McCormick (NYSE:MKC) is about to release earnings. Ponder this Bear Case Scenario:
McCormick has experienced 20%+ revenue growth in developing countries. If as and when the global economy shifts gears developing economies will slow down. Packaged spices are a new fangled idea and may not survive culturally.
McCormick is huge in the US and controls private label as well as its own brands. I’m waiting for some smart lawyer to start an anti-trust action and change the landscape. At the same time an activist hedge fund seeking short-term profits may take positions and demand divestitures.
In some markets the premium brands are so highly priced consumers are defaulting to private label. McCormick’s needs to figure out product ranges and price points a bit better. This may be a sign of entrenched arrogance.
George Gutowski writes from a caveat emptor perspective.