McCormick & Co. is to pay $750m to become the majority shareholder in the US group’s venture in Mexico with Grupo Herdez.
The companies set up McCormick de Mexico in 1947. Today (21 August), Cholula sauces owner McCormick said it had struck a deal to take its stake in the venture from 50% to 75%.
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Brendan Foley, McCormick’s chairman, president and CEO, said the company has had “a long and successful partnership with Grupo Herdez and we look forward to continuing our collaboration”.
He added: “This marks the beginning of an exciting new chapter for McCormick in Mexico. With this expanded ownership, we will advance our global flavour leadership and increase our presence in condiments and sauces.”
McCormick said the venture’s annual net sales are around $810m, excluding exports. The business’ products centre on mayo, including McCormick Mayonesa con Jugo de Limones, and it markets other McCormick-branded lines.
The company sees the venture’s sales growing “in the mid-single-digits range” and believes having majority ownership will give the group opportunities to expand further in the “high growth emerging market” of Mexico. McCormick already has a factory in Cuautitlán de Romero Rubio, north of Mexico City.
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By GlobalData“Additionally, this transaction creates a strategic platform for scaling our operations and distribution across Latin America,” Foley said.
McCormick sees Latin America as one of the company’s “growth accelerators” and told shareholders at last year’s annual investor day the region was a “large, growing and resilient market” where it planned to “build further scale”.
Publicly listed Mexican group Grupo Herdez said it will support McCormick with sales and distribution.
In a separate statement, Grupo Herdez said the sale of a chunk of its shares in McCormick de Mexico would help the company “pursue other strategic opportunities, while continuing its portfolio reconfiguration”.
Chairman and CEO Héctor Hernández-Pons Torres added: “This transaction will allow Grupo Herdez to continue participating in future growth opportunities while preserving our scale and depth in the Mexican market.”
