McCormick reported its third quarter on 1 October. Net sales rose 17 per cent on the year, with a one per cent currency benefit and a 14 per cent contribution from the McCormick de Mexico acquisition. Organic sales grew about 2 per cent, driven by price. Gross profit rose 150 million dollars to 794.9 million, with gross margin up 190 basis points to 39.3 per cent. The company reaffirmed its full-year outlook.
The sentence that explains the quarter is not in the numbers. It is in the behaviour the numbers describe. People are eating at home.
Inflation, tariffs and the Iran war have pushed households to cut discretionary spending, and the first thing to go in almost every budget is the restaurant meal. The second thing is the expensive cut of meat. What replaces both is a cheaper protein, some vegetables, and whatever makes them taste like a meal rather than a sacrifice.
McCormick has articulated this for several quarters with unusual clarity. Its categories cost a fraction of what proteins, produce and carbohydrates cost, and deliver most of the flavour. Low and middle income households are making more frequent trips with fewer items, buying larger pack sizes, and stretching a meal across more occasions. In that world, a spice company is not a luxury supplier. It is the thing that makes the economising survivable.
This is the part of a downturn that gets reported badly. The story is always written as contraction, as though everyone loses at the same time in the same direction. What actually happens is that spending relocates. The restaurant’s lost Friday becomes somebody’s chicken thighs, somebody’s paprika, somebody’s bag of rice, and a slightly better bottle of olive oil than the household would normally buy because the saving on the restaurant was eighty pounds and the upgrade costs three.
A cafe owner can read this ledger directly. The customer who stops buying lunch does not stop buying coffee. The customer who cancels the weekend brunch habit still comes in on a Tuesday for the thing that costs four pounds and makes the morning tolerable. Falling discretionary income does not kill small indulgences. It concentrates them, because the small indulgence becomes the only one left.
The practical move is to know which column you are in and sell accordingly. If you are the Friday restaurant, this is a hard year and the work is retention, occasion-building and giving people a reason the meal cannot be reproduced at home. If you are the paprika, this is a good year, and the work is being on the shelf, in the right pack size, at a price that reads as sense rather than opportunism.
McCormick’s margin expansion came alongside the price increases, which is the part a sceptic should hold onto: the organic growth is price rather than volume. The company is earning more per unit in a period when the consumer is defined by caution, and it has reaffirmed guidance rather than reached for it.
Everybody in the chain is trading down to something.
Somebody in the chain is selling the something.
Source: McCormick & Company, “McCormick Reports Solid Third Quarter Performance and Reaffirms 2026 Outlook”
