McCormick to buy hot-sauce maker Cholula for $800 million

In 2005 a shopkeeper arrives at an Associated Supermarket to showcase McCormick’s spices and flavors.

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Spice maker McCormick said on Tuesday that it would buy the parents of hot-sauce maker Cholula from private-equity firm El Catterton for $ 800 million, as it capitalized on strong demand for packaged foods during the Kovid-19 epidemic think for.

Many food producers, from plant-based patty maker Beyond Meat to breakfast cereal maker Kellogg’s, saw their sales increase in supermarkets as people cook more at home due to a health crisis.

McCormick, which already owns Frank’s RedHot and Old Bay Hot Sauce brands, reported an 8% increase in sales in its latest reporting quarter, as did high-level home food consumption from its restaurant partners. Outperformed weak sales.

Hot sauce has increased in popularity in recent years, thanks to the increasing popularity of spicier dishes such as Thai and Satchwan, as well as YouTube’s pop-culture influences such as Hot Ones.

Cholula has annual net sales of about $ 96 million and is expected to grow from mid to high-single digits in a general environment beyond the epidemic.

The company said the deal was likely to be completed by the end of this year, expected to add McCormick’s adjusted earnings per share in 2021.

The Wall Street Journal first reported on Monday that McCormick was working on a deal to buy Cholula.

Analysts have said that the fast-growing Cholula is very suitable for McCormick’s portfolio, but they remain cautious about whether the deal will get regulatory approval.

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