McCormick Plans Targeted February Price Hikes to Cover Tariff and Cost Increases
McCormick & Co. said on its January 2025 conference call that it will implement targeted price increases in February to offset tariffs and rising ingredient costs, with further pricing actions planned later this year. CFO Marcos Gabriel projects these hikes will contribute more to 2026 growth than 2025 adjustments.
1. McCormick Raises Consumer Segment Prices
McCormick & Company announced targeted pricing actions in February for its consumer goods segment, following increases introduced in late 2025 to offset elevated tariffs. CEO Brendan Foley noted that the company has not fully passed along all tariff-related costs and expects the new price adjustments to contribute a larger share of revenue growth in 2026 compared with 2025. These measures are designed to address rising input costs for key spices such as black pepper and garlic, which have increased by roughly 15% year-over-year according to industry data.
2. Q4 Revenue Beat Contrasts with EPS Shortfall
For the fourth quarter, McCormick delivered revenue of $1.85 billion, up 2.9% from the prior year, driven by a 4.0% sales increase in the consumer segment to $1.13 billion. Organic growth in that unit comprised a 2% price contribution and a 1% volume and mix gain. Despite the top-line outperformance, the company reported an earnings-per-share miss, marking only the second shortfall in three years, as gross margin contracted under pressure from commodity and tariff expenses.
3. Margin Recovery and FY26 Outlook
CFO Marcos Gabriel outlined mixed guidance for fiscal 2026, forecasting modest margin improvement through ongoing efficiency initiatives and cost-saving programs, even as investment in capacity expansion continues. The company cited recent acquisition of a controlling interest in its Mexican spices joint venture as a strategic move to enhance supply chain resilience. Management anticipates that operating leverage from the consumer segment and yield benefits from procurement projects will partially offset input cost inflation.
4. Analyst Upgrade Highlights Valuation Upside
On January 23, Bernstein Research upgraded McCormick to an overweight rating and set a price target of $85, implying a potential upside of approximately 39% from recent levels near $61. Analysts point to resilient volume trends, steady market-share gains in North America, and sustained consumer interest in at-home cooking as catalysts. McCormick’s market capitalization stands at roughly $16.4 billion, with shares fluctuating between $60.60 and $65.70 on the day of the upgrade.