headquarters, the whole thing, so it should be pretty interesting.
Yeah.
Maybe, Brendan, we start with you. You had a number of priorities coming into this year, including, most notably, strengthening global leadership in your core categories. How do you feel you're performing against this priority so far, particularly as you think about spices and seasonings, and what are you most optimistic about as you look out through the back half of twenty-five?
Thank you, Andrew, and thank you for inviting us to be at the conference again this year. Always thrilled to be here. You know, we always like to, you know, lead off any discussion about and sort of our performance, and that we really do operate in just really great and advantaged categories. We're really on trend and have been, and historically, we have driven growth, organic growth, just through volume. It's also really important for us to make sure that we, you know, continue to build out our leadership and differentiation in the marketplace, you know, particularly within, you know, the food industry, but doing it with really, you know, much greater competitive posture and intensity and focus.
And so, you know, high-quality growth is really important for our organization, and especially not just in 2024, but even beyond 2024. And so we intentionally increased investment in the areas in which we really do have a right to win. And so what that did is allowed us to focus in on those categories which are really most important in terms of driving that growth. You know, one of those areas was spices and seasonings, definitely. We put a lot of energy in terms of increasing our investment in brand marketing.
Yeah.
We talked a lot about launching even more innovation this year and getting back up to the levels of where we had been previously, you know, back as far as, you know, 2019. And we also invested in areas like price gap management and price pack architecture across our portfolio. And you know, these are areas that, you know, received a lot of attention from us, you know, particularly in this, this part of our portfolio. It's also about driving consumer value, whether it's higher flavor or, you know, launching even more innovation or even greater freshness for the consumer. You know, also in areas like, you know, we're talking about even just better quality, making sure that we're really delivering that, that total consumer value, you know, across our business.
From a share standpoint, we like how we've been performing over the past couple of quarters. We even got to, you know, some positive unit, you know, share performance as we came out of the second quarter overall, and so I think that's an indication that we're starting to see the performance that we wanna see across this part of our business, and globally, in the second quarter, we grew volume across really the entire consumer segment, but specifically in the U.S., you know, really driving, I think, improved volume growth was definitely a large part of our performance, as well as in EMEA, we grew dollar share in a number of markets, so we really like the trend of our business.
It isn't just necessarily in the U.S., but also across, you know, where we're competing globally, so that has been pretty good. I would say in the other categories that we operate in, whether it be, you know, hot sauce or mustard or recipe mix, we like the fact that we've seen really good improved consumption through the second quarter on those categories, too, and that's directly related to a lot of the programs that we've been putting in place to support the business, overall. Also notably, even though we have all seen a slowdown in traffic, in the food service industry, we've been growing volume in our branded food service business, during this period of time. So doing a nice job, we think, of gaining share in that part of the market.
So, when I look back at the first half of the year, really pretty happy with the progress that we've made. It's sort of on plan, if you will, thinking about it that way. You know, this is an area that I think we've put a lot of focus up against. We're getting, I think, the return and the response from the programs that we're putting in place, again, back up to that top priority of just really putting even more strength and more support in our core category areas. The other thing I'm really quite thrilled about is just the speed and quality of the execution from our team.
I think we all decided we're gonna act early in this fiscal year and really make sure that we're getting on top of the business much faster in terms of improved growth. I can't thank the team enough for the amount of, you know, the great execution that they're delivering across the business. I would just wrap it up by saying, we said twenty twenty-four was a year of investment for our business, and that indeed has been the case, and we're accelerating our approach to that just higher quality growth, volume driven, and we're definitely starting to see those results. It helps us set us up for twenty twenty-five. But I would just say, importantly, this was part of our plan.
In many ways, it reflects the fact that we've got great cost savings programs which allow us to invest more into the business, and at the same time, we're driving margin improvement, so we like the progress that we're making, and, you know, we're anxious to sort of, you know, obviously, you know, begin to talk about how we'll do in the second half of the year.
Thank you for that, and Brendan, you know, given your position in the flavor industry, I'm curious about what you're seeing in terms of consumer trends, especially with the US consumer. You know, we're hearing a lot of weakness across the consumer complex. What are you seeing in terms of consumers moving towards value, and how does this influence your growth strategy?
We're in a unique position in the industry because when we think about flavor, we're end-to-end flavor. We think about flavor from all different sides of the industry, and so we get a really unique view, I think, in terms of what's playing out there. This is a strong understanding in terms of consumer trend and preferences and where overall flavor trends are driving. Our view of the consumer really hasn't changed a whole lot since the second quarter. You know, since we've talked about the second quarter, our... The consumer definitely, you know, there is a resiliency there, but they definitely remain challenged. I mean, what we're seeing right now is they continue to exhibit value-seeking behaviors.
One way to think about, you know, what we're seeing in the trends is you still see an increase in the amount of quick trips to the grocery store at the expense of pantry loading. We're seeing smaller basket sizes, because they're buying just for what they need. I know there's a really big debate about calories and how much are being consumed at one point in time. We're seeing really just as many calories being consumed, but I think what's happening is a lot more focus on less waste. We just see, again, this pattern of behavior of just, you know, really relying on leftovers and, et cetera. So, you know, that's definitely playing in this value-seeking behavior as consumers decide how they're really deciding to spend their money when it comes to food.
If you look at food service, we're definitely seeing slower trends on traffic. I think what's coming through in the data that we're looking at is that slower traffic tends to be sourced from either a lower-income consumer or maybe the older consumers. And so we're seeing that's where the slowness might be coming down through food service. And it's definitely shifting into more food-at-home, you know, consumption overall. It's important to remember, though, during, you know, times like this, you know, consumers, you know, when they're pressured, they tend to cook at home more often. And so we definitely, at Group, believe we're seeing that. They tend to shop on the perimeter of the store more frequently. We're definitely seeing accelerated growth there in that part of the store.
And that really helps categories that McCormick participates in, because you got to flavor that broccoli, you got to flavor the chicken. You're not buying things, you know, already prepared or made, or you're going out to eat necessarily as frequently as you used to, and so that tends to benefit our categories. And in fact, I think we're talking about, you know, back in the second quarter, when we were, you know, talking about the performance of our categories, we're still those categories that we operate in still lead unit consumption center store. They're still outperforming. And that's just directly, I think, connected with what we're seeing happen, you know, overall, I think in the grocery store.
You know, one of the things we have to kind of step back and think about is, during the pandemic, consumers really did learn how to cook, because they had to in a lot of ways. And also, they're, they're still cooking a lot more right now because, you know, there's this period of high inflation. And as savings were depleted and stimulus was depleted, you know, we definitely see that behavior still happening, I think, overall. Still, and this has been a pretty consistent number for the past two years, about 86% of meal occasions are happening in home, which is still about two points higher than it was pre-pandemic. It hasn't really moved a lot. It just sort of stayed there, and that's where consumers are right now.
And so that's really, I think, what is some of the data that we keep looking at is, you know, consumers are still in the kitchen. Now, a lot of this is a learned skill, and it's really brings a lot of benefits, I think, to consumers. Healthier meals. It also tends to be cheaper, too, and so it allows consumers to stretch, you know, kind of their food dollar, I think, a little bit longer, and so that's an opportunity for consumers. It brings families together, which is always a good thing. And it also really is, you know, allow people to kind of continue exploring on flavors. So we think a lot of this, you know, increased amount of cooking at home has just sort of stayed in place for a while, has really ultimately been, you know, net pretty good for the consumer.
But it's just, you know, we've just seen more people more comfortable with that now, and they still enjoy doing it overall. On value, we're seeing a number of things start to play. If I think about value as a trend, what's interesting is I'm seeing a little bit more movement and shift towards larger sizes, which had increased, then it kind of stayed flat for a while, now we start to see it reappear again. And then ironically, at the same time, really small sizes are starting to, you know, grow fast, too, because you're starting to see that that's a you know, an opportunity where like mini or trial sizes, and it's an opportunity to try new flavors.
So it lowers the barrier to trial for people. They're not gonna really spend a lot, but it shows that they still want innovation, but they really wanna, you know, take away, I think, you know, what it might take to kind of try that new product. So we see these mini or trial sizes start to grow a lot. And then the other thing, which is kind of indication of the mindset for value, is we have this business we call recipe mix. Those are the seasoning packets that you find in grocery stores. And you might find it, it's a single meal play, it's probably around $1.29-$1.49, and that's a real value for the consumer, and now we're starting to see that unit volume really start to accelerate.
So it tells us how consumers are thinking and, you know, kind of, how they're operating and spending their dollar in order to get the most value that they can. They're still buying brands, they're still buying high-quality products, but those are some of the, you know, the trends that we're seeing, I think, overall. I think from a Gen Z perspective, and this is kind of a fun area for us because this is obviously our new future consumer, and right now what we're seeing them do is lean into higher quality and more expensive items in terms of flavor. We're seeing velocity pick up on our gourmet line, and it's coming from this cohort. So it's kind of interesting to see, you know, how Gen Z is playing. Their cooking skills aren't where they need to be.
They're still kind of building their own homes or apartments or whatever it might be. So we see a lot of growth right now in seasoning blends, and that's really kind of the fastest growing area of the spices and seasonings category. And that's because it's like a flavor hack. Typically, when you're cooking with herbs and spices, you might start your meal prep with that or use it throughout the meal prep. But if you don't know what you're doing, they're kind of adding this at the end of the meal as a way to flavor a meal. So we're seeing a lot of seasoning blends grow with, especially with this cohort, Gen Z, you know, because of that. So it kind of adds a lot of excitement, I think, to the category in terms of new products and things that we're working on.
We just launched this new Flavor Maker blends, which directly approaches that specifically for them, you know, overall. Now, just a couple other trends that I think are worth noting. In food and beverage, we're seeing e-commerce continue to gain more share of sale of total sales, and so it continues to creep up and grow. It's actually where you see more unit movement going on right now in terms of unit growth, as well as it's being driven by, in the mass channel, you're seeing a lot more delivery happen, and so it's becoming even a greater convenience for consumers, and so that's an area that we see growth, and I would just say, even during this time of value, flavor exploration still remains, you know, an active part of our category.
We just have to make sure that we have all different forms of value for that consumer, and we have the innovation agenda to match that.
Great. Thank you for that. And Brendan, you know, there's always concern over private label and how those interplay with your brands. Can you talk a bit about how you view private label today? And in that context, how do you think about pricing over the long and near term, and where do you think the consumer is on their journey in terms of adjusting to these new, higher, you know, price points that we've all, you know, been having to adjust to in the last two years?
Yeah, private label seems like an evergreen question.
Mm-hmm.
I think we're gonna get this all the time, and
Particularly in spices and seasonings, for some reason.
Certainly is. And, you know, we're a market leader in the categories in which we play in and in all the major markets that we're in, but we're also a leading private label supplier in U.S. spices and seasonings, so we have, you know, presence in both parts of our categories. And we're really diligently addressing, you know, our competitiveness within private label. So we made a real concerted approach to make sure that we, you know, took a really strong look at price gaps that were happening out in the marketplace there. It was more to make sure that we were at the right price premium versus, you know, private label, and so we've done a lot of good work around that. And so far, we're seeing really, if we compare our performance to private label, our unit volumes are doing really well.
We're seeing overall price gaps at really the lowest what they've been in the last year in terms of us versus private label. And so, you know, we feel like we're really getting the right traction and performance, I think, up against, you know, private label as a part of our category right now. But you know, think about that, you know, private label, though, plays an important role in any category, and you have to really take a look at the whole consumer proposition. So we work a lot with our retailers to make sure that we have, you know, strategies that really drive the entire category, and that includes the performance of private label.
But also, it makes sure that, you know, we have to make sure that our brands, and we do this really well, is we have offerings at every price point across the category. And so we've really done a nice job of thinking and making sure that our branded portfolio is really available at all those different price points, you know, throughout the whole portfolio. One of the things we did recently... 'Cause we know brands really still matter a lot. They really do. And we launched a part of our line that's called Lawry's Opening price point, as a way to help compete up against private label, on top of all the other programs that we have.
And what we're seeing there, particularly we're still building out distribution, but a lot of our distribution is also coming in the form of dollar and the discount channel. And we're seeing a lot of trade-up from private label into that brand. Oh, and it's actually growing the category. So we know that, you know, brands really matter, and we start to see that level of performance, and we think it's going really nicely. We started now to launch other seasoning blends in that line, and so those will start to come out, but it kind of gives you an opportunity to think about that whole portfolio is very broad. We have the broadest portfolio out there in the industry.
That, combined with private label and having really the right effective category management strategies, we think we're driving a lot of success for our customers and for the category and also for our brands. So we're pleased with, I think, the progress that we've made there. I would say, overall, in terms of pricing, I don't know if the consumer's fully adjusted yet to super high prices. I think what we've kind of made our focus areas, just to make sure we meet consumers where they are on an item-by-item basis to make sure that we're competitive, you know, overall. When we look at our execution on shelf, we're really proud of the category management, revenue management discipline that we have to really get, I think, the effective performance on the shelf, not only for our brands, but also for the category overall.
The consumption has been good, and so we like the path that we're taking, but private label's been part of that story, for sure.
I think people think private label, they think that's a big, scary thing for most CPG companies. Frankly, a lot of our markets we play in are heavy private label, and we do really well there. You think about the U.K., it's a 50% private label market. Generally, when you have a high private label, then you have a number one brand leader. You don't have as many of the brands like you have in the U.S. So we've found, through our category management tools, getting the price points right, we can play in every environment, whether it's a high-branded environment like the U.S. or France, or a high private label environment like the U.K.
Great. Thank you. Within maybe shifting gears a little bit, within flavor solutions, Brendan, maybe you could help bring to life that business for us a little bit.
It's one that's less transparent, harder for us to get a sense of. Explain your product categories and the customers you serve, and it'd be great if you can illustrate maybe how McCormick is truly different from a lot of the other flavor houses that many of us in the audience end up tracking pretty closely.
The great things about McCormick is somewhere today, whether it's been at home or away from home, you've probably eaten a product flavored by McCormick. That's the way we think about how broad we are and what end-to-end really means for us. Most people know about, you know, our brand and McCormick through the Consumer segment, what you find on grocery store shelves, you know, et cetera. We think about and you bring in Flavor Solutions, our business stretches well beyond just that Consumer business. When you think about our Flavor Solutions segment, think about, you know, we play in a lot of areas where we have unique building blocks for flavor to complex flavor systems.
And we sell to a number of, you know, sort of a broad part of the marketplace in terms of different customers and channels. But broadly, think about it as that part of our business is we're selling to CPG manufacturers, but also in the food service industry. And so this is the breadth that we have beyond just consumer retail and our brands overall. And so that's a pretty exciting part of our business. As you know, it's roughly around 40%, maybe slightly higher than 40%. I'm gonna break it down in a way that brings it down to sort of different categories within flavor solutions. The first one is branded food service.
Think about this as our consumer brands now going into the food service environment, and that could be branded herbs and spices, condiments and sauces, seasoning blends, all going into food service. They're gonna be in larger packaging, but really, the application is back of house, where chefs are using these products to flavor the meals or the food products that they're creating, or front of house. Could be on tabletop, for example, if you're seeing a bottle of, you know, McCormick grinders or Frank's RedHot sauce. This is, you know, our presence in branded food service, and it's roughly, of our total Flavor Solutions segment, about 25% of that part of our portfolio. And this is an exciting area of growth for us, and so, you know, I'd say that's kind of the first area.
The other area that we compete in is custom condiments and coatings and just bulk herbs and spices overall. That's roughly, you know, sort of less than 25% of this total portfolio of flavor solutions, and this is primarily what we're serving in the kind of QSR type of the industry. So we're, you know, serving quick-serve restaurants there, and it could be in the form of just, you know, sort of, you know, their condiments or coating systems for protein we'll be selling in there, and that's that part of our business. But the largest part of it is the flavor category that we're talking about here. And think about that as seasonings other flavoring systems, you know, dry and wet marinades that we might manufacture and sell, seasonings, specialty flavors.
This is the area in which I think as you're referring to, Andrew, tends to be maybe at times, maybe the least understood. I'll do my best. Again, we're always doing the sliders, trying to make sure that we explain this business as, as easily as we can. This is where we tend to compete against other flavor houses. And when you think about flavor houses, everyone comes to market with a particular strength. For McCormick, you know, I'm gonna break down that strength in terms of flavor competencies at first. What we tend to be really good at is savory, an area we call sweet brown, or think about that as naturally sweet. So think about vanilla as a way to sweeten up and, and provide flavor.
Heat is another competency that we have that we're really pretty good at, and an emerging strength in citrus, you know, overall. Now, think about those competencies and now where they're applied, you know, where you might find them in the marketplace. And so there, from an application standpoint, when you think about seasonings, think about the snacking category: chips, crackers, bakery items, too. It isn't necessarily just snacking, but you see a lot of applications in terms of seasonings. We also flavor beverages, so we'll flavor dairy beverages. We'll flavor non-alcoholic beverages and also alcoholic beverages, so we tend to operate in that application. Another area that we've been calling out a lot in the last couple of years since we bought FONA is also performance nutrition.
And there, just to be very clear, think about, like, those powdered protein drinks and the flavoring that you'll find in there, and so we'll flavor that. And then lastly, I would say is think about protein flavoring, and a lot of times, you know, we're really very good in sort of this area in marinades, so we also flavor, you know, products that way. Those are the areas in which we tend to have a strength overall in the flavor industry. And you know, those flavor competencies can go across a lot of different applications, but I'm just laying out the ones that are probably more prominent in terms of our customer base. But overall, when you think about what makes us different than other flavor houses, what's it almost...
The best way to describe it is the point one starts from. For us, what's unique about McCormick in this part of the flavor industry is that we start with a food and culinary heritage. Our base starting point is natural ingredients, and so that kind of makes us unique in terms of our point of entry into the flavor industry, you know, overall, and it really does give us a real expertise in terms of that flavor experience when we're starting with natural ingredients. And it tends to really lend itself towards clean and natural type flavor applications compared to our peers. Now, the starting point is different, and this is, you know, a little bit of the difference between all the different flavor houses, where they begin. That's where McCormick begins.
The one thing that we don't have in our portfolio is fragrance, which is not part of what we're gonna do, and we're so focused on flavor. That's not an area we're gonna go into. We don't have the competency in that, and we're not gonna be good at it overall. Also, unlike most other flavor houses, they don't have a consumer business. We do. And that gives us a real understanding of not only the, sort of a deeper understanding of the role that brands play, but also, I would say it's even more profound when you think about consumer insights and the amount of leverage we have from a knowledge standpoint about what's going on in the marketplace, and that is a real leverage and a difference that we have versus our, our competitive set there in flavor.
And that becomes a real competitive advantage when we're talking to customers and thinking about what's next in flavor, where, you know, opportunities could go in terms of flavor development. And so those are the things that really distinguish us. I would say also, those flavor competencies that we have tend to be McCormick strengths, tend to be really good at seasonings, really good at savory, and other flavor houses are really good at other areas, and so, but we all compete in the same big, broad market.
Thank you for that. That's helpful. Mike and Marcos, you know, you started 2024 with strong first half results. Guidance was set prudently for 2024. How do you think your business is performing, both in consumer and flavor solutions so far? Do you still expect positive volumes in the second half of the year, and do you continue to expect China consumer to be neutral for the year?
Great. I'll start, Andrew. First, I'd like to thank you for hosting such a great conference. I mean, I've been the CFO-
Pleasure
... for eight years, and this will be my last one, which is kind of bittersweet.
Yes.
But you can tell the last one, standing room only.
There you go.
Congratulations to Barclays. It's like the A&M, Notre Dame game the other night.
That's it.
... First of all, I mean, we are very happy with our first half performance. As we said on our earnings call a couple months ago, strong volume growth. You know, as any good CFO will tell you, we've just started our fourth quarter. We're in our quiet period. It's the first day of close, so we'll know our numbers in about three weeks, and we'll share them with you in the earnings call, but as of Q2, really good. You know, the investments we've made, we've talked about increased brand advertising, price pack initiatives, our increased innovation really bearing results. Our consumer business in Q2 showed positive volume growth, which is great.
Across all regions in the spices and seasonings area, which you know is a very core category for us, we grew volumes, and we grew share in the U.S. from a unit perspective, which is really important, driving these units, which is very important for us. This year, as Brendan said, it is a year of investment for us in all those areas. The nice thing is, with all those investments, we have been able to grow margins, which was another focus for us this year. Our increased comprehensive continuous improvement program, our Global Operating Effectiveness, are driving the savings that are allowing us to invest to drive growth in the second half and into 2025. Mentioning 2025, I will turn it over to Marcos.
Yeah. Thanks, Mike, and happy to be here, Andrew, as well. So we had a good first half, as Mike mentioned. We made sequential volume improvements since Q4 of last year, especially in the consumer segment, and we expect to deliver total positive volume growth in the second half of the year. We believe that, you know, the plans that we have in place, we have confidence in those plans, and that they will drive, improve the results, not only going into the back half of the year, in 2024, but also in 2025 and beyond.
So just giving you some insights by segments, if you think about it, the Consumer segment, our growth levers, brand, marketing, innovation, the surgical price gap management that we put in place, all those are working, and they're expected to improve our volume trends going into the back half. Similarly, Flavor Solutions, volume trends are expected to improve in the second half, and that is aligned with the timing of some of the customer activities that we talked about in Q2. In addition, we do have a very robust innovation pipeline with most of our customers, which is also helping. And then I would also say that branded food service has performed very well so far this year, despite the softness in the overall market.
So overall, the trends that we saw in Q2, they do remain consistent across the business going into the second half. As it relates to China, to your second question, there, Andrew, I mean, similar to what some of our peers are reporting, the market conditions continue to be challenging, but we still expect sequential sales improvement as we move through the second half of the year. And obviously, we continue to believe in the long-term trajectory, growth trajectory of the China business, and we're driving plans and enhancing capabilities to serve the Chinese consumer and customers there.
Great. Great, thank you. And also, we're staying with you, Mike and Marcos. How would you characterize the direction of Flavor Solutions margins over time? Do you expect you'll be able to get back to pre-COVID Flavor Solutions margins? And what kind of timeframe should we think about, if so?
Yeah, I think the direction is going the right direction, is going north. And then just to give a little historical perspective, you know, when I became CFO about eight years ago, we put a lot of focus into profit realization, and the margins on our Flavor Solutions side of the business did grow over time to around 14%, right before COVID. And obviously, the cost implications of that did put a hurt on the Flavor Solutions side. A lot of extra supply chain costs to service our customers during that time. But we've really made great progress the last year and a half.
In 2003, we increased margins by about 200 basis points, so getting it back to 10%, you know, through a lot of those cost savings initiatives I mentioned, taking out some of those one-time supply chain costs and really building for the future from a volume perspective. This year, we're on track, and our guidance for the whole company is about 80 basis point improvement from an operating profit margin perspective, which Flavor Solutions will be a big part of that. But, you know, going back to the playbook, we had, you know, five or eight or nine years ago, growing margins. We'll talk about how we're gonna continue to grow those margins over the next couple of years.
Yeah, so before we go into the margins, how we're gonna get there, I mean, let me start by noting that we've had a couple of years of very solid top-line growth in the Flavor Solutions business over the last couple of years, 2022, 2023, particularly in the flavors and the branded and food service segment. And which would be even more impactful if we had higher margins. So the focus for us is really to continue to drive margins improvement over time, and this improvement will come through three main levers, I would say. The first one is portfolio migration. We're gonna continue to shift towards higher margin categories, such as flavors and branded and food service. Number two is volume.
As we return to volume growth, we expect the operating leverage to run through the P&L and improve margins, and then finally, I would say CCI, our Comprehensive Continuous Improvement program, our savings initiative program, you know, it's very robust in driving efficiencies, as well helping the margins, the margin profile. In addition to that, I would say that, you know, we continue to make progress optimizing our cost structure across the supply chain network, and we're also trimming or exiting low-margin business, so all of these elements, they will, they give us confidence to continue to improve, they will continue to improve the margin profile going forward, but also, as a growth company, we are very much focusing, putting investments behind this business to continue to drive top-line growth.
So as you think about it looking forward, Flavor Solutions is gonna be about the combination of and the balance between continue to drive top-line growth, as well as improving the margin profile. As Mike mentioned, I mean, 2024, we guided 80 basis points of margin improvement for the overall business. Flavor Solutions is gonna be roughly the same. And then over time, you know, we continue to improve margins in line with our long-term algorithm.
Great. Thank you, and Mike, I guess, how long can McCormick lean in, you know, with investments while still maintaining margins, I guess, before investor concern, you know, on gross margin creeps back up? So how do you feel about the returns on the spend and how they've played out so far? Because I think, you know, it's one broader concern in the industry, which is there's flexibility now, gross margins have improved, the industry's leaning in on promotional merchandising spending to get volumes moving. But the longer we go without seeing meaningful improvement, the more concern will crop up about long-term margin degradation.
It's a fair question, and you know, at CAGNY, we laid out a plan to really invest in 2024, especially early in things like brand marketing, price point, price gap management, increased innovation through our R&D resources and digital. You know, and that you think about that increase, we said at the time it was you know, about an $80 million dollar increase, but about 10% growth on normal. So not totally outsized, but a good investment for us and really leaned in the first half because we wanted to meet the consumer where they are. And we've shown you know, through the consumption trends, things like that, you talk about ROI, we're really pleased with the performance because it has turned the volume trend, as we talked about a few questions ago.
You know, the reality about McCormick, though, and we think about things in a longer-term perspective, and we even back in CAGNY, we're talking about second half of 2024 volume growth into 2025, so continuing into the future. The thing about McCormick's. Our long-term growth algorithm, which is so important, and you think about the top line, 4-6% net sales growth, a third from base volume growth, a third from innovation, a third from bolt-on M&A. That drops you down to 7-9% operating profit growth. Really robust CCI or cost savings programs, you drop some of that to the bottom line to get OP growth in the 40 basis points, but you also invest in things like A&P growth.
We've been investing in A&P growth the last ten years, every year, pretty much as a higher percentage of net sales, even through the COVID years. You know, we called out a little bit more in CAGNY, some of the other areas we're investing in. So frankly, as volumes come back and our. You know, we get closer to our sales growth algorithm, that allows us more room to even invest more in the business. You get to that virtuous flywheel, I think, that we've talked about.
Mm-hmm.
More investment doesn't scare me because we've shown that's the way we've operated the business for a long time.
Yep. Marcos, you know, as you step into your new role, what will be the same and what will be different, and any differences in capital allocation priorities?
Thanks for the question, Andrew. I mean, first, McCormick is a great company, and it's a great business, and with great people. I'm excited to be and humbled to be working closely with Brendan. I mean, Brendan hired me seven years ago, and I'm excited to be working with Brendan along the way, and Mike, obviously, over the last few years, and as I step into this role and continue to drive and advance our leadership and differentiation in the space of flavors. So I've been a member of the senior management team for some time now. I joined the company as the CFO of the Americas region, working with Brendan, and managing the biggest region of McCormick.
Then I moved into becoming the CTO, the Chief Transformation Officer of the company, leading a series of transformation programs, as well as the global business services. So, I have been part of the, you know, influencing the strategies of the company and been part of shaping the global teams. So, you shouldn't expect significant changes from me, except for my accent. You should expect a lot coming between me and Mike. Obviously, I'm gonna continue to support Brendan in executing on his priorities. You know, growth, performance, and people. We'll be continue to be very disciplined in terms of capitalizing the right opportunities to continue to drive applying growth, margin, as well as cash. And, we remain committed to a long-term algorithm, as we stated in our calls.
You know, we're looking forward to sharing more of those plans and our strategies and our priorities at our Investor Day in October with all of you. As I look forward to officially taking on the role, you know, I'd like to continue to build off of Mike's instrumental contributions over the past eight years as a CFO, and his. Mike has been a great mentor to me and to many others within the company. You know, we as a team, we think bold, and we want to pursue a very ambitious agenda. You know, McCormick is a global company. It's in great categories, and we have great opportunities in front of us.
So, I would say that my focus is gonna continue to be, you know, helping shape up the strategy that we have in place, but also, I would say, you know, around the focus around disciplined execution, it's gonna be very important and, as we continue to move forward, and that's gonna be enhanced through a series of programs that we have in place, including digital transformation, which is something that is very close to my heart, and that I believe can continue to drive McCormick forward. To your question, Andrew, about capital allocation, I mean, our priorities remain consistent, you know, a balanced use of cash, funding investments to drive growth, returning a significant portion of cash to shareholders via dividends, as well as paying down debt.
As it relates to paying down debt, we've made good progress over the last couple of years. I mean, by the end of 2023, we closed our leverage ratio at three times. I believe we're gonna continue to make progress as we head towards the end of this year. We generate the most of our cash in the second half of the year, so debt leverage ratio will continue to improve as we close 2024. Then, as you know, deleveraging give us the flexibility to continue to pursue M&A opportunities. Our M&A, I would say, has not changed. Strategy has not changed. I mean, continues to be a very important part of our long-term algorithm.
As you know, we have done M&A very successfully over the past few years, and we'll continue to do so, but in a disciplined approach, and always thinking about, you know, M&A from acquisition through integration and making sure that we realize the synergies as we integrate those assets.
Great.
Overall, I would say, you know, we'll continue to focus on those assets that are accretive to net sales, profit, as well as cash.
Great. Perfect. Well, I think that's all we've got time for here. We've covered a lot. Mike, congratulations on a wonderful run at McCormick.
Thank you.
Marcos, welcome to the CFO role.
Thank you.
Brendan, thanks very much for being here, and we look forward to seeing you in Hunt Valley on October 22nd.
Thank you.
Thank you.