Brendan M. Foley
Chairman, President, and Chief Executive Officer at McCormick & Company, Incorporated
Good morning, everyone, and thank you for joining us. We are pleased to start the year with solid first-quarter results that are in-line with our expectations. Our performance continues to demonstrate the success of our prioritized investments in the areas that we believe will continue to drive the most value and sustain our momentum for the remainder of 2025 and beyond. McCormick remains a growth-oriented company with robust plans that leverage the demand for flavor and the strength of our brands. Our strategies have proven to be effective by driving growth and compounding that growth over the years.
With our strategies and best-in-class leadership, we are well-positioned to continue on our trajectory and 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 first-quarter results, focusing mostly on-top line drivers. Next, I will review how McCormick is positioned relative to an evolving consumer landscape. Then I will highlight some areas of success and the areas we continue to work on as well as our growth plans. Marcos will then go into more depth on the first-quarter 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 first-quarter, total organic sales increased by 2%, primarily driven by volume and product mix growth and partially offset by pricing, in-line with our expectations. In Global consumer, organic sales growth was volume-led, demonstrating continued momentum across key markets. We delivered robust volume growth in all three regions. This sustained growth is supported by investments across our core categories, including innovative brand marketing, accelerated innovation aligned with consumer trends, expanded distribution and robust category management initiatives. As expected, volume growth was partially offset by price. In the Americas, price declined due to price gap management plans that were implemented in the second-quarter of 2024 and a targeted incremental promotion related to seasonal recipe mixes.
In EMEA, we took selective pricing actions to cover rising commodity costs and still maintain volume momentum. For the year to go, we expect price in our Global Consumer segment to be flat. Now to the Global Flavor Solutions segment, where organic sales growth was also volume-led. We delivered sequential volume improvement relative to the 4th-quarter and are pleased with our results. Volume growth was driven by continued execution of our strategic priorities in flavors amid a challenging customer environment. Faster-growing customers partially offset larger CPG customer softness. In addition, QSR customer performance improved in Asia-Pacific and the Americas, led by innovation. Furthermore, across Asia-Pacific, including China, we delivered strong volume growth as we partnered with QSR customers on new products and limited time offers.
Consistent with prior years, we expect Flavor Solutions volume growth to fluctuate quarterly due to timing of customer activities. However, on a full-year basis, we continue to expect to deliver positive volume growth. From a profitability perspective, we delivered results in-line with our expectations. As the first-quarter was impacted by increased investments in marketing and technology as well as the timing of stock-based compensation expense that shifted relative to the prior year. As we look to the year-to-go period, we remain confident in our operating income and earnings growth outlook on a constant-currency basis. Moving now to the macro-environment, including the current state-of-the consumer.
There is increasing consumer uncertainty and concern over returning to more inflation and this has impacted consumer sentiment, particularly in the last month. This prolongs the consumer context of 2024 where consumers, especially lower-income consumers are more cautious exhibiting more value-seeking behavior and tightening their budgets. As many are worried about the future, job security and rising costs. We are seeing this not just in the US but across our key markets. At the same time, we are all witnessing shifts in consumer preferences. They are becoming more health conscious and this trend is continuing to gain momentum. They are cooking at-home more often and increasingly shopping a perimeter for protein and produce.
As we look at growth in edible categories, unit growth is primarily driven by these perimeter categories. Healthier and better-for-you trends as well as a desire to stretch budgets are fueling the continued interest in cooking from scratch, reinforcing the demand for flavor and for McCormix categories. Spices and seasonings remain the top-growing center store category. As a result, consumption trends in our business remain strong. Ultimately, we expect the global consumer segment to continue to benefit from these secular trends and we have the plans and advantaged portfolio to capitalize on them. And in our Flavor Solutions segment, we continue to partner with customers to launch new products or reformulate existing ones to fit healthier lifestyles.
Furthermore, our exposure to faster-growing customers allows us to win in several high-growth categories, many of which Which are benefiting from the trends towards healthier eating. In the context of this environment, McCormick's trends remain strong. Our volume-driven first-quarter results and continued strength in consumption trends demonstrate our ability to continue to successfully meet our objectives for the year. We continue to monitor consumer trends. Our focus remains on meeting consumers and customers where they are, delivering value, expanding our presence in growing channels, including mass, club and e-commerce and deliding them with flavor as well as helping customers innovate to meet consumers' changing dietary needs. We believe we have the right plans in-place and we remain well-positioned to capitalize on secular trends and continue to drive differentiated long-term growth across both of our segments. Let's move to Slide 5 and let me highlight for the quarter some of the key areas of success. Across our Global consumer segment, we successfully executed on our plans with increased investment and competitive focus towards driving growth. We improved unit and volume share gains across our core categories in key markets. In the US, the vast majority of our categories are growing unit share. Let me provide some color on the categories globally. Starting with spices and seasonings. In Americas, EMEA and Asia-Pacific, including China, we delivered strong volume growth. In the US, we drove unit and volume share growth, outpacing private-label for the third consecutive quarter. In addition, we drove market-share gains in Canada and China. In recipe mixes, we continue to strengthen consumption trends in the Americas and drove unit and volume share gains in the first-quarter. In the US, McCormick gravy and chili recipe mixes were a significant growth driver as they deliver on the value and convenience consumers are seeking. In addition, we are outpacing the total category in total new buyers as well as dollars per buyer. In Canada, we drove dollar unit and volume share gains. In mustard, we've made great progress globally over the last four quarters and are pleased to see that our plans are driving great results. In the first-quarter, we drove dollar, unit and volume 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 dollar share gains. In addition, we are gaining dollar share in the UK. In hot sauce, our plans continue to yield great results. In the US, we drove positive unit share gains, reflecting significant progress. Distribution gains as well as investments in differentiated brand marketing, including a strong Super Bowl activation and innovation continue to fuel our performance. Outside of the US, we are gaining market-share in France, the UK and Australia. Additionally, we continue to make progress on total distribution points. In the Americas, we significantly expanded TDPs across spices and seasonings, recipe mixes and hot sauce in the Americas. In EMEA, we are seeing broad-based distribution gains in spices and seasonings and hot sauce. We are also gaining distribution in high-growth channels like discounters and e-commerce. In Asia-Pacific, our business in China is recovering gradually relative to the prior year as expected. We delivered strong performance amid a continually challenged environment. Growth in our categories, including spices and seasonings and condiments outpaced the market, which included the Chinese New Year holiday. Moving to Flavor Solutions, we saw strength in our technically insulated high-margin product category, flavors. In Flavors in the Americas, we remain focused on being the partner of choice across our four taste competencies, savory, heat, naturally sweet and citrus and fruit. As a result of this continued focus, we are winning new customers and gaining share. We outperformed the industry across many end categories, including alcoholic and non-alcoholic beverages as well as snacking bars. Partially offsetting this is the softness we continue to see in larger CPG customer volumes. QSR trends improved in the Americas and in Asia-Pacific. In the Americas, we are continuing to drive innovation with our customers, driving volume growth amid soft foot traffic. In China and Australia, our customers' new products and promotions are driving strong volume growth. In Southeast Asia, volume growth benefited from our customers lapping the impact of geopolitical boycotts in the prior year. Let me now touch on some areas where we are seeing some pressure. The areas of pressure are primarily in our Flavor Solutions business. In the Americas and in EMEA, some of our CPG customers continue to experience softness in volumes within their own businesses. We continue to work on offsetting these trends through innovation and collaboration with customers and by winning new customers. The foodservice environment remains challenged. While our food away-from-home performance continues to outpace the industry, we are seeing flat performance in branded foodservice in the Americas as well as some of our customers are seeing softness in their volumes due to a slowdown in foot traffic. QSR traffic remains soft in EMEA. 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 aligned with consumer trends. As outlined on Slide 6, 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 focus on-brand marketing as our plans across all categories are supported by our global brand marketing initiatives. We are prioritizing investments to connect with consumers and fuel growth. Our differentiated brand marketing is driven by a combination of factors. In addition to maintaining a high share of voice, we are committed to having the best content in our categories, content that inspires and educates consumers and reaches them at the right points on their path to purchase and on their flavor or diet journey. From flavor exploration to menu planning, to shopping and cooking and even to eating and sharing the experience online. In the first-quarter, brand marketing spend increased against the high spend in the prior year as expected. This increase was broad-based and a key driver in supporting volume growth for this quarter as well as for maintaining our volume momentum for 2025. Through our efforts across multiple channels and by leveraging our digital capabilities, we are driving further household penetration and increasing buy rates across our core categories. Our holiday campaigns across our regions proved successful. Our marketing campaigns in the Americas highlight our everyday value, innovation and point of difference to consumers and are supporting our volume growth and driving share gains. Our Frank Super Bowl activation campaign with Paris Hilton was very successful. We gained new buyers and media and consumer sentiment was incredibly positive. To wrap-up our growth plans, although we are navigating in a difficult environment, we remain confident in the long-term health of our business and in our fundamentals and in delivering our 2025 financial outlook on both near-term and long-term objectives. We remain focused on investing behind our growth levers to continue to drive differentiated performance. Now over to Marcos.
