Hot Stuff: Lawrence Kurzius Spices Up McCormick’s Business

Around the CEO of McCormick & Co. Lawrence kurzius quiet buzzing many scientists and nutritionists in white coats and protective glasses, filling vials and checking the contents of noses. 

On the wall behind them is a herb garden, which decorates the room with fresh sprouts of mustard, amber peas, Brazilian parsley and other spices. 

The 6-foot-3 Alabama native is in his element, his slow South wind slipping as aides break down the lab’s features: a rotary evaporator that extracts flavor without heat; the centrifuge is powerful enough to turn a thick meaty seasoning in the crystal-clear and delicious liquid; the Bank of eight induction burners.

 «We take the science of taste very seriously,» says Curtius, a 16 — year veteran of the world’s largest spice supplier, explaining how he abandoned initial plans for a more rigorous kitchen. «

The whole industry is looking at us to give an idea of what will happen next. I told them it can’t be good enough because it’s not expensive enough.»

Since Curtius, 61, took over three years ago, sales have surged 26 percent to $ 5.4 billion, and the company’s stock price, based outside Baltimore, has doubled. It was market performance and a reputation for creativity in the commodity industry that allowed Curtius to rank 37th in our first annual list of America’s 100 most innovative corporate leaders.

Franks Redhot
Frank Redhot is the main driver of McCormick’s organic sales growth this year.
Much of that growth came from the purchase of food assets by the us-based Reckitt Benckiser Group for $ 4.2 billion two years ago. That was more than the combined value of all acquisitions made in McCormick’s 130-year history, and investors hated it, falling 5% on the day it was announced. But in retrospect, it was a brilliant move. This gave Curtius control of a variety of staples from the supermarket, including French mustard, barbecue cattleman sauce, and Frank’s RedHot. And it raised the business with the tenth largest seller of spices second only to Kraft Heinz.

Curtius joined McCormick in 2003 and was appointed head of its consumer business in 2013, the year 3G Capital, an active zero-budget investment group, bought Heinz for $ 28 billion. Two years later, with Berkshire Hathaway, the investment group merged Heinz with Kraft in a $ 55 billion deal.

«We said,’ No one is going to cut costs as well as 3G. We will go in the exact opposite direction, ‘» said Curtius, adopting a plan to double investment in the brand when he was appointed CEO in 2016.

Frank RedHot was the secret component of Reckitt’s deal. Cooking vinegar is America’s favorite hot sauce, which is known to be used to spice Buffalo-style chicken wings. Army cooks-chefs have learned the scent of Frank. Once they caught on to its essence, McCormick rolled out a grocery basket with new products: dry grilling condiments and cooking flavorful sauces, new Frank brand sauces like chili lime, and a line of pre-cooked Buffalo wings, McCormick’s first major foray in frozen form. — food space.

«Frank was trapped in a non-food company,» said Curtius, who says he wants to make it the best-selling hot sauce in the world. «We have a better understanding of the science behind the fragrance than the previous owner. That’s what we do.»

Curtius spent 12 years as CEO of Zatarain and led its sale to McCormick in 2003. THE TOURS MCCORMICKS
In doing so, McCormick captured something that’s almost unheard of in the packaged-food industry these days: organic sales growth. It’s tiny — a slight 3% increase last quarter — but it’s impressive in an industry that’s largely falling or worse. (Kraft Heinz has already written off nearly $ 17 billion this year.) McCormick’s 22 percent Ebitda margin is one of the best in its class.

McCormick bottles are ubiquitous on the spice counters of most American cuisines, and condiments like Old Bay still make up the bulk of sales. The brand controls 40% of the U.S. spice market and 20% of the global market. But it’s a slow commodity business, and Curtius makes sense to turn his attention elsewhere.

Changing tastes and patterns of food consumption are rewriting industry compilations. Generation Z, 7 to 22 years old, which today make up the most diverse consumer group in the U.S., is a demographic hobbyist that distributes a huge amount of purchasing power across a wide range of tastes.

That’s good news for a spice company, but young Americans also place a premium on transparency of sources when buying food. With more than 90 McCormick businesses around the world and levels of institutional structures helping to stabilize costs, it would be difficult for the company to label any of its spices as «fair trade» or «single origin.» McCormick took three years just to turn their line of gourmet organic.

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