says.

"We continue to be pleased with our progress and with the early results from Frank's and French's," Kurzius said after the company announced first-quarter earnings at the end of March.

McCormick took control of each brand's operations on Feb. 1.

"Despite being number one in hot sauce, we believe there remains significant upside for Frank's in awareness, trial and household penetration," he said.

Hot sauce as a complement to food and in cooking is gaining traction, with the category growing more than 25 percent globally since 2012, McCormick says. A March report by Orbis Research attributes the "staggering" growth in global hot sauce sales to increased purchasing power around the world and improvements in distribution systems.

The company also is investing in consumer research to convince retailers to boost shelf space for Frank's and French's products. And it's working with food makers and chain restaurants to add or expand the brands as flavorings and on tabletops. McCormick's is taking similar steps with existing and new retail and food service customers outside the U.S.

This past week, Pratt said she and other McCormick marketing executives met in London to address one key question: "How do we expand French's and Frank's in a rapid and smart way across the globe?

"The brands are so strong and recognizable and [there is] universal appeal of spicy, bold flavor," she said.

McCormick & Co., the global flavorings firm based in Sparks, reported record earnings for the fourth quarter of its 2017 fiscal year.

Analysts said McCormick has the scale and supply chain systems in place to boost sales outside the U.S. and Canada and to expand in the food service and restaurant business, starting with existing food service customers.

"There is an opportunity to expand internationally, to bring some of these brands to markets where they haven't been and expand distribution where there is not a big presence," Weissman said.

Additionally, she said, McCormick is "already working with restaurants to put salt and pepper on the table. They can add French's mustard and Frank's RedHot."

Timing is on McCormick's side, not only as consumers seek additional flavor options and healthier choices, but as social media is growing as an effective marketing tool, said Jonathan Feeney, managing partner at Consumer Edge in New York.

"You don't have to buy an ad in the Super Bowl to reach consumers," he said.

But the next phase of growth brings some risk. The company will need to expand the product line and boost sales without diluting the strength of the brands, he said.

Because the company took on debt to fund the purchase, "this has to work," Feeney said.

"They haven't managed this brand before," he said. "But it's a company with a great track record of growth."

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