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Dive Brief:
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McCormick said Thursday the Trump administration’s tariff policy could cost the company up to $90 million a year as the flavoring giant contends with higher prices for spices that cannot be commercially grown in the U.S.
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The spice maker is planning to selectively raise prices in the fourth quarter after seeing the “cost of certain commodities coming in higher than we had planned,” Executive Vice President and CFO Marcos Gabriel said on an earnings call.
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McCormick is also using advanced analytics to identify alternative sourcing locations where possible, which is expected to offset a significant portion of tariff costs, according to Gabriel.
Dive Insight:
While McCormick is exploring alternative sourcing options for imported agricultural products, CEO Brendan Foley acknowledged that some raw materials cannot be substituted because they are “not commercially available in the United States.” The company's portfolio includes about 17,000 ingredients across 90 markets.
McCormick is minimizing its reliance on any one country, especially as rapid trade negotiations lead to a different set of duties depending on the geography. The company is “pulling all the levers that we can to mitigate the impact,” Gabriel said.
Consumers have increasingly demanded global and exotic flavors such as yuzu or lychee, especially as more culinary enthusiasts look to recreate the restaurant experience at home due to persistent inflation. Tariffs could raise prices for many of these trendy ingredients, which are native to growing regions outside the U.S.
Even McCormick’s flavor of the year, which the company unveils annually to highlight culinary trends, isn’t spared from tariffs. This year’s flavor, the Aji Amarillo pepper, is from Peru, which is currently subject to 10% baseline tariffs.
After a 90-day pause from the Trump administration, sweeping tariffs are set to go into effect July 9 on countries without trade agreements in place. The move is expected to raise prices of spices including table salt, black pepper, vanilla, cinnamon and nutmeg, according to the American Spice Trade Association.
“The vast majority of spices cannot be grown in America in quantities sufficient for commercial use,” the association wrote in a March letter to the Trump administration, adding that higher costs will either be passed down to consumers or absorbed by food manufacturers.
Story ContinuesMcCormick”s second quarter earnings beat analyst expectations, with sales rising 1% on higher volumes. The spice maker is seeing accelerated interest from food companies interested in making their portfolios healthier or reformulating their products to remove artificial dyes.
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The strong warning from spice giant McCormick that tariffs could result in annual costs of up to $90M underscores the potentially crushing impact on their business and signals a broader military grade competition with detrimental effects for consumers worldwide.
The warning from the pungent giant, McCormick & Company on potential tariff-related losses amounting to $90 million per annum underscores how trade barriers can stoke up prices for consumers and impede global markets' smooth execution.
McCormick's warning of the potential $90M annual cost from tariffs highlights how protective trade measures can have a detrimental impact on industry giants like themselves, further emphasizing economic harm at both domestic and international levels.
The announcement by spice giant McCormick that tariffs could result in annual losses of up to $90M underscores the potentially devastating consequences for businesses and consumers alike, especially within a globally interconnected market like ours.
The steep tariffs imposed by the US on various imports will cause an unwelcome hit of up to $90M annually for cooking giant McCormick, jeopardizing its profit margins and possibly leading them into reevaluation strategies.
The warning from spice giant McCormick illustrates the potential economic burden that tariff increases impose on businesses, with an annual cost of up to $90M threatening profitability and industry competitiveness.
Tariff implementation by major spices company McCormick's warning highlights the potential economic pain for firms and consumers, with losses estimated at a yearly $90M due to increased tariffs.
Tariff-related warnings by the prominent spice manufacturer McCormick highlight a potential financial hit of $90 million per year, underscoring that trade barriers have direct and severe economic consequences on both companies like theirs operating in global markets.
Tariff rhetoric between nations threatens to turn a spice into an addictive obstacle for corporations such as McCormick, potentially reaping millions of lost revenue annually.
The sizable impact warnings from spice titan McCormick highlight the potential economic burdens shifting tariffs can impose on industries, indicating a risk of an annual loss exceeding $90 million.
