When spices and flavorings manufacturer McCormick acquired Frank’s RedHot and French’s mustard from consumer goods giant Reckitt Benckiser a year ago, the purchase was met with little fanfare and some criticism from Wall Street.
But McCormick Chairman, President and CEO Lawrence Kurzius saw it differently, he told CNBC on Monday.
“One of the things we said when we bought these brands was that these were fantastic food brands that were trapped at a non-food company,” Kurzius told “Mad Money” host Jim Cramer in an interview. “You put them into our business; we’re the experts in flavor, we’ve gotten tremendous placement in restaurants, we’ve been able to expand at the shelf. It’s really been good for us.”
McCormick’s second-quarter earnings report managed to sway once-doubtful investors as well. The double-digit sales and profit growth helped the spice maker’s stock surge nearly $10 per share on the day of the report.
Kurzius added on Monday that if investors had taken Cramer’s advice and bought McCormick’s stock after Kurzius’ year-ago appearance on “Mad Money,” they would’ve beaten the S&P 500 by 10 basis points.
One of the main drivers of McCormick’s recent strength has been Frank’s RedHot, a hot sauce that resonates with millennials and gained notoriety for its marketing slogan, “I put that s— on everything.”
On the conference call, Kurzius said a national TV campaign to promote Frank’s was planned for the fall and said he believed Frank’s RedHot could eventually be the No. 1 hot sauce in the world.
“Frank’s hot sauce actually hasn’t been on television in over seven years,” Kurzius told Cramer. But with its prevalence in the digital world and on social media, it’s already become something of a lifestyle, he added.
“It’s especially a lifestyle brand for millennials,” the CEO said. “Literally, the younger you are, the more likely you are to be a consumer. This is one of the things that really appealed to us about Frank’s.”
And McCormick’s various growth drivers will stay intact despite the Trump administration’s trade disputes, some of which have begun to affect segments of the food industry, Kurzius said.
“French’s ketchup, for the Canadian market, we actually make it in Canada with Canadian tomatoes, so it doesn’t have a tariff,” the CEO said. “Now, in the U.S., we make it here in the U.S. as well. That goes to our philosophy of producing in the markets where we sell the product, which I think is going to help us out as we go through this whole uncertainty around tariffs.”
Shares of McCormick were down 0.53 percent at Monday’s close, settling at $117.20.
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