McCormick is building a hot sauce empire

The 132-year-old spice behemoth thinks hot sauce could be the next ketchup – and the key to stealing the condiment crown from Kraft Heinz.

You may know McCormick for the red capped bottles that line your spice rack.

But according to Bloomberg, America’s favorite spice maker has been busy expanding its empire into a spicy new sector: hot sauce.

McCormick was founded in 1889…

… by Willoughby McCormick, who started out making root beer and fruit syrups. From there, a series of acquisitions made the company a major player in the global spice trade following the Great Depression.

McCormick has continued to fuel expansion through acquisitions — scooping up Old Bay for $12.5m in 1990 and Lawry’s for $604m in 2008.

In 2015, leadership decided to push into new markets, kicking off a saucy acquisition spree that includes:

  • Stubb’s barbeque sauce for $100m in 2015
  • Frank’s RedHot and French’s mustard for a whopping $4.2B in 2017
  • Cholula for $800m in 2020

So why hot sauce?

McCormick believes it’s the “ketchup” of the next generation, and the key to wresting the condiment crown from The Kraft Heinz Company.

While Euromonitor International reports the ketchup market is still ~$2B larger than the market for chili sauces, McCormick points to 2 factors that bode well for the future of hot sauce:

  • Increased popularity of Mexican cuisine and other international flavors
  • Cultural relevance through shows like “Hot Ones,” an interview series on YouTube where guests answer questions over wings

The other reason? Through its massive wholesaler network, McCormick is perfectly positioned to sell tons of hot sauce to a long list of restaurants and retailers.

Case in point, the company has already put Frank’s and Cholula on the menu at Subway and Chopt, a fast-casual salad chain.

But Kraft Heinz isn’t going down without a fight

The condiment behemoth has been busy experimenting with a line of flavors called “mashups” that mix classic flavors.

Blends include Buffaranch (buffalo & ranch dressing), Honeyracha (honey & Sriracha), and Sweet Ketchili (ketchup & sweet chili sauce).

While the verdict is still out on the names, it’s clear the battle for condiment supremacy will leave consumers with a new frontier of flavors.

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