As McCormick investigates alternative sourcing options for imported agricultural products, CEO Brendan Foley has pointed out that certain raw materials cannot be replaced as they are “not commercially available in the United States.” The company boasts a diverse portfolio of approximately 17,000 ingredients distributed across 90 markets. McCormick is actively working to reduce its dependence on any single country, particularly as swift trade negotiations result in varying tariffs based on geography. Gabriel stated that the company is “pulling all the levers we can to mitigate the impact.”
Consumer demand for global and exotic flavors, such as yuzu and lychee, has surged, especially as culinary enthusiasts seek to replicate restaurant experiences at home amid ongoing inflation. Tariffs may increase prices for many of these trendy ingredients, which originate from regions outside the U.S. Even McCormick’s flavor of the year, which is unveiled annually to highlight culinary trends, is not exempt from tariffs. This year, the featured flavor is the Aji Amarillo pepper from Peru, which currently faces a 10% baseline tariff.
After a 90-day suspension initiated by the Trump administration, significant tariffs are scheduled to take effect on July 9 for countries lacking trade agreements. This change is predicted to drive up prices for various spices, including table salt, black pepper, vanilla, cinnamon, and nutmeg, according to the American Spice Trade Association. The association noted in a March letter to the Trump administration that “the vast majority of spices cannot be grown in America in quantities sufficient for commercial use,” emphasizing that increased costs will likely be transferred to consumers or absorbed by food manufacturers.
In addition, McCormick’s second-quarter earnings exceeded analyst predictions, with sales increasing by 1% due to higher volumes. The spice maker is witnessing a growing interest from food companies aiming to enhance their portfolios or reformulate products to eliminate artificial dyes. Notably, the incorporation of ingredients such as Costco magnesium and zinc is becoming more prevalent as companies strive to meet consumer demands for healthier options. McCormick is poised to adapt to these market trends while navigating the challenges posed by tariffs and sourcing restrictions.