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McCormick snaps up Cholula for US$800M

The spice maker adds to its hot sauce portfolio with its latest acquisition


McCormick & Co. continues to heat up its brand portfolio.

The spice maker said Tuesday that it was buying Cholula--the hot sauce with the distinctive wooden cap and a
cult following--for US$800 million from private equity firm L Catteron.

McCormick made a notable tilt toward the hot sauce shelf three years ago when it acquired Frank's RedHot, the preferred fuel in Buffalo wing recipes, as part of its $4.2 billion acquisition of Reckitt Benckiser's food business.

The acquisition arrives in the midst of the pandemic, with consumers eating the majority of their meals at home. There was evidence of that trend in recent regulatory filings from McCormick, a company in Hunt Valley, Maryland with a valuation of close to $25 billion.

McCormick said in September that revenue surged 8% during the third quarter as people replaced the contents of outdated spice racks, or started one for the first time. And hot sauce is increasingly part of the pantry mix.

"Hot sauce is an attractive, high-growth category and, as an iconic premium brand, Cholula is outpacing category growth," said McCormick Chairman and CEO Lawrence Kurzius in prepared remarks.

Cholula has made its own adaptations during the pandemic to get the sauce to its cult followers.

Earlier this month, the company teamed up with simplehuman to create a touch-free Cholula dispenser for restaurants or other places that serve the hot sauce, allowing those eating out to bring the heat in relative safety.

Shares of McCormick, which have hit an all time high this year, rose almost 2% Tuesday.

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