McCormick earnings highlight rising demand for customized flavor systems

McCormick & Company’s 2025 earnings report reveals that its B2B ingredients arm is growing faster and performing better than its retail spice brands. The results point to a broader trend: food manufacturers investing in flavor enhancement to protect margins and drive product differentiation — not as an optional extra. 

Although the US company’s Consumer segment (67%) remained larger than its Flavor Solutions (33%) in total profit in fiscal 2025, Flavor Solutions is growing faster on a year-over-year profitability basis. 

Flavor Solutions’ net sales were similar to 2024 at US$2.89 billion, while organic sales increased 1%, driven by price. However, its operating profit grew 9% YOY to US$359 million in 2025, or 11% in constant currency. The increase was driven by higher pricing and decreased SG&A expenses. This segment acts as an R&D partner to food companies, creating custom seasoning blends, liquid flavor systems, and taste modulators for product formulations.

The Consumer segment’s net sales increased 2% from 2024 to US$3.95 billion million, while organic sales also increased 2%, driven by volume growth. However, its operating income decreased by 1% YOY to US$735 million in 2025, partly due to increased commodity costs and tariffs. This segment sells branded products, including herbs and spices, seasoning mixes, and condiments, to retailers.

The disconnect between Flavor Solutions’ flat sales and rising operating profit highlights the margin resilience of this business compared to the more promotion- and price-sensitive retail segment. The ingredient arm’s relatively high growth could suggest a more sustained demand for customized flavor solutions than commoditized spices, as food manufacturers lean on flavor to strengthen product positioning, even in a high-cost environment.

Demand for customized flavor systems is being driven by key application areas, including snacks, ready meals, sauces, and protein-based products, where manufacturers are under pressure to refresh taste profiles, localize flavors, and reformulate recipes without increasing shelf prices.

Volume led-growth in retail arm

Brendan M. Foley, McCormick’s chairman, president, and CEO, points to volume-led growth in the Consumer segment, not just price increases, when explaining the company’s financial gains in 2025. 

“We achieved differentiated, volume-led organic growth and share gains powered by continued investment in our brands, expanded distribution, and innovation across our portfolio,” he says.McCormick manufactures, markets, and distributes spices, seasoning mixes, condiments, and other flavoring products to retail outlets, food manufacturers, and foodservice businesses.

“Despite inflationary pressures and rising costs from a shifting global trade environment, we achieved operating profit growth and operating margin expansion while continuing to invest for future growth.”

At a company level, volume-led growth suggests brands are reformulating rather than delisting products, with flavor systems playing a key role in maintaining taste while managing costs.

McCormick’s 2026 outlook

The company says its 2026 outlook reflects continued investment in core categories to sustain its differentiated net sales and volume trends, expand operating margins, and drive shareholder value.

“As we move into 2026, McCormick is operating from a position of strength, a solid foundation, and a clear focus on sustainable, profitable growth. Our outlook reflects continued top-line momentum, gross margin recovery, and strong operating profit performance, supported by executing on our strategic priorities, efficiency gains, and the strategic acquisition of a controlling interest in McCormick de Mexico.”

“While global trade dynamics continue to create headwinds and we are facing elevated costs for the year, we are leveraging our competitive advantages, productivity initiatives, and cost management discipline to help mitigate these pressures, sustain volume growth, and fund investments that drive long-term value creation.”

McCormick’s geographic expansion, including its increased stake in McCormick de Mexico, strengthens its localized ingredient development, enabling it to tailor flavor profiles to local tastes and respond more quickly to regional taste trends.

Earlier this year, the company acquired an additional 25% stake in McCormick de Mexico from Grupo Herdez, bringing its total ownership to 75% and giving it majority control of the Mexican business.

Global flavor trends

Innova Market Insights recently announced its Global Flavor Trends for 2026, with “Sensorial Explorations” taking first spot in a comprehensive analysis of the five consumer and market-driven flavor trends poised to reshape F&B innovation in 2026 and beyond.

Food Ingredients First recently caught up with ADM, dsm-firmenich, and Ocean Spray to explore their latest flavor research and spotlight emerging trends in the global flavor landscape.

We also highlighted some standout product innovations, including Nestlé’s Kit Kat Mont Blanc, coated in chestnut and rum-flavored cream (Japan), and Hellmann’s mayonnaise with bacon flavor (Argentina).