Volume Expectations for 2024
Q: How are you thinking about volume for 2024 and into 2025?
A: Management expects volumes to improve throughout 2024, with volume growth anticipated in the second half, continuing into 2025. They acknowledge a cautious view due to consumer uncertainty but believe investments will drive quality earnings growth.

Margin Outlook
Q: How can you invest in the business and still improve margins?
A: Despite increased investments in the business, McCormick plans to improve margins by leveraging cost savings programs like CCI and GOE, low single-digit inflation, and portfolio optimization. They anticipate an operating margin improvement of about 80 basis points in 2024.

Cautious 2024 Outlook
Q: Why is your 2024 outlook cautious, and how does it affect margins?
A: Due to consumer uncertainty and recent softness in consumption trends, management is taking a cautious view on volumes, particularly in the first half of 2024. However, they remain confident in margin expansion through cost management and expect gross margin improvement of 50 to 100 basis points.

Net Sales Growth Cadence
Q: What is the expected cadence of net sales growth in 2024?
A: Organic net sales growth is expected to be relatively consistent through the year. Pricing actions will have more impact in the first half, while volume improvements are anticipated as the year progresses, offsetting the waning effect of prior pricing actions.

Flavor Solutions Trends
Q: What are your assumptions for Flavor Solutions' volumes and restaurant traffic?
A: Management expects continued progress in Flavor Solutions, with strong performance in branded foodservice and flavors in categories like performance nutrition and beverages. Some softness may persist due to customers' volume declines, but improvement is expected throughout 2024.

Consumer Americas Pricing and Share
Q: How are you managing price gaps and the impact on market share?
A: McCormick is surgically adjusting price gaps at the SKU level to drive volume and unit share gains, complemented by increased A&P investment. They acknowledge that price gaps have impacted unit volumes and are focusing on regaining share.

China Sales Outlook
Q: What's the outlook for your China Consumer business?
A: The company expects China sales in 2024 to be comparable to 2023, with a gradual recovery starting in the second half. Challenges include low consumer confidence and reduced spending, but long-term growth prospects remain positive.

Operating Margin Expansion
Q: How will operating margins expand across your businesses in 2024?
A: Both segments are expected to see operating margin improvements, with no material differences between them. Margin expansion will be driven by cost savings initiatives and portfolio optimization, despite increased investments in price gap management and A&P.

Flavor Solutions Margin Recovery
Q: How will Flavor Solutions' margins recover to prior levels?
A: Management plans to rebuild Flavor Solutions' margins through cost initiatives, portfolio management, and focusing on higher-margin categories. They've improved operating margin from 8% in 2022 to 10% in 2023 and expect further positive movement in 2024.

Q1 Considerations
Q: What factors should we consider for Q1 performance?
A: Q1 will see higher cost increases (high single-digit inflation), the highest impact from pricing actions, increased A&P spending up double digits, and a higher tax rate. Volume pressures may persist, but improvements are expected throughout the year.