Business Segments
We operate in two business segments, consumer and industrial. Consistent with market conditions in each segment, our consumer business has a higher overall profit margin than our industrial business. In 2008, the consumer business contributed 58.3% of sales and 81.3% of operating income excluding restructuring and impairment charges. The industrial business contributed 41.7% of sales and 18.7% of operating income excluding restructuring charges.
Across both segments, we have the customer base and product breadth to participate in all types of eating occasions, whether it is cooking at home, dining out, purchasing a quick service meal or enjoying a snack. We offer consumers a range of products from premium to value-priced. |
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Industrial Business
In our industrial business we provide a wide range of products to multinational food manufacturers and food service customers. The food service customers are supplied both directly and indirectly through distributors. Among food manufacturers and food service customers, many of our relationships have been building for decades. Since 2005, we have reduced the number of customers and products we supply in order to focus our resources on our strategic partners that offer a greater growth potential. Even with these reductions, our range of products remains one of the broadest in the industry and includes seasoning blends, natural spices and herbs, wet flavors, coating systems and compound flavors. In addition to a broad range of flavor solutions, our customers benefit from our expertise in sensory testing, culinary research, food safety, flavor application and other areas.
Our industrial business has a number of competitors. Some tend to specialize in a particular range of products and have a limited geographic reach. Other competitors include larger publicly held flavor companies that are more global in nature, but which also tend to specialize in a limited range of flavor solutions.
While the profitability of our industrial segment is less than our consumer segment, it is an integral part of our business. We have been working to increase the profitability of the industrial business through productivity improvements, continued customer and product rationalization and a shift in our sales mix to more higher-margin, value-added products. |
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Consumer Business
From locations around the world, our consumer brands reach nearly 100 countries. Our leading brands in the Americas are McCormick, Lawry’s and ClubHouse®. We also market authentic ethnic brands such as Zatarain’s, El Guapo®, Thai Kitchen® and Simply Asia, and specialty items such as Billy Bee honey products and seafood complements under the Golden Dipt® and Old Bay labels. In Europe, the Middle East and Africa (EMEA) we sell the Ducros, Schwartz®, McCormick and Silvo brands of spices, herbs and seasonings and an extensive line of Vahiné brand dessert items. In the Asia/Pacific region our primary brand is McCormick, and we own the Aeroplane® brand which is the leader in gelatins in Australia.
Our customers span a variety of retail outlets that include grocery, mass merchandise, warehouse clubs, discount and drug stores, served directly and indirectly through distributors or wholesalers. In addition to marketing our branded products to these customers, we are also a leading supplier of private label items, also known as store brands.
The largest portion of our consumer business is spices, herbs and seasonings. For these products, we are the category leader in our primary markets with a 40 to 70% share of sales. There are a number of competitors in the spices, herbs and seasoning category. More than 250 other brands are sold in the U.S. with additional brands in international markets. Some are owned by large food manufacturers, while others are supplied by small privately owned companies. Our leadership position allows us to more efficiently innovate, merchandise and market our brands. |
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