Brendan M. Foley
Chairman, President, and Chief Executive Officer at McCormick & Company, Incorporated
Good morning, everyone, and thank you for joining us. I am pleased to report on our strong performance for the fourth quarter and fiscal year 2024, an important year for McCormick, in which we built momentum and strengthened our leadership and differentiation returning to quality volume-led growth. We invested in our core categories, drove improved unit and volume share trends, while also expanding our margins and delivering strong earnings growth. Our results demonstrate the success of our prioritized investments in the areas that we believe will drive the most value and set us up to continue to drive momentum for 2025 and beyond.
McCormick remains a growth company. We have robust plans that leverage the demand for flavor and the strength of our brands. Our strategies have proven to be effective in driving growth and compounding that growth over the years, and I remain confident that we have the right leadership team in place and engaged employees globally to deliver on our near-term and long-term objectives with industry-leading performance.
This morning, I will begin my remarks with an overview of our fourth quarter, focusing primarily on top line drivers. Next, I will highlight some areas of success and the areas that we continue to work on. Then I will briefly reflect on our full year performance and share our plans at a high level to continue to drive momentum in 2025. Next, I will review how McCormick is positioned relative to an evolving consumer landscape. Marcos will then go over to more depth in the fourth quarter as well as 2024 fiscal year financial results and review our 2025 outlook. And finally, before your questions, I will have some closing comments.
Turning now to our results on slide 4; in the fourth quarter, total organic sales increased by 2%, reflecting volume and product mix growth of more than 2%, partially offset by pricing. Total volume improved sequentially for the fourth consecutive quarter despite a challenging environment. And this improvement in the fourth quarter was driven by our Consumer segment, where volume and product mix increased approximately 4% compared to the prior year.
In Americas Consumer, we delivered meaningful sequential volume improvement, leading to more than 5% volume growth year-over-year. This growth reflects continued focus on our core categories, investing in brand marketing, accelerating innovation and alignment with consumer trends, expanding distribution and price gap management plans.
In EMEA, we continue to drive positive volume growth across our major markets and core categories. We realized benefits from new product innovation as well as expanded distribution. In Asia Pacific, our results were impacted by China as the environment in this market remains challenged. Looking forward, we expect a slight and gradual recovery in 2025 relative to the prior year. Marcos will discuss this when he covers our outlook for 2025.
Moving to Flavor Solutions; volumes were flat for the Global segment. Volume performance was primarily impacted by volume softness in our CPG and QSR customers' volumes. Sequentially, relative to third quarter volume growth, our results were impacted by the timing of customer activities.
Let's move to slide 5, and let me highlight for the quarter, some of the key areas of success. In our Global Consumer Segment, we successfully executed on our plans with increased investment and competitive focus towards driving growth across our core categories.
In the Americas, across all categories, we drove unit, volume and dollar consumption growth. Notably, our unit and volume consumption outpaced both branded food peers and private label in the fourth quarter. In Global Spices and Seasonings, we drove solid unit, volume and dollar consumption growth across key markets in the Americas, EMEA and Asia Pacific.
In the U.S., we continue to improve on our competitiveness. Our volume consumption outpaced both branded competitors and private label for the quarter. Overall holiday performance was terrific. We saw high demand and sellout on our displays that feature core holiday items as well as new innovation. We had strong performance across the portfolio and our holiday limited time offer finishing sugars contributed to our share momentum and were incremental to the category.
In recipe mixes, we continue to strengthen consumption trends in the Americas and EMEA driving overall share. In the U.S., our Cholula line remains a significant growth driver. We are innovating with Cholula recipe mixes, bringing new consumers to the category, particularly with millennials and younger families. In the U.K., our new short seasonings and recipe mixes, specifically designed for air fryers, are performing well and driving strong consumption.
In mustard, we made great progress globally over the last three quarters and are pleased to see that our plans are driving great results. In the fourth quarter, we drove unit volume and dollar share gains in the Americas. In Poland, one of the top mustard consuming countries, our mustard consumption continues to grow, and we are also realizing unit and dollar share gains.
In hot sauce, we continue to have underlying strength in our base business and strong consumer loyalty. We drove positive unit volume and dollar growth in the fourth quarter, demonstrating that our plans are working. Sequentially, we drove significant improvement in dollar and unit share trends. This improvement was driven by distribution gains, increased brand marketing and innovation. We continue to make progress on total distribution points. We expanded TDPs across Spices and Seasonings, recipe mixes, mustard and hot sauce in the Americas.
In the EMEA, we are also seeing distribution growth across markets in Spices and Seasonings and condiments and sauces. We are also gaining distribution in growing channels, like discounters and e-commerce. Finally, in the Americas and EMEA, we drove double-digit consumption growth in e-commerce, outpacing the market. E-commerce was a significant driver of our unit consumption growth for the quarter as consumers continue to seek convenience.
In Flavor Solutions, we saw strength in our technically insulated high-margin product category, flavors and in branded foodservice. In flavors, in the Americas, we remain focused on being the partner of choice across four taste competencies: savory, heat, naturally sweet and citrus and fruit. These are areas of deep expertise and strength and where we are recognized as leaders within the flavor industry.
As a result of this continued focus, our performance with our high-growth innovator customers remain strong, and we outperformed the industry across most end categories. In Americas branded foodservice business, we drove volume growth and expanded distribution across Spices and Seasonings and condiments, outperforming the industry. In addition, we are winning in hot sauce tabletop unit share and with innovation, new distribution, packaging and promotion.
Let me now touch on some areas where we are seeing some pressure. As I mentioned earlier, in our Asia Pacific Consumer business, the environment in China remains challenging. Consumer sentiment remains low, and October and November distributor inventory buildup was below prior years due to the expected softer consumption. In Flavor Solutions, in both Americas and EMEA, some of our CPG customers experienced continued softness in volumes within their own businesses.
And in EMEA, some of these customers were impacted by geopolitical boycotts in the region related to the Middle East conflict. This geopolitical impact may continue into 2025. In addition, QSR traffic remains soft in the EMEA and in the Americas. We have seen this pressure impact our results for several quarters. It's difficult to predict QSR traffic. However, we are collaborating with our customers as they focus on improving their volumes through innovation and value and align with consumer trends.
Now, I would like to reflect on our performance for the fiscal year on slide 6. We successfully delivered on the goals we set and shared with you for 2024. We demonstrated our dedication to improving volumes. We refined our plans and prioritized our investments to drive impactful results and returned to differentiated and sustainable volume-led growth, the kind of growth that investors expect from McCormick.
I am very proud of what we achieved, and you should expect continued momentum in 2025. Our team remains focused on returning to our long-term growth algorithm, strengthening our profitability, continuing our strong cash flow, paying down our debt and reducing our leverage ratio, all have put McCormick in a position of strength to invest further with a sustained focus on growth.
A few highlights for the year. On the top line, sales growth came in close to the high end of our guidance range as we expected. Importantly, we drove total positive volume growth for the year, with the Consumer business delivering 1% volume growth for 2024. We continue to invest in our business as well as drive margin expansion, in line with our guidance. Importantly, we made significant progress in advancing our Flavor Solutions operating margins. Our growth for 2024 on the top line and the bottom line reinforces our confidence in achieving the 2028 targets we set out at our Investor Day as well as our long-term objectives.
Our results demonstrate that our foundation is strong. We have proven and powerful brands and the results we are seeing from our refined and strengthened plans provide confidence in the effectiveness of our strategies and investments. We made significant progress this past year, and we have plans to continue that momentum in 2025 and beyond.
Let me now share our perspectives on Consumer trends. Our portfolio's breadth and reach in Consumer and Flavor Solutions and our shared insights give us a strong understanding of consumers, flavor needs, preferences, behaviors and trends. We are continuously monitoring these trends across the globe and adapting our strategies accordingly. Demand for flavor remains the foundation of our growth. Our business is differentiated. We do not compete for calories, we flavor them.
Importantly, our opportunity continues to grow no matter where calories are shifting, and the demand for flavor continues to have a long runway. Our products in the Consumer segment help flavor home cooked meals and in the Flavor Solutions segment, we are collaborating with many of our customers through reformulations and flavoring to meet the evolving consumer needs for healthy products, including snacks and beverages.
Overall trends continue to evolve. Consumers remain challenged, particularly lower income consumers. While everyone continues to watch their spending, there appears to be some easing with mid- and higher-income cohorts, yet also remain focused on maximizing value without compromising flavor. Demand for larger sizes remains elevated as they are seeking value. At the same time, there is increased demand for small or trial sizes, highlighting that flavor exploration remains important.
Furthermore, consumers continue to cook at home and are increasingly shopping the perimeter for protein and produce. Healthier and better-for-you trends as well as the desire to stretch budgets are fueling this continued interest in cooking from scratch, reinforcing demand for flavor and for McCormick's categories. Spices and extracts remains the #1 center store growth category. Lastly, our consumer-centric mindset remains at the heart of everything that we do. And we believe we have the right plans that are continually informed by what matters most to consumers and customers.
As outlined on slide 7, our growth plans remain consistent to drive growth through category management, brand marketing, new products, our proprietary technologies and our differentiated customer engagement. Our growth levers are supported and enhanced through data and analytics as we continue to accelerate our digital transformation. Our base business is strengthening across major markets and core categories, and we have a number of initiatives in flight that will continue to drive this performance and differentiation.
Let me highlight a few areas that support and enable these growth plans. First, our decisions to optimize our portfolio over the years allows us to concentrate our focus on four global categories. Spices and Seasonings, condiments and sauces, branded foodservice and flavors. We are intentionally focused on these categories as they are critical to driving our profitable sales growth and strengthening our flavor leadership. They drive the greatest value for McCormick, and we are excited about our plans to continue to drive growth in each of them. Furthermore, consumer demand for hot and spicy is strong and remains a significant tailwind to our growth. We are uniquely positioned to win in heat with our global iconic brands, deep consumer insights, meaningful scale, technology and expertise that we have been building for decades. Heat is a growth enabler in both of our segments and yet another reason to believe in our long-term objectives.
Lastly, underpinning our long-term growth objectives is a unique system of advantages that work together to drive our industry-leading growth. These advantages include the breadth and reach of our focused global portfolio, powerful leading brands, our heat platform, unique consumer insights, global sourcing capabilities and our disciplined approach to acquisitions and integrations. Importantly, our power of people culture is at the foundation of it all. These advantages, together with the execution of our strategies are critical to ensuring we deliver on our growth potential.
Now, over to Marcos.
