Spice World

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The Scoville scale is used to measure how “hot” a chili pepper or hot sauce truly is. While Cholula doesn’t quite reach ghost pepper status on the Scoville, the brand itself is on fire.

Seasonings company McCormick announced Tuesday it has agreed to buy the popular hot sauce maker for $800 million.

Flavor Favorite

Maryland-based McCormick is a spice-rack regular in American kitchens. Known for brands like Old Bay seasoning and French’s yellow mustard, the company sells its flavorings to restaurants and consumers alike.

Now the seasoning vet is adding Cholula hot sauce to its repertoire after reaching a deal with L Catterton, the private-equity firm that’s owned the brand since last year:

  • Named after a city in Mexico, Cholula was introduced to the U.S. in 1989. Bottled with its iconic wooden cap, the unique blend of peppers and vinegar is used to liven up everything from tacos to cocktails.
  • It’s also one of the fastest-growing hot sauces – McCormick said Cholula’s annual net sales are around $96 million and rising. The Cholula bottle even made a celebrity guest appearance on a recent SNL skit to break up the wedding of two ketchup bottles.

Adding Cholula will make McCormick a hot sauce mogul. The company already owns Frank’s RedHot, which it picked up in 2017. Frank’s and Cholula alone make up around 30% of the entire U.S. hot sauce market, according to Euromonitor International and Nielsen data from Cholula.

A Hot Commodity

U.S. retail sales of hot sauce have jumped over 40% since 2015 and are on track to reach nearly $1 billion this year, according to Euromonitor. That’s just shy of ketchup sales.

International flavors like Thailand’s sriracha have scorched the market and smaller sauce brands have remained potent – securing over 40% of hot sauce sales.

And with the pandemic keeping people at home this year, amateur chefs everywhere are looking to add spice (or edibility) to their recipes. In the twelve months ending November 7th, hot sauce sales were up nearly 25%.

The Takeaway

McCormick is savoring the condiment boom. The company reported strong 8% revenue growth in its 3rd quarter versus a year ago.