Hold the garlic, hold the onions McCormick to sell Gilroy seasoning unit

March 16, 1996|By Timothy J. Mullaney | Timothy J. Mullaney,SUN STAFF

McCormick & Co. Inc. said yesterday that it will sell the California-based unit that makes its onion and garlic-based products, shedding about 11 percent of the Sparks spice giant's sales but, apparently, a smaller share of its profits.

ConAgra Inc., of Omaha, Neb., will pay an undisclosed price for Gilroy Foods Inc. of Gilroy, Calif., McCormick spokesman Mac Barrett said. Gilroy makes products such as onion powder, onion salt, minced onion, garlic powder and garlic salt, which are sold to food manufacturers and to other McCormick operations for sale at supermarkets under the McCormick brand.

Gilroy has about $200 million in annual sales, Mr. Barrett said. McCormick as a whole posted sales of about $1.9 billion for the fiscal year that ended last November.

Mr. Barrett said McCormick will not comment on why it is selling the business until the sale closes.

Analyst Kurt Funderburg, of Ferris Baker Watts Inc. in Baltimore, said he believes the business was sold because it was earning less than other McCormick lines; that made it vulnerable, because McCormick has vowed to shed poor performers in a bid to recover from stagnant earnings.

"It seems like a strategic fit with the rest of their business, so the returns must have been pretty unattractive the last couple of years," said Mr. Funderburg. "This is concrete evidence they are committed to getting down to a concrete core of businesses they can make money with."

McCormick does not release separate results for Gilroy. But the company has said that its industrial business, which sells spices to other companies, makes less than its retail-oriented business.

The company has cited that fact as a key reason its overall profit margins have narrowed in recent quarters.

McCormick said it will retain a small piece of Gilroy that produces electricity from steam generated in garlic processing and will keep Gilroy's interest in SupHerb Farms of Turlock, Calif.

Mr. Barrett said McCormick has not decided what it will do with the money from the sale.

Pub Date: 3/16/96

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