McCormick CEO Brendan Foley Talks Unilever Deal

Summary

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Podcast Summary:

Bloomberg Talks – McCormick CEO Brendan Foley Talks Unilever Deal
Date: April 9, 2026
Host: Bloomberg
Guest: Brendan Foley, Chairman and CEO of McCormick

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Episode Overview

In this episode, Bloomberg interviews Brendan Foley, CEO of McCormick, diving into the details of McCormick’s landmark deal with Unilever’s food business. The conversation covers the structure and rationale of the merger, how it bucks current industry trends, integration challenges, product innovation, consumer preferences, and macroeconomic pressures. Foley shares insights on strategy, integration planning, and the enduring value of iconic food brands.

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Key Discussion Points & Insights

1. Deal Structure and Strategic Rationale

• Aims of the Merger:
  • The combined entity aims to be a “global flavor powerhouse,” uniting iconic brand portfolios for growth and value creation.
  • Foley: “This is a combination really focused on growth and value creation…two iconic brand portfolios combining to really create just a preeminent food company that's all focused on flavor.” (01:27)
• Reverse Morris Trust Structure:
  • The deal employs a Reverse Morris Trust, giving Unilever shareholders a majority stake but leaving McCormick in operational control and keeping headquarters.
  • “It's about two thirds the size of the total combined, and McCormick is about one third...both shareholders win in this.” (02:53)

2. Contrarian Strategy in a Splitting Industry

• Industry Context:
  • While most consumer product companies (Kraft Heinz, Keurig Dr. Pepper) are splitting or narrowing their scope, McCormick and Unilever are combining forces.
  • Foley argues this is about “focus,” not mere scale: “We're really bringing together a number of brands...all focused on flavor...But it is a really about focus in both companies.” (02:18)

3. Integration Planning and Organizational Change

• Integration Challenges:
  • The process involves both “separating and then integrating” brand portfolios and operations, with 80% of Unilever’s food business already operating as a standalone.
  • Foley emphasizes a detailed plan and leveraging both Unilever's local talent and McCormick’s experience:
    • “You have to separate and then you have to integrate...we see a lot of overlap opportunities where we're lifting and shifting great Unilever talent and ways of operating into a combined business.” (03:50)
• Talent Retention:
  • On the question of relocation to Baltimore: “This is a global business, and we need people globally.” (04:43)

4. Differentiation Amid Private Label Competition

• Quality & Sourcing:
  • Foley points to sourcing and quality as McCormick’s differentiators—“We go all the way to the source...work with over 54,000 smallholder farmers...prevents adulteration and make sure that we have the right spec behind everything that we have.” (05:06)
  • Strong brand loyalty for products with unique flavor profiles (e.g., Cholula, Frank’s Red Hot).

5. Consumer Trends: Inflation, Value, Health, & Wellness

• Changing Consumer Behavior:
  • Noted little change in the recent month, but the past years have shown an increased focus on value, health, and wellness.
  • “We think we're hitting that cross section of value in health and wellness.” (06:00)

6. Innovation vs. Acquisition

• Product Innovation:
  • Importance of keeping legacy brands like Hellmann's relevant through new flavors and innovation.
  • Openness to both organic growth and inorganic acquisition: “We consider both...Sometimes there are opportunities where you see brands like we did with Cholula a couple of years ago, we thought this brand has the ability to take off globally. That has to be in our portfolio.” (08:10)
• Local & Hyperlocal Brands:
  • Acknowledges the trend and appeal of hyperlocal food brands but sees synergy with McCormick’s expertise: “I see a world of innovation opportunity, whether it is a small growing brand...or innovation opportunities behind brands like Hellman's.” (07:08)

7. External Pressures: Packaging & Energy Costs

• Macroeconomic Factors:
  • Geopolitics and energy prices have raised packaging costs; McCormick is managing input cost volatility and exploring ways to offset those costs.
  • “We're certainly watching that closely, and the price of oil obviously affects a lot of that...we have to think about value of itself, making sure that we also find other ways to offset those input costs.” (09:04)

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Notable Quotes & Memorable Moments

• On Value Creation:
  • “It's going to be very accretive in the first year, sales, adjusted operating margin, adjusted eps. And so we really think there's a lot of value creation opportunity here.” (01:27)
• On Brand Loyalty & Quality:
  • “It's the quality in the flavor of our products...it is quality in the jar that is the big differentiator versus everything else.” (05:06)
• On Consumer Trends:
  • “There's a real intersection with the need for value and also health and wellness. And consumers are going to give up on looking for both of those.” (06:00)
• Innovation Culture:
  • “We see a lot more new penetration. But there's also innovation opportunities behind brands like Hellman's, where you're still going to want to be a loyal user, but it's also a lot of new flavor opportunities there too.” (07:08)

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Timestamps for Key Segments

• [01:27] – Overview of the merger’s ambition and value creation
• [02:18] – Combining companies is about focus, not just scale
• [02:53] – Explanation of the reverse Morris Trust structure
• [03:50] – Integration planning, leveraging experience and overlap
• [05:06] – McCormick’s differentiation through sourcing and quality
• [06:00] – Consumer trends: value and health remain priorities
• [07:08] – Innovation in legacy and new brands, including hyperlocal strategies
• [08:10] – Organic vs. inorganic growth & acquisition of innovative brands
• [09:04] – Impact of global energy markets on input and packaging costs

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Tone and Language

The tone is direct, optimistic, and laden with industry-specific insight. Foley emphasizes strategy, passion for food quality, and the importance of innovation and adaptation in a fast-changing consumer landscape.

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This summary captures the core content and strategic vision articulated in the interview, providing a comprehensive guide for listeners and industry watchers alike.

Transcript

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[Interviewer]

radio news the spice giant McCormick is betting on scale moving to combine with Unilever's food business in a deal aimed at building a global flavor powerhouse. The key question is whether investors will have any appetite. Oh boy, I know a lot of puns here but I'm here for it and for the spices because I love to cook and it's, I spend a lot of my day in the at shop. Right. It's been a lot of day shop. Right. Joining us now is Brendan foley, chairman and CEO of McCormick. Brendan, great to have you. Really appreciate you coming coming in. Talk to us first about this deal because it is a massive deal and I guess you'll what you'll back into a company that still will have a majority of Unilever shareholders but you'll stay on running the business and keep your headquarters.

[Brendan Foley]

That's right. This is, this is a combination really focused on, on growth and value creation. So you have two iconic brand portfolios combining to really create just a preeminent food company that's all focused on flavor. And so when we look at this, it's, you know, it's going to be very accretive in the first year, you know, sales adjusted operating margin, adjusted eps. And so we really think there's a lot of value creation opportunity here. But it's also, you know, an opportunity for, you know, McCormick just to continue to kind of that strategic focus on flavor at a global level.

[Interviewer 2]

It does feel a little bit counter to the overall trend of what's happening with consumer products. Kraft, Heinz paused a split but still is looking at it. Keurig, Dr. Pepper, this is moving in the opposite direction. Are they getting something wrong? Why do you think that you're growing bigger as others are trying to do spin offs or shrinking and focusing in on, on various parts of their business?

[Brendan Foley]

You know, for Both Unilever and McCormick this is about focus. And you know, we're really bringing together a number of brands. Again, as we said, they're all focused on flavor and that's what McCormick's focus is. And we bring the focus of a food company now to that brand portfolio that we're combining with, with Unilever. But it is a really about focus in both companies.

[Interviewer]

So I want to focus on the flavor, too. I have a million questions about your products, but I want to ask first about the deal, because the structure is interesting. It's a reverse Morris trust. I don't know what that means, but. But tell us about the mechanics of that and why you decided to do it this way.

[Brendan Foley]

Well, as we, as we combine both companies, you know, think about the size of Unilever. It's about two thirds the size of the total combined, and McCormick is about one third. And that's really the combination that we agreed upon in terms of the proportion for both shareholders. But both shareholders win in this. What they get is a larger food company that's faster growing with stronger margins and an ability to really, kind of really build out globally.

[Interviewer]

Well, and Unilever is a monster business, but they must have a lot of faith in you and, and your management team, because otherwise they would, you know, obviously replace you.

[Brendan Foley]

McCormick is the right home for these brands. And when we talked about it, I mean, the equity fit of their folk, the focus of their portfolio, which is brands like Hellman's and Noor and other brands that are also local favorites, combined with McCormick, it's a really strong fit. When you think about the grocery store,

[Interviewer 2]

it is a big project to take on what becomes sort of the pain points of an acquisition of a deal, of a reverse, reverse Moore's trust of this size. What needs to be worked through in the coming months and years?

[Brendan Foley]

Well, the important part is how you plan integration. So we have a very detailed integration plan that we have underway. And we have a lot of experience in doing this, of course, not necessarily at this size and the scale, but when you look at an integration, it's important to define the complexity that you're dealing with. And in this one, you know, think about, first you have to separate and then you have to integrate. And right now, the separation, I think 80% of the sales of Unilever's food business is already separated. It's standalone. Think about the sales organization, manufacturing, R and D. Those are things that kind of come together and kind of reduce execution risk. But also think about market overlap. Now we're talking about the combining aspect of this. And so we see a lot of overlap opportunities where we're lifting and shifting great Unilever talent and ways of operating into a combined business.

[Interviewer 2]

How does that work with just Making sure that the best talent stays on board. Do they need to move to Baltimore? I mean, it's a great city. I love Baltimore. But maybe you'd have people being like, absolutely not way. No way I'm going there.

[Brendan Foley]

This is a global business, and we need people globally.

[Interviewer]

I wonder about a couple of trends in the food business that everyone has seen, right? The private label business, the white label business, has gotten big. So how do you differentiate McCormick from, I don't know, bowl and basket or whatever, you know, private label brand is sitting right next to it in the spice aisle?

[Brendan Foley]

It's the quality in the flavor of our products. So you think about the hot sauce category. Those are flavors that can't be replicated. And so people are really loyal to them. Think about Cholula or Frank's Red Hot. And in fact, they probably have many hot sauces in their pantry for different purposes. But you look over to herbs and spices. I mean, if you compare, you know, sort of a cumin to a human, you know, we have a very unique sourcing strategy that is really deep. We go all the way to the source, and we have a chain of custody from the farm. We work with over 54,000 smallholder farmers, and so we know exactly what that product is, and it prevents adulteration and make sure that we have the right spec behind everything that we have. So it is quality in the jar that is the big differentiator versus everything else, because we have a very unique sourcing strategy.

[Interviewer 2]

I think there is this fear that consumers already, having dealt with a lot of inflation, are dealing with it even more acutely as gasoline prices go up. Have you seen any changes to consumer behavior over the past month?

[Brendan Foley]

You know, I would not say over the past month. It's really been over the last couple of years. There's a real intersection with the need for value and also health and wellness. And consumers are going to give up on looking for both of those. So we put a lot of focus around that in the first couple of years that I've been CEO and really make sure we have our price points right at shelf. We're working a lot with our retail partners to make sure that we grow categories, and we think about volume growth, and that's been a big focus of ours. If you look at the performance of McCormick and Unilever Foods over the last two to three years, we're one of the few companies that have been doing that because we think we're hitting that cross section of value in health and wellness.

[Interviewer]

I want to get into mayonnaise a little bit because I grew up in Bexley, Ohio. My grandmother would make us peanut butter and mayonnaise sandwiches.

[Interviewer 2]

Oh, I don't know how I feel about it.

[Interviewer]

Delicious. It's delicious. But she wouldn't have used anything other than Hellman's. And as a result, I never will try Mike's Amazing Lemonade or Duke's Mayonnaise or whatever Kewpiece, this Japanese mayonnaise. But other people are increasingly starting to branch out and there's also like a hyper local foods trend that's picking up. How do you look at this category, this all important category of mayonnaise?

[Brendan Foley]

Well, when you look at categories like this where you have big legacy, you know, sort of iconic brand names like Hellman's or like McCormick, those are important to consumers. But consumers also like to explore with flavor. They like to try new things. We understand this world of flavor a lot. And you know, you have to continue to be relevant and you have to bring in innovation. You have to bring in new flavors. You have to think about, you know, how does heat apply? You know, and think about flavor trends. We know all about that. And so I see a world of innovation opportunity, whether it is a small growing brand, like think about Cholula or Frank's Red Hot or My Mustard. Those are really great, high potential brands around the world that we see a lot of growth and so we see a lot more new penetration. But there's also innovation opportunities behind brands like Hellman's, where you're still going to want to be a loyal user, but it's also a lot of new flavor opportunities there too.

[Interviewer 2]

What's, what's sort of the split between like your test kitchen coming up with new stuff versus inorganic acquisitions and finding little small, like you know, the kind of small local hyper brands out there. Do those look attractive to bring in new innovation or is it kind of all done in house?

[Brendan Foley]

Well, we consider both, actually. As we think about growing the business, it is about growing the brands organically. That's really important. It's also important to grow through volume. And sometimes there are opportunities where you see brands like we did with Cholula a couple of years ago, we thought this brand has the ability to take off globally. That has to be in our portfolio.

[Interviewer]

What's next? I mean, would you, you want scale, you know, you want more skus. Do you go after a JM Smucker? Because Jif peanut butter goes amazingly well with Hellman's mayonnaise.

[Brendan Foley]

You know, we're really focused very exclusively. And that's why I think is really the most important part of this combination is we're dedicated to flavor, but we've been very, very focused on that just,

[Interviewer 2]

just very quickly because we're almost out of time. But one of the things that's been remarkable about this, this very tense geopolitical moment that we're living in is that kind of the price of everything is dependent off energy, including plastics. What is that done to you? Packaging getting more expensive because of what's happening in the Middle East?

[Brendan Foley]

Well, we're certainly watching that closely, and the price of oil obviously affects a lot of that. We're finding a way to work through that, you know, and every company is trying to find a way to make sure we work through that. But this is one where we have to think about value of itself, making sure that we also find other ways to offset those input costs. And that's the way we're dealing with this current situation.

[Interviewer]

Brendan, great having you on the program, hoping to get you back on. And if you ever need anybody in your innovation kitchen, I'd be happy, happy

[Interviewer 2]

it's going to be all mayo and peanut butter sandwiches.

[Interviewer]

Can't wait, I'm telling you. Brendan foley, chairman and CEO of McCormick

[Podcast Narrator]

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