The more people economize by cooking for themselves, the more spices they buy. And the more spices they buy, the better McCormick & Co. likes it.
Although the nation is in the throes of a recession, Hunt Valley-based McCormick announced yesterday that it had record spice sales and profits in its fiscal 1990.
Spice sales in the fourth quarter, which ended Nov. 30, rose 10.3 percent, to almost $400 million, compared to the year-ago period, while profits soared 25.5 percent, to $25.5 million, or 62 cents a share, the company said.
Some restaurants have reduced their spice purchases, but sales to grocery stores are booming, said James J. Harrison Jr., a McCormick vice president.
"People are cooking more at home, and that works to our advantage," Mr. Harrison said, explaining that McCormick's sales to consumers are more profitable than sales to restaurants and fast-food chains.
Rafi Zvili, owner of the Food Plus Inc. supermarket in Highlandtown, said his sales of McCormick spices have been strong in recent months, despite the recession.
In addition, he said, his customers continue to prefer McCormick's name-brand spices, even though the store offers off-brand spices at about half the price.
Susan Sternberger, a stock analyst who follows McCormick for the Ladenberg, Thalman & Co. investment firm in New York, said the unusual way grocery stores handle spice sales helps make McCormick's consumer sales its most profitable division.
Most grocery stores buy only one company's full line of spices and usually offer only a few competing items, she said.
That means the spice company that wins the competition for shelf space gets near-monopoly profits, she said.
Since 1987, when a new management team redesigned the company's spice packaging, McCormick has won over grocery stores. About 45 percent of the nation's grocery stores now take McCormick's full line, Ms. Sternberger said.
"The new management has got ten its act together," and the company is performing well, she said, noting that McCormick's stock is trading near its all-time high.
In over-the-counter trading yesterday, McCormick closed at $25.25, up 50 cents.
McCormick's net income for the year dropped from $135.5 million, or $3.09 a share, in 1989 to $69.4 million, or $1.66 a share, this year. The main reason was an $83 million gain on the sale of its real estate division in 1989.