Health-conscious consumers reach for spices

Annie Baxter Mar 24, 2015
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Health-conscious consumers reach for spices

Annie Baxter Mar 24, 2015
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Food industry analysts say Americans increasingly prefer home-cooked meals with fresh, simple ingredients. It’s the food that you find in the refrigerated sections on the perimeter of grocery stores, rather than the processed foods stacked on shelves in the middle aisles.

“The center of the store represents items that have not performed as well as those on the perimeter,” says Darren Seifer, a food and beverage analyst at the NPD Group.

That’s not great news for some big food companies. But analysts say the spice industry, on the other hand, is getting a boost. People use spices to accent their fresh veggies and meats.

“The overall spice industry is growing mid to single digit type rates  let’s call it 3-5 percent — whereas the packaged food guys are barely growing volumes or are slightly negative,” says Brian Yarbrough, a research analyst with Edward Jones.

Yarbrough says the U.S. spice and seasonings industry is a roughly $5 billion market. And it’s dominated by McCormick & Company. Yarbrough says while McCormick is benefitting from healthy eating trends, it’s losing market share to smaller niche brands and to competitors like Walmart and Safeway, which offer store brands. They’re often cheaper.

“It’s private label and a lot of these smaller players combined that are definitely impacting the McCormick Business,” he says.

Jeanette Beger, 32, of St. Paul, Minn., is the kind of consumer that McCormick may want to woo. She’s one of the millennials food industry analysts say were driven into their kitchens when the Great Recession rendered dining out unaffordable.

“We use a lot of spices,” Beger says, as she and her toddler spoon turmeric and coriander into a frying pan for a curry dish.

But a glimpse inside Beger’s spice cabinet shows how McCormick is losing ground. Only two of the couple dozen spice containers are labeled McCormick. Beger buys niche brands and bulk spices from the local co-op.

Erin Lash, an analyst with Morningstar, says McCormick is trying to get health-conscious consumers like Beger to notice its products in the fresh food sections of stores.

“Over the past year, the company has worked to reposition their products outside the center of the store and place those next to produce and proteins to get them in front of consumers and be that next purchase,” she says.

Brian Yarbrough at Edward Jones says McCormick has been successful acquiring smaller spice makers and may also lean on that strategy as “an avenue of growth.”

 

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