At the outset of fiscal year 2011, there are some exciting growth opportunities for our business, as well as a few challenges. We wanted to share some of the discussion Alan has had with investors on these topics…

I understand that the cost of many agricultural products has increased. Has this affected your input costs? How will it impact your business?

McCormick uses dairy products, wheat, soybean oil and other commodities in the manufacture of products for our industrial customers. We have arrangements with these customers to pass through increases or decreases in the cost of major commodities with price adjustments. As a result, fluctuations in commodity costs affect our net sales, but have a minimal impact on profit.

The costs of many spices and herbs began to rise in 2010. While we are working to offset a portion of these increases with our CCI cost savings, we have also increased our pricing for many products in both our consumer and industrial business.

How have you adapted your business to the macro-economic environment?

In this economy, people are preparing more meals at home. Our products are well-suited for time-pressed consumers who are seeking convenience and value.

New products like Recipe Inspirations and Perfect Pinch in the U.S. help families prepare great tasting food conveniently. In international markets, our homemade dessert products and recipe mixes help consumers economize by preparing food at home.

Some of the best opportunities for growth seem to be in emerging markets. To what extent are you participating in this growth?

“There are attractive growth opportunities for both our consumer and industrial businesses in a number of emerging markets.”

There are attractive growth opportunities for both our consumer and industrial businesses in a number of emerging markets.

Through a joint venture that dates back to 1947, McCormick brand mayonnaise, marmalades and teas, as well as spices, are category leaders in Mexico. This business has had impressive growth and 2010 was no exception with sales up 12%. We launched a consumer brand in China nearly 20 years ago and have a leading position in several product categories in the largest cities. Our consumer sales in China have increased at a 20% compound annual growth rate in the past five years. We have small operations in other countries including South Africa, El Salvador and Thailand. During 2010, we were also pleased to form joint ventures in India and Turkey, both of which are fast-growing markets.

Our industrial business customers include leading food manufacturers and quick service restaurants that are expanding globally. As a valued supplier, we are supporting their geographic expansion which over time has included China, South America, and, in 2010, Eastern Europe and Russia.

All around the world, we are bringing passion to flavor.