December 13, 2022 • 19 mins
The labor market remains tight, and employers still need workers to fill their ranks. In order to speed up the process, some companies are dropping a once crucial step: the interview. Places like UPS, Home Depot, and The Gap are dropping it for mostly hourly positions and in places with high turnover and warehousing. Some are offering jobs 25 minutes after applying and others are making offers 24-48 hours after applying. After exhausting other methods to attract workers, some are going with speed. Sarah Chaney Cambon, labor economics reporter at the WSJ, joins us for what to know.
Next, the condiment business is hyper competitive and one of the major players in the spice game, McCormick, has been making acquisitions to take over the world of hot sauce. They bought Frank's Red Hot and Cholula Hot Sauce in deals worth millions of dollars each. The past few years have proven to be beneficial for McCormick as many people stayed in and cooked more at home, but they were not immune to supply chain issues that affected the industry when it came to acquiring key ingredients. Austin Carr, features writer at Bloomberg BusinessWeek, joins us for the fight for hot sauce supremacy.
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Episode Transcript
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Speaker 1 (00:00):
It's Tuesday, December thirteenth. I'm Oscar Ramirez in Los Angeles
and this is the daily Dive. The labor market remains
tight and employers still need workers to fill their ranks.
In order to speed up the process, some companies are
dropping a once crucial step, the interview. Places like ups
(00:21):
Home Depot in the Gap are dropping it for mostly
hourly positions and in places with high turnover and warehousing.
Some are offering jobs twenty five minutes after applying, and
others are making offers forty eight hours after applying. After
exhausting other methods to attract workers, some are going with speed.
Sarah Cheney Kembon, labor economics reporter at The Wall Street Journal,
(00:43):
joins us for what to know next. The condiment business
is hyper competitive and one of the major players in
the spice game. McCormick has been making acquisitions to take
over the world of hot sauce. They bought Frank's Red
Hot and Cholula Hot Sauce in deals worth millions of
dollars each. The past few years have proven to be
beneficial for McCormick, as many people stayed in and cook
(01:04):
more at home, but they were not immune to supply
chain issues that affected the industry when it came to
acquiring key ingredients. Austin Carr, Features writer at Bloomberg business Week,
Jones is for the fight for hot sauce supremacy. It's
news without the noise. Let's dive in and you know,
of course, these companies are doing other due diligence like
(01:24):
background checks in a lot of cases still et cetera.
But the fact in the matter of these workers are
not having to interview for these jobs and they're getting
them incredibly fast. Joining us now is Sarah Cheney Kimbon,
labor economics reporter at The Wall Street Journal. Thanks for
joining us, Sarah, thanks so much for having me. Well,
the job market remains very tight. Still, workers are in
(01:46):
high demand. When we're talking about blue collar work. We're
seeing a lot of layoff announcements coming from big companies
like Amazon, Walmart, Ford. These are hitting more white collar workers.
But right now what we're seeing is, i mean, as
a mentioned, everything so tight, companies are really looking at
hiring people that they need fast, especially in this as
we come up to the holiday season, and what they're
(02:09):
doing is in some cases omitting the job interview if
you apply, you know, maybe in a twenty four hours,
forty eight hours, you're already getting an offer. In some cases,
we're looking at places like UPS, the Gap Home depot Um. So, Sarah,
tell us a little bit more about what we're seeing
with these companies. Right, So, a lot of these companies
are skipping the job interview, as you mentioned, and what
(02:31):
that means is that applicants are going online, maybe for
a warehousing job. Let's say at UPS, they're going online,
they're filling out an application, and within minutes they're receiving
a job offer via email. Um And you know, of
course these companies are doing other due diligence like background
checks in a lot of cases still, et cetera. But
(02:53):
the fact in the matter of these workers are not
having to interview for these jobs and they're getting them
incredibly fast. We've talked about a lot of the different
changes that are going on. There's some employers dropping college
degree requirements. Sometimes they're not even doing background checks or
you know, really going for whatever the experience that they
might need. The people just needs workers so badly. And
(03:14):
you even mentioned that they're doing this in some of
the healthcare industry, what with nurses. They're looking at licenses
that you might have and saying, Okay, this person is qualified.
But they're even as going as far as kind of
working its way into the healthcare industry. Yes. Absolutely, as
we know, and I'm sure a lot of people in
their own communities are saying that nurses and healthcare workers
(03:35):
are in super high demand. There's a shortage of workers
in that industry, and so some how the organizations are
um just using nursing licenses as kind of a measure
instead of job interviews, and um in terms of other
jobs and occupations where we're seeing no interview required, it's
a lot of warehousing, retail jobs, jobs that are high
(03:58):
turnover that are experiencing shortages. Still. Yeah, now let's focus
on that a little bit. Let's focus on ups as
a matter of fact, because you wrote about them specifically
in your article and you know they're obviously you mentioned
where these jobs are. It might not be the big
career move. It might be this is kind of like
for expediency. If you need a job right now, there
(04:18):
are a lot of things available and you can get
them quickly. Ups. For example, they're looking at a lot
of package handlers. These are the jobs that they're offering
to people without interviews and all that. Absolutely, So ups
UM is kind of one of the companies that UM
was sort of early to do the no interview required.
(04:41):
It started doing it during the pandemic, I believe. And
about of ups is seasonal workers. So that includes the
package handlers and some types of delivery drivers are hired
without an interview and they can get a job offer
within about twenty five minutes of applying. And these so
(05:01):
these are jobs that are in some cases seasonal, in
some cases they're they're permanent jobs as well. Um they
tend to be uh not like customers facing roles. A
lot of companies are continuing to interview for for those
types of jobs. It's it's more you know, blue collar
warehouse jobs where we're seeing this. Yeah, and for a
place like ups obviously they get very very busy during
(05:22):
this season right now. They were looking to hire more
than a hundred a hundred thousand seasonal workers this year.
They said it was a little harder to do than
last time. But the hourly employee is just such an
important part of a lot of these companies and when
they're facing high turnover and all that, um, you know,
these are pretty important jobs for these companies. Absolutely. I
(05:44):
spoke with UM an executive at a company who basically
uses software to kind of speed up the application process
for a lot of hourly workers, and he made the points, um,
that you're kind of getting at that hourly workers. You need.
You need those workers to make the hamburger, you need
(06:04):
the workers to process the package, etcetera. And so if
companies don't have enough of those workers, they might not
be able to meet demand and it could just kind
of trigger this cycle in which employees keep quitting those
jobs and companies have to keep trying to fill those vacancies. Yeah,
we have. The last time we got some jobs numbers,
(06:25):
we had ten point three million openings. This is from October,
and there was six point one million people still looking
for jobs. So it's very much in their purview to
pick and choose whatever they want. And that's how these
companies are competing right now. You know, they've already increased wages,
they've offered other benefits. Now it's all about speed. It's like, hey,
(06:46):
if you want a job boom, we're gonna give it
to you right now and hopefully you'll come on board.
With us. Yes, yeah, exactly. I think that um, like
you mentioned, like, wages have been going up over the
past year, year and a half, and that's great, but
that can only go so far in terms of attracting
these workers. And a lot of hourly workers are um,
(07:07):
you know, applying for a lot of jobs at once,
and so if um someone takes a job quickly, your
company loses out on them. Your company really needs to
be moving quickly to fill those roles. Yeah, well, it's
an interesting look right now. I mean, the jobs are
out there. If this is something that you might need,
maybe part time, maybe just you just need something quickly,
you know, it might be something you can be interested
(07:29):
in there. Sarah Cheney cambon Labor Economics Report at The
Wall Street Journal. Thank you very much for joining us.
Thanks so much for having me on. You might not
realize that they're known for catchup and a ton of
you know, behind sort of fifty seven brand, but they
(07:52):
also own grape poupon a one miracle whip do you
like Leon Perren's wort? Joining us now is Austin Carr
features right at Bloomberg Business Week. Thanks for joining a saucein,
Thanks for having me. I love stories about food, I
love stories about the business of food, and I love
me some sauces. So this story was right up my alley.
(08:13):
We're gonna be talking about McCormick spices. So everybody who's
bought vanilla, extract, pepper, I mean a ton of different spices,
you most likely have bought McCormick's at one point in
your life. But this story is about them venturing off
into more than just the spice rack. They really big
on getting into the sauce game, the hot sauce game. Specifically,
(08:36):
they purchased Frank's Red Hot, they purchased Cholula, they purchased
French as mustard, which I currently have in my friend
right now. So this is just kind of them looking
for lots of growth, lots of expansion, and they really
want to to go big on the hot sauce side
of things. So Austin tell us a little bit about it. Yeah,
(08:56):
that's totally right. As as you noted, McCormick known for
all seasonings and spices and those red caps that you
see in your your grandparents pantry, but in recent years
they've really going after the sauce market, and yeah, Frenches,
they also owned Stubs Barbecue, they owned Old Bay, and
they also develop a lot of products for other companies.
If you've ever had Cool Ranch, Burrito's or bud Light Line,
(09:19):
they were the company behind that that flavor to development.
But with hot sauce, specifically in their purchase of of
Frank's Red Hot and Cholula Hot sauce, that's really going
after the big, huge growth in the global hot sauce market.
In the last six or seven years, we've seen global
hot sauce sales rise about to about five billion dollars
(09:40):
around the planet. In the U s specifically, it's actually
the hot sauce market is roughly on par as of
the as of last year with Ketchup, which is pretty shocky.
One would thing Hinds catch up. Those sort of major
sales are bigger than hot sauce. But hot sauce is
a huge growth industry right now, and that explains why
McCormick's really going deep on this. This love for for
local or heat that that's really taken off, especially among
(10:02):
millennial consumers. Yeah, and as you mentioned in the article, right,
I mean, this is all the very hyper competitive business.
Just the sauce market in general, and uh, I just
like the wording right to become big Hot sauce, you
need to fight big ketch Up first, you know, referring
to Hines, just because they have such a huge control
over the market with Ketchup specifically. But let's talk about
(10:24):
these acquisitions that they made, because they're very interesting. I
want to throw the dollar amounts out there. They first
started off with Frank's Red Hot and Frenches Mustard. That
was kind of a combo deal, and then after that
they went after Cholula. So let's start start with Frank's
Red Hot, then let's get into Cholula. Yeah, the deal
with French is and and Frank's that was actually for
(10:45):
four point two billion dollars. So in the food world,
those are gigantic prices. You might hear about that that
sort of investment when it comes to the tech world.
And so when when I when I talked about these
purchases with analysts, they really can compare these things to
the equivalent of you know, when Facebook bought Instagram. It's
it's sort of that level of scale that we're talking
in terms of the risk the bet that they're making
(11:05):
on these brands. Then fast forward November, they decided to
go after Cholula Hot Sauce for and they spent about
eight hundred million dollars and according to our sources, they
outbid Hines for that. Hines, of course, you might not
realize that they're known for ketchup uh in a ton
of you know, the Hinds sort of fifty seven brand,
but they also own Gray Poupon, a one miracle whip
(11:27):
if you like Leon Perren's worcestssur sauce. You know, they're
sort of this arsenal portfolio player in the sauce market.
And we're interested in hot sauce just as much as McCormick.
But the McCormick's put up more money. They bought Cholula
and now they control about a third of the U.
S Hout sauce market between Frank's which is number one,
in Cholula which is now number two, ahead of Tabasco.
(11:49):
It's just nuts, really, And you know the people that
were and mccormicks that we're trying to get this deal going,
they say, hey, you know, we want to go big.
We want to do this. They gotta approval for everybody.
They said, go for it. And what was the deal?
Is eight hundred million dollars is the bad that they
put down eight million cash cash offer. So this was
really a deal that was designed to stop a bidding
(12:11):
war from happen. In other words, you don't want Heinz
counter offering, you know, and so by by throwing out
this big offer, you're not going to see another one
countering at a billion or two billion. You know, Cholulas
sells about a hundred million dollars of hot sauce a year,
so already the multiple there is pretty big, at least
in the food world. Um, so this was really a
big deal. And since then they have seen a lot
(12:32):
of growth that McCormick has huge distribution channels with restaurants
around the country, with retailers like walmartin Amazon, and so
for them to sort of go from take this Cholula,
which is was owned by a private equity firm, and
you know it wasn't a portfolio play beforehand, and now
throw it into all these restaurants, whether that's in bottles
or in what are called satchets. Those are those little
(12:53):
squeeze packs you see when you tear them open, important
on your your your chicken wings or fries and You're
going to see that a lot more in the coming years,
especially in grocery stores. That's why I love these stories. Right,
you kind of grow to love certain brands and then yeah,
you start seeing it in certain restaurants and you're seeing
it everywhere, and you kind of don't know the history
behind it and in some cases who makes or who
(13:15):
owns these properties, right, Because for Cholula specifically, mccormicks doesn't
put any of their branding on it, which is I mean,
it's probably smart on their side, right, They just want
to keep it in the minds of the consumers. This
has always been Cholula, it comes from Mexico, all this stuff,
so they don't even put their branding on there. That's correct,
and and that's actually it's a pretty smart branding opportunity.
(13:36):
I mean, when you think about it, you go to
the grocery store, you look at that huge shelf of
condiments and sauces and dressings, and you're really choosing not
just the taste, but also sort of the memory of
that brand. That that sort of dispensing mechanism is very important,
how the bottle looks the cap. That's why with with Chula,
a lot of people know it as much for the
flavor of that sort of spicy sauce that sort of
(13:57):
goes with anything flavor, but they also know it for
that distinctive wooden caps had this sort of slender glass bottle.
And if you look at a lot of the other
big companies, you know, we think of Hellman's Mayo, you
know that blue and white jar, but you might not
know it's owned by Uni Lever. You know, Sir Kensington,
which is sort of fancy Mayo own Ketchup, also owned
by Uni Lever, and with you know, you could think
of Hunts Ketchup, Golden's mustard wishbone dressing for Ranch. Those
(14:20):
are all owned by ConAgra, another big food giant. So
a lot of these companies out there, they realize the
benefit of making these products almost seem like independent, family
run bespoke brands, when there are actually these sort of
giant food conglomerates. They're sort of partnering up. So when
you go to a ski resort or a buffet line,
you see their brands altogether at the end of the
(14:41):
food aisle, rather than Craft or Unilever and McCormick or ConAgra.
They're all going after each other for those mix of
flavors that they want consumers to lust after. And as
you mentioned earlier, right, McCormick's had its hand in making
developing other things by Lightline and Cool Ranch. Dorito's one
of my everite ones too. I had no, no, no
clue they had a hand in that. I did want
to talk about the pandemic supply chains and COVID all that,
(15:02):
because that's an interesting thing too. They were seeing a
lot of increase in sales at US stores. Obviously people
were cooking at home, needed to stock up their pantries.
They did have all these deals with restaurants and some
of that dried up, but the sales for grocery stores
was increasing so much, and then they ran into the
supply chain issues for a lot of their stuff, tumeric
which they need for the mustard. Just a ton of
(15:25):
different things on the different angles on this front. So
to tell us about that, it was a really fascinating thing.
I mean, I think at the beginning of the pandemic,
rewind the clock. I know, it's it's been so many
years at this point, but back to that February March
period when no one quite knew how big of a
threat the COVID nineteen situation would be. And for McCormick,
they're seeing restaurants closed, they're seeing factories close, and this
(15:46):
could be a really disruptive force in their industry. But
then the opposite happened all of a sudden, as you noted,
sales of tumeric, which a lot of people use for
for health reasons or because it's what gives the yellow
color to to spicy yellow mustard, and Frenches broths, because
people were cooking soup at home, baked goods like vanilla,
all these things taking off. So at this real whiplash
(16:07):
moment from McCormick where they have to keep up with
the demand at the same time as all these factories
are closing. It was a real crazy few months going
onto a year, and specifically with tumeric, the US almost
ran out of mustard for a time. They were running
low on their reserves for some of the ingredients like
tumeric that goes into French is partly because ocean freight.
(16:28):
All those ocean freighters were either not running or closed
down or over capacity, so they actually had to rush
an emergency air cargo shipment of tumeric and it landed
inadvertently in Baltimore instead of at a French's factory in Missouri.
So they had to hire all these truckers overnight to
drive it a thousand miles to the French's factory in
time for a production run. Otherwise, who knows, we might
(16:49):
not have mustard on our our hot dog. Which sounds small,
but for a lot of people, these are comfort foods
and that was a big deal during the pandemic, especially
if you're your parents with kids at home and you've
got to keep them entertain with food. Yeah, I mean
that sucks for you know, McCormick's, the parent company at
this point for all of this. Sucks for them to
have to go through that. But man, I kind of
love hearing that. You know, the scramble right for consumers,
(17:12):
we don't really know what's going on. You might hear
there's a shortage of this or that, but this was
the scramble to get people the products that they know
and love and want. So what's next for McCormick's, at
least with this growth potential into hot sauces and other
sauces and all these acquisitions, they're looking for, what's next
for them? You know, I think what's next is now
that they have this massive build up of brands that
(17:34):
are all owned by the same company but seemingly run independently.
At least when it comes to grocery sales, You're going
to see a lot more mash ups. You know, um Hines,
for example, they're doing that. They're doing a lot of
mash up products, and it's not just ketchup anymore, but
they mix it with you know, all types of I
think they have catch elly, so you know Hynes, catch up,
(17:56):
the Mayo chop, honey Racha, tarch up, Cranch, so sort
of blends of ketchup and ranch dressing and saracha and
and so forth. Buffer Ranch another one part of what
Hinz calls their innovation agenda. And so what you might
see in the coming years are perhaps some mashups between
cholula and frenches, so you have a sort of spicier
(18:18):
mustard or you know Old Bay, which is that popular
Baltimore seafood seasoning that's mixed with hot sauce these days,
very popular, and so maybe there's going to be more
of that. And so the question is how far do
you take that before it's sort of ruined some of
the brand cash a do you want cholula showing up
on taco bell menus at McDonald's and so forth. On
the other hand, I think a lot of people might
(18:38):
like that stuff because you know, everyone's hungry and and
these types of products they can really go on anything. Yeah,
I mean those sauce mashups really can be intriguing and
pleasant surprise when it really works with you know, whatever
you're dipping in and chicken wings, whatever it can be.
So yeah, it's just a fun story. There's a lot
of details about mccormicks and some of their history we
couldn't get into for this, but I think just everybody
(19:00):
read Austin's piece on all of it. Austin Carr, features
writer at Bloomberg business Week, thank you very much for
joining us. Thank you, and if your listeners have a chance,
I know one product that McCormick was really proud of
in terms of a mash up with French is flavored
craft beer and French is flavored ice cream. And they're
they're convinced it's a big flavor out there, So go
try it if you're curious. All right, thanks so much, Austin.
(19:23):
Thank you. That's it for today. Join us on social
media at neely Dive pod on both Twitter and Instagram.
Leave us a comment, give us a rating, and tell
us the stories that you're interested in. Follow us on
iHeart Radio or subscribe whatever you get your podcasts. This
(19:45):
episode of The Daily Dives produced by Victor Wright and
engineered by Tony Sorrentino. I'm Oscar Ramirez and this was
your Daily Dive
It's Tuesday, December thirteenth. I'm Oscar Ramirez in Los Angeles
and this is the daily Dive. The labor market remains
tight and employers still need workers to fill their ranks.
In order to speed up the process, some companies are
dropping a once crucial step, the interview. Places like ups
(00:21):
Home Depot in the Gap are dropping it for mostly
hourly positions and in places with high turnover and warehousing.
Some are offering jobs twenty five minutes after applying, and
others are making offers forty eight hours after applying. After
exhausting other methods to attract workers, some are going with speed.
Sarah Cheney Kembon, labor economics reporter at The Wall Street Journal,
(00:43):
joins us for what to know next. The condiment business
is hyper competitive and one of the major players in
the spice game. McCormick has been making acquisitions to take
over the world of hot sauce. They bought Frank's Red
Hot and Cholula Hot Sauce in deals worth millions of
dollars each. The past few years have proven to be
beneficial for McCormick, as many people stayed in and cook
(01:04):
more at home, but they were not immune to supply
chain issues that affected the industry when it came to
acquiring key ingredients. Austin Carr, Features writer at Bloomberg business Week,
Jones is for the fight for hot sauce supremacy. It's
news without the noise. Let's dive in and you know,
of course, these companies are doing other due diligence like
(01:24):
background checks in a lot of cases still et cetera.
But the fact in the matter of these workers are
not having to interview for these jobs and they're getting
them incredibly fast. Joining us now is Sarah Cheney Kimbon,
labor economics reporter at The Wall Street Journal. Thanks for
joining us, Sarah, thanks so much for having me. Well,
the job market remains very tight. Still, workers are in
(01:46):
high demand. When we're talking about blue collar work. We're
seeing a lot of layoff announcements coming from big companies
like Amazon, Walmart, Ford. These are hitting more white collar workers.
But right now what we're seeing is, i mean, as
a mentioned, everything so tight, companies are really looking at
hiring people that they need fast, especially in this as
we come up to the holiday season, and what they're
(02:09):
doing is in some cases omitting the job interview if
you apply, you know, maybe in a twenty four hours,
forty eight hours, you're already getting an offer. In some cases,
we're looking at places like UPS, the Gap Home depot Um. So, Sarah,
tell us a little bit more about what we're seeing
with these companies. Right, So, a lot of these companies
are skipping the job interview, as you mentioned, and what
(02:31):
that means is that applicants are going online, maybe for
a warehousing job. Let's say at UPS, they're going online,
they're filling out an application, and within minutes they're receiving
a job offer via email. Um And you know, of
course these companies are doing other due diligence like background
checks in a lot of cases still, et cetera. But
(02:53):
the fact in the matter of these workers are not
having to interview for these jobs and they're getting them
incredibly fast. We've talked about a lot of the different
changes that are going on. There's some employers dropping college
degree requirements. Sometimes they're not even doing background checks or
you know, really going for whatever the experience that they
might need. The people just needs workers so badly. And
(03:14):
you even mentioned that they're doing this in some of
the healthcare industry, what with nurses. They're looking at licenses
that you might have and saying, Okay, this person is qualified.
But they're even as going as far as kind of
working its way into the healthcare industry. Yes. Absolutely, as
we know, and I'm sure a lot of people in
their own communities are saying that nurses and healthcare workers
(03:35):
are in super high demand. There's a shortage of workers
in that industry, and so some how the organizations are
um just using nursing licenses as kind of a measure
instead of job interviews, and um in terms of other
jobs and occupations where we're seeing no interview required, it's
a lot of warehousing, retail jobs, jobs that are high
(03:58):
turnover that are experiencing shortages. Still. Yeah, now let's focus
on that a little bit. Let's focus on ups as
a matter of fact, because you wrote about them specifically
in your article and you know they're obviously you mentioned
where these jobs are. It might not be the big
career move. It might be this is kind of like
for expediency. If you need a job right now, there
(04:18):
are a lot of things available and you can get
them quickly. Ups. For example, they're looking at a lot
of package handlers. These are the jobs that they're offering
to people without interviews and all that. Absolutely, So ups
UM is kind of one of the companies that UM
was sort of early to do the no interview required.
(04:41):
It started doing it during the pandemic, I believe. And
about of ups is seasonal workers. So that includes the
package handlers and some types of delivery drivers are hired
without an interview and they can get a job offer
within about twenty five minutes of applying. And these so
(05:01):
these are jobs that are in some cases seasonal, in
some cases they're they're permanent jobs as well. Um they
tend to be uh not like customers facing roles. A
lot of companies are continuing to interview for for those
types of jobs. It's it's more you know, blue collar
warehouse jobs where we're seeing this. Yeah, and for a
place like ups obviously they get very very busy during
(05:22):
this season right now. They were looking to hire more
than a hundred a hundred thousand seasonal workers this year.
They said it was a little harder to do than
last time. But the hourly employee is just such an
important part of a lot of these companies and when
they're facing high turnover and all that, um, you know,
these are pretty important jobs for these companies. Absolutely. I
(05:44):
spoke with UM an executive at a company who basically
uses software to kind of speed up the application process
for a lot of hourly workers, and he made the points, um,
that you're kind of getting at that hourly workers. You need.
You need those workers to make the hamburger, you need
(06:04):
the workers to process the package, etcetera. And so if
companies don't have enough of those workers, they might not
be able to meet demand and it could just kind
of trigger this cycle in which employees keep quitting those
jobs and companies have to keep trying to fill those vacancies. Yeah,
we have. The last time we got some jobs numbers,
(06:25):
we had ten point three million openings. This is from October,
and there was six point one million people still looking
for jobs. So it's very much in their purview to
pick and choose whatever they want. And that's how these
companies are competing right now. You know, they've already increased wages,
they've offered other benefits. Now it's all about speed. It's like, hey,
(06:46):
if you want a job boom, we're gonna give it
to you right now and hopefully you'll come on board.
With us. Yes, yeah, exactly. I think that um, like
you mentioned, like, wages have been going up over the
past year, year and a half, and that's great, but
that can only go so far in terms of attracting
these workers. And a lot of hourly workers are um,
(07:07):
you know, applying for a lot of jobs at once,
and so if um someone takes a job quickly, your
company loses out on them. Your company really needs to
be moving quickly to fill those roles. Yeah, well, it's
an interesting look right now. I mean, the jobs are
out there. If this is something that you might need,
maybe part time, maybe just you just need something quickly,
you know, it might be something you can be interested
(07:29):
in there. Sarah Cheney cambon Labor Economics Report at The
Wall Street Journal. Thank you very much for joining us.
Thanks so much for having me on. You might not
realize that they're known for catchup and a ton of
you know, behind sort of fifty seven brand, but they
(07:52):
also own grape poupon a one miracle whip do you
like Leon Perren's wort? Joining us now is Austin Carr
features right at Bloomberg Business Week. Thanks for joining a saucein,
Thanks for having me. I love stories about food, I
love stories about the business of food, and I love
me some sauces. So this story was right up my alley.
(08:13):
We're gonna be talking about McCormick spices. So everybody who's
bought vanilla, extract, pepper, I mean a ton of different spices,
you most likely have bought McCormick's at one point in
your life. But this story is about them venturing off
into more than just the spice rack. They really big
on getting into the sauce game, the hot sauce game. Specifically,
(08:36):
they purchased Frank's Red Hot, they purchased Cholula, they purchased
French as mustard, which I currently have in my friend
right now. So this is just kind of them looking
for lots of growth, lots of expansion, and they really
want to to go big on the hot sauce side
of things. So Austin tell us a little bit about it. Yeah,
(08:56):
that's totally right. As as you noted, McCormick known for
all seasonings and spices and those red caps that you
see in your your grandparents pantry, but in recent years
they've really going after the sauce market, and yeah, Frenches,
they also owned Stubs Barbecue, they owned Old Bay, and
they also develop a lot of products for other companies.
If you've ever had Cool Ranch, Burrito's or bud Light Line,
(09:19):
they were the company behind that that flavor to development.
But with hot sauce, specifically in their purchase of of
Frank's Red Hot and Cholula Hot sauce, that's really going
after the big, huge growth in the global hot sauce market.
In the last six or seven years, we've seen global
hot sauce sales rise about to about five billion dollars
(09:40):
around the planet. In the U s specifically, it's actually
the hot sauce market is roughly on par as of
the as of last year with Ketchup, which is pretty shocky.
One would thing Hinds catch up. Those sort of major
sales are bigger than hot sauce. But hot sauce is
a huge growth industry right now, and that explains why
McCormick's really going deep on this. This love for for
local or heat that that's really taken off, especially among
(10:02):
millennial consumers. Yeah, and as you mentioned in the article, right,
I mean, this is all the very hyper competitive business.
Just the sauce market in general, and uh, I just
like the wording right to become big Hot sauce, you
need to fight big ketch Up first, you know, referring
to Hines, just because they have such a huge control
over the market with Ketchup specifically. But let's talk about
(10:24):
these acquisitions that they made, because they're very interesting. I
want to throw the dollar amounts out there. They first
started off with Frank's Red Hot and Frenches Mustard. That
was kind of a combo deal, and then after that
they went after Cholula. So let's start start with Frank's
Red Hot, then let's get into Cholula. Yeah, the deal
with French is and and Frank's that was actually for
(10:45):
four point two billion dollars. So in the food world,
those are gigantic prices. You might hear about that that
sort of investment when it comes to the tech world.
And so when when I when I talked about these
purchases with analysts, they really can compare these things to
the equivalent of you know, when Facebook bought Instagram. It's
it's sort of that level of scale that we're talking
in terms of the risk the bet that they're making
(11:05):
on these brands. Then fast forward November, they decided to
go after Cholula Hot Sauce for and they spent about
eight hundred million dollars and according to our sources, they
outbid Hines for that. Hines, of course, you might not
realize that they're known for ketchup uh in a ton
of you know, the Hinds sort of fifty seven brand,
but they also own Gray Poupon, a one miracle whip
(11:27):
if you like Leon Perren's worcestssur sauce. You know, they're
sort of this arsenal portfolio player in the sauce market.
And we're interested in hot sauce just as much as McCormick.
But the McCormick's put up more money. They bought Cholula
and now they control about a third of the U.
S Hout sauce market between Frank's which is number one,
in Cholula which is now number two, ahead of Tabasco.
(11:49):
It's just nuts, really, And you know the people that
were and mccormicks that we're trying to get this deal going,
they say, hey, you know, we want to go big.
We want to do this. They gotta approval for everybody.
They said, go for it. And what was the deal?
Is eight hundred million dollars is the bad that they
put down eight million cash cash offer. So this was
really a deal that was designed to stop a bidding
(12:11):
war from happen. In other words, you don't want Heinz
counter offering, you know, and so by by throwing out
this big offer, you're not going to see another one
countering at a billion or two billion. You know, Cholulas
sells about a hundred million dollars of hot sauce a year,
so already the multiple there is pretty big, at least
in the food world. Um, so this was really a
big deal. And since then they have seen a lot
(12:32):
of growth that McCormick has huge distribution channels with restaurants
around the country, with retailers like walmartin Amazon, and so
for them to sort of go from take this Cholula,
which is was owned by a private equity firm, and
you know it wasn't a portfolio play beforehand, and now
throw it into all these restaurants, whether that's in bottles
or in what are called satchets. Those are those little
(12:53):
squeeze packs you see when you tear them open, important
on your your your chicken wings or fries and You're
going to see that a lot more in the coming years,
especially in grocery stores. That's why I love these stories. Right,
you kind of grow to love certain brands and then yeah,
you start seeing it in certain restaurants and you're seeing
it everywhere, and you kind of don't know the history
behind it and in some cases who makes or who
(13:15):
owns these properties, right, Because for Cholula specifically, mccormicks doesn't
put any of their branding on it, which is I mean,
it's probably smart on their side, right, They just want
to keep it in the minds of the consumers. This
has always been Cholula, it comes from Mexico, all this stuff,
so they don't even put their branding on there. That's correct,
and and that's actually it's a pretty smart branding opportunity.
(13:36):
I mean, when you think about it, you go to
the grocery store, you look at that huge shelf of
condiments and sauces and dressings, and you're really choosing not
just the taste, but also sort of the memory of
that brand. That that sort of dispensing mechanism is very important,
how the bottle looks the cap. That's why with with Chula,
a lot of people know it as much for the
flavor of that sort of spicy sauce that sort of
(13:57):
goes with anything flavor, but they also know it for
that distinctive wooden caps had this sort of slender glass bottle.
And if you look at a lot of the other
big companies, you know, we think of Hellman's Mayo, you
know that blue and white jar, but you might not
know it's owned by Uni Lever. You know, Sir Kensington,
which is sort of fancy Mayo own Ketchup, also owned
by Uni Lever, and with you know, you could think
of Hunts Ketchup, Golden's mustard wishbone dressing for Ranch. Those
(14:20):
are all owned by ConAgra, another big food giant. So
a lot of these companies out there, they realize the
benefit of making these products almost seem like independent, family
run bespoke brands, when there are actually these sort of
giant food conglomerates. They're sort of partnering up. So when
you go to a ski resort or a buffet line,
you see their brands altogether at the end of the
(14:41):
food aisle, rather than Craft or Unilever and McCormick or ConAgra.
They're all going after each other for those mix of
flavors that they want consumers to lust after. And as
you mentioned earlier, right, McCormick's had its hand in making
developing other things by Lightline and Cool Ranch. Dorito's one
of my everite ones too. I had no, no, no
clue they had a hand in that. I did want
to talk about the pandemic supply chains and COVID all that,
(15:02):
because that's an interesting thing too. They were seeing a
lot of increase in sales at US stores. Obviously people
were cooking at home, needed to stock up their pantries.
They did have all these deals with restaurants and some
of that dried up, but the sales for grocery stores
was increasing so much, and then they ran into the
supply chain issues for a lot of their stuff, tumeric
which they need for the mustard. Just a ton of
(15:25):
different things on the different angles on this front. So
to tell us about that, it was a really fascinating thing.
I mean, I think at the beginning of the pandemic,
rewind the clock. I know, it's it's been so many
years at this point, but back to that February March
period when no one quite knew how big of a
threat the COVID nineteen situation would be. And for McCormick,
they're seeing restaurants closed, they're seeing factories close, and this
(15:46):
could be a really disruptive force in their industry. But
then the opposite happened all of a sudden, as you noted,
sales of tumeric, which a lot of people use for
for health reasons or because it's what gives the yellow
color to to spicy yellow mustard, and Frenches broths, because
people were cooking soup at home, baked goods like vanilla,
all these things taking off. So at this real whiplash
(16:07):
moment from McCormick where they have to keep up with
the demand at the same time as all these factories
are closing. It was a real crazy few months going
onto a year, and specifically with tumeric, the US almost
ran out of mustard for a time. They were running
low on their reserves for some of the ingredients like
tumeric that goes into French is partly because ocean freight.
(16:28):
All those ocean freighters were either not running or closed
down or over capacity, so they actually had to rush
an emergency air cargo shipment of tumeric and it landed
inadvertently in Baltimore instead of at a French's factory in Missouri.
So they had to hire all these truckers overnight to
drive it a thousand miles to the French's factory in
time for a production run. Otherwise, who knows, we might
(16:49):
not have mustard on our our hot dog. Which sounds small,
but for a lot of people, these are comfort foods
and that was a big deal during the pandemic, especially
if you're your parents with kids at home and you've
got to keep them entertain with food. Yeah, I mean
that sucks for you know, McCormick's, the parent company at
this point for all of this. Sucks for them to
have to go through that. But man, I kind of
love hearing that. You know, the scramble right for consumers,
(17:12):
we don't really know what's going on. You might hear
there's a shortage of this or that, but this was
the scramble to get people the products that they know
and love and want. So what's next for McCormick's, at
least with this growth potential into hot sauces and other
sauces and all these acquisitions, they're looking for, what's next
for them? You know, I think what's next is now
that they have this massive build up of brands that
(17:34):
are all owned by the same company but seemingly run independently.
At least when it comes to grocery sales, You're going
to see a lot more mash ups. You know, um Hines,
for example, they're doing that. They're doing a lot of
mash up products, and it's not just ketchup anymore, but
they mix it with you know, all types of I
think they have catch elly, so you know Hynes, catch up,
(17:56):
the Mayo chop, honey Racha, tarch up, Cranch, so sort
of blends of ketchup and ranch dressing and saracha and
and so forth. Buffer Ranch another one part of what
Hinz calls their innovation agenda. And so what you might
see in the coming years are perhaps some mashups between
cholula and frenches, so you have a sort of spicier
(18:18):
mustard or you know Old Bay, which is that popular
Baltimore seafood seasoning that's mixed with hot sauce these days,
very popular, and so maybe there's going to be more
of that. And so the question is how far do
you take that before it's sort of ruined some of
the brand cash a do you want cholula showing up
on taco bell menus at McDonald's and so forth. On
the other hand, I think a lot of people might
(18:38):
like that stuff because you know, everyone's hungry and and
these types of products they can really go on anything. Yeah,
I mean those sauce mashups really can be intriguing and
pleasant surprise when it really works with you know, whatever
you're dipping in and chicken wings, whatever it can be.
So yeah, it's just a fun story. There's a lot
of details about mccormicks and some of their history we
couldn't get into for this, but I think just everybody
(19:00):
read Austin's piece on all of it. Austin Carr, features
writer at Bloomberg business Week, thank you very much for
joining us. Thank you, and if your listeners have a chance,
I know one product that McCormick was really proud of
in terms of a mash up with French is flavored
craft beer and French is flavored ice cream. And they're
they're convinced it's a big flavor out there, So go
try it if you're curious. All right, thanks so much, Austin.
(19:23):
Thank you. That's it for today. Join us on social
media at neely Dive pod on both Twitter and Instagram.
Leave us a comment, give us a rating, and tell
us the stories that you're interested in. Follow us on
iHeart Radio or subscribe whatever you get your podcasts. This
(19:45):
episode of The Daily Dives produced by Victor Wright and
engineered by Tony Sorrentino. I'm Oscar Ramirez and this was
your Daily Dive
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