Essay about Mccormick

764 Words Aug 31st, 2013 4 Pages
Case analysis on McCormick

Company Background:
McCormick is a world’s leading manufacturer and provider in spices, herbs and seasonings industry, founded in 1889 in Baltimore. Its yearly sales account for around 21% market share in global market and 17% market share in US market. McCormick sources globally and has more than 1500 suppliers.
McCormick operates in two business segments: consumer and industrial. The consumer segment is to sell spices, herbs, extracts, seasoning blends, sauces, marinades and specialty foods to the consumer food market under a variety of brands worldwide; it is the primary driver of their business representing approximately 58% of sales, 80% of EBIT profits. The industrial segment sells seasoning blends,
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Current issues and challenges:
1. Private label revolution: McCormick has been working with Wal-Mart for several years. Currently, Wal-Mart accounts for 11% of McCormick’s yearly sales. While selling McCormick’s label products, Wal-Mart always wants to try selling its own label with McCormick’s solution. If Wal-Mart successfully attract its customers’ preference over its strong brand image and launches its own private label products, McCormick will be losing sales, potentially at $680 million per year level.
2. Market sales in European market: Besides US market, European market has been always McCormick’s target. But successfully entering into the European market and staying competitive are not easy tasks. Especially European customers’ preferences are quite different from the domestic ones and the consumers in European are price sensitive.

Recommendations:
1. Response for private label revolution
Since it is difficult to stop Wal-Mart from launching its own private label products with McCormick’s solutions, we recommend two actions for McCormick to better mitigate the potential risk of losing sales. First, McCormick can provide the unique herb or seasoning flavor products to Wal-Mart and authorize Wal-Mart to exclusively sell those products only at its stores. This will guarantee consumers with special taste or with preference in seasoning products will come and buy at Wal-Mart stores. This
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