Dive Brief:
- McCormick & Co. intends to cut 10% of its supply chain workforce in the Americas as part of a cost-reduction program meant to save $75 million in 2023, the company said during its fourth-quarter earnings call.
- The workforce reduction come as the spices and seasonings manufacturer pursues more automation in facilities to add efficiencies. CEO Lawrence Kurzius said McCormick has achieved half of its planned workforce reduction in supply chain over the past three months.
- McCormick also eliminated inefficient or difficult-to-staff shifts in production as another way to save costs. The spice maker is the latest CPG company in the food and beverage space to announce a restructuring of its workforce.
Dive Insight:
Job cuts have become a popular measure in the recent past for companies across nearly all sectors of the business economy, including food and beverage, to bring costs down.
Coca-Cola announced in November it’s planning to restructure its North American workforce through a “voluntary separation program” that will include employee buyouts.
PepsiCo is laying off workers at the headquarters of its North American snacks and beverages divisions, according to reporting in The Wall Street Journal. And plant-based meat companies Beyond Meat and Impossible Foods, as well as ingredients behemoth International Flavors & Fragrances, have laid off workers or announced plans to streamline their businesses.
McCormick plans more layoffs beyond supply chain, with Kurzius saying the company is looking to “streamline our workforce across the entire organization.” The company is rolling out a voluntary retirement program, which “will be followed by other actions, some of which will be involuntary.”
A spokesperson said the company is “still reviewing options to streamline the organization” and that it hasn’t yet announced how many jobs would be cut or when it would be disclosed. McCormick currently employs about 14,000 people globally, according to its website.
In its recent earnings report, the Maryland-based spices and flavorings company highlighted the financial impact the broader economy is having on its business. It forecast earnings to be between $2.42 and $2.47 a share in 2023, compared to $2.52 a year earlier. During its fourth quarter, revenue fell 2% to $1.7 billion.
″[W]e navigated a dynamic global environment including persistently high cost inflation and supply chain challenges, significant disruptions in China related to COVID, and the conflict in Ukraine,” Kurzius said in a statement.
Similar to other CPGs, McCormick has turned to price increases, which the company said are only now beginning to catch up to the pace of inflation.
Sarah Zimmerman contributed to this story.
