Thanks a lot. Brendan and Marcos, maybe a good place to start. You had some recent news. You recently announced the acquisition of an incremental 25% ownership in McCormick de Mexico. Maybe you can walk through the sort of the strategic rationale for the deal. Financial impact on total McCormick, you know, following the close of the transaction.
We're excited about this transaction, and it's been part of our pipeline for a long time, so we were really thrilled to get it off and running. It's very much aligned with our strategic priorities, and it really allows us to, you know, sort of strengthen our global flavor leadership, but also participate in fast-growing markets. And this also really does a nice job of sort of really diversifying our geographic mix. So just to give you some numbers to give it some context, after we close on this transaction, Mexico will be greater than 10% of our overall sales. The U.S., as a percentage of our total, you know, portfolio, will move from 60%-55%, and emerging markets will move from 20%-25%.
So it really does a nice job of sort of, you know, providing some diversity across our portfolio, which we think is healthy overall for our business. You know, near term, we like this because it allows us to participate, you know, even more fully in a strong, fast-growing market. It allows us to increase our exposure, our participation in condiments and sauces through the strength of Mayonesa in that part of our business. And also, it allows us to allocate, you know, think a little bit more freely, you know, the resources and the capabilities to continue driving growth in McCormick in Mexico, you know, overall. And plus, you know, those are things that we can, you know, as we set that up, we can start to think about bringing more McCormick products into the market.
And it also really strengthens our Flavor Solutions business, particularly with the strength of that food service business, you know, that we have there. So those are initial reasons that we felt really good about this. From a mid to long-term perspective, this is about really, I think, providing us more of a foundation for growth in the Latin America region. We already have a presence in Central America directly, but this plus McCormick de Mexico just allows us to use those resources, think about growth more aggressively, you know, overall. And it also opens up the door for us to think more holistically about growth in the Latin America region, both organically and also, you know, inorganically. Overall, ultimately, what this does is it opens up a very attractive market for us. It's a business that we know well, and also it's with a proven brand in the region.
McCormick has a lot of consumer loyalty in Mexico, and on top of that, a lot of household penetration, and we think the brand travels very well within the region overall. You know, and so when we think broadly about this acquisition, this really lines up very nicely with what we're trying to accomplish. I mean, Marcos, you want to cover anything I missed?
Yeah, I mean, in addition to the strategic benefits that Brendan just mentioned, the transaction delivers solid financial upside. It is accretive throughout the P&L. It maintains the strength of our balance sheet, right? So, let me walk you through the P&L a little bit. So it adds more than $800 million in net sales in emerging markets, $180 million of operating profit, and it is margin accretive, about 60 basis points gross margin and operating margin accretive. From an EPS perspective, it is also accretive on year one, delivers a strong cash conversion cycle, which is incremental to total McCormick's cash from operations. And finally, it has a minimal impact on leverage ratio. I mean, we are at three times today. Upon close, in the beginning of next year, we're going to continue to be within, you know, that range, below three times.
The ROIC metric is also really not impacted by this deal. It adds a meaningful scale, as Brendan mentioned, creates a strategic platform for us to continue to grow in that time and maintain the balance sheet flexibility that we have to pursue other investments in the future.
Great. Great. Thank you for that. Brendan, maybe you could share your perspective on sort of what you're seeing in terms of consumer trends, especially in the U.S., how have consumer shopping behaviors and sentiment evolved even over the past few months, and how does it influence the growth strategy going forward?
From a very high-level perspective, the demand for flavor continues to be pretty strong, and, you know, that just really fuels, I think, the foundation of, you know, our growth trajectory overall. And our growth strategy is aligned with where consumers are going. They're looking for value, they're looking for health and wellness, they're also looking for convenience. We see those three as really occupying kind of the key themes that we're seeing out there in the marketplace. You know, right now, I'd say broadly, the environment remains pretty challenged in the U.S. We definitely see continued, and we talked about this even earlier this year, you know, there's continued sort of weakness in consumer sentiment and pressure, especially on the middle to lower-income consumer. We still see a lot of value-seeking behaviors out there.
We would characterize that as, you know, shorter shopping trips, you know, smaller baskets, or more frequent shopping trips, I should say. And those things continue to kind of characterize what we're seeing out there in the marketplace overall. And consumers are intentionally, they're being very intentional in their spending habits. They're trying to balance value with health and wellness and also convenience at the same time. And so these are the factors that we see playing out. You know, when consumers are pressured, they tend to cook at home more often. They also shop the perimeter of the grocery store for fresh food, and that allows them to make meals cheaper at home overall. And so, you know, that continues to reinforce this demand for flavor, and we see that in our categories overall. The other thing, we research this every quarter.
We kind of try to understand consumer sentiment and behaviors, and, you know, flavor is still the most important thing they think about when they think about putting a meal on the table, and so that is, regardless of income level or health preferences, that's still one of the most important things that they're trying to accomplish, so these are some of the, you know, the insights that are really affecting everything. Now, consumer is really focused on health and wellness at the same time. Those two, you know, sort of broad trends put together really kind of illustrate what's going on in the marketplace. 86% of meals are still mostly cooked at home. That still remains about two points higher than the pandemic. We've always talked about this as a long-term secular trend. It just sort of accelerated during that period of time.
You know, in the last few years, consumers, you know, increasingly learn how to cook, and they like it, so they're getting better at it. And we think that's also good for our portfolio and our business, and they're making healthier and cheaper meals. And so this is where we see consumers kind of, you know, finding their way through that resiliency that we've talked about. We're also seeing a lot of growth in functional foods, a lot focused on, you know, health and wellness benefits. And we start to see that in categories like snacks and beverages, where they're trying to add fiber, or they're trying to add protein, or they're putting a lot more focus on areas like hydration. We're also seeing in areas like, you know, they're looking for more energy or even just better sleep. All of that needs flavor the way we look at it.
And so those are opportunities for growth that we see in the marketplace. The other thing I just want to add is that convenience is definitely accelerating too, the need for that. We're seeing in our e-commerce numbers. You know, the percentage of sales that's coming from e-commerce continues to grow in our portfolio. We don't see that stopping. And what's interesting, that's happened as they're also seeking for value. So they're ready to pay for it. And that's kind of, I think, when you think about sort of the trends in all of this together, they're sort of all having to come together, and the consumers find their way to make it all work. And where McCormick lands in all of this is we have a broad portfolio with a very focused innovation agenda up against these trends.
And we think that's really been driving, I think, the health of our business overall in our consumer business. And, you know, the other thing I would say is that we've been very aggressive in making sure that we meet consumers with where they are. And this has really, I think, really helped us, and we think that's the right thing to do in this environment. It creates consumer loyalty, and it's the foundation of really sustainable long-term growth.
Thank you for that. I guess for Brendan and Marcos, McCormick's been differentiated, frankly, from a lot of your peers with its volume growth over the last several quarters. What gives you the confidence that this momentum can continue, particularly in light of upcoming tariff-related price increases? You know, do you see opportunities for incremental price investments in the future to help drive growth, and will innovation be a larger driver going forward as well?
All of those are factors that we're going to have to think about as we move forward. You know, if we just look at our performance so far, I mean, first of all, we operate in great categories. It starts with that. I just talked about the consumer trends that are really influencing the marketplace and the categories that we operate in, and we think those trends are pretty sticky, you know, overall. Our Consumer segment performance has been strong for the last five quarters, and we're doing what we said we would do. We're seeing the results from our plans. We're growing share, we're growing volume in many of the key categories and a lot of our key markets overall. McCormick unit consumption in the U.S. is beating total grocery. We do like the trends that we're seeing.
As we move into the second half, we're continuing to see that momentum. And a lot of that is driven by the continued increase in A&P. Our messaging is resonating. It's targeted, it's digitally enabled. We're also seeing a lot of focus and reward right now from the innovation that we launched in 2024. I mean, a good example of that is like Cholula Extra Hot. That's doing really well as one example. And the price gap management, you know, plans that we put in place, you know, back in early, you know, sort of late 2023, those are now part of the baseline that we talked about. On top of that, what we have going on is expanded distribution across our core categories overall. We're seeing the benefit of even new innovation now coming out in 2025. And so you see that in continued expansion of the Cholula line.
You know, for example, we've just launched Cremosas. The McCormick brand this summer launched Finishing Salts as part of our portfolio. And then we're doing another wave in both the fall and the holiday on Finishing Sugars, and those have been very popular. In EMEA, we're seeing a lot of growth right now from Air Fryer Seasonings and all-purpose seasonings. And then we're relaunching our whole Gourmet line right now. It's starting to sort of appear on shelf bottle by bottle. That'll be a flow in, and that's that countertop-worthy, you know, sort of benefit that consumers are looking for. And so that's really, I think, driving a lot of growth. And so throughout this, we have a lot of confidence in terms of how our consumer business is performing. And that aggressive posture that I talked about earlier, it's kind of reflected in all those plans and those activities.
You know, when we think about pricing, I think, as you know, we started investing in price in late 2023, and we're really early in identifying the need for value and delivering that for consumers, and that's put us in a pretty neat situation as we continue to move forward in this current environment. Now I'll let Marcos talk a little bit more about pricing.
Yeah, I'll add some color on that. So growth in our consumer business is driven by multiple levels, right? Pricing is one area, and that is part of our base right now. So as Brendan alluded to, last year we invested in price behind the most elastic SKUs. We fully lapped these investments in Q2, and these SKUs continue to perform really well. I mean, we have elevated velocities out of these SKUs, so that's very positive for us. As we look to the remainder of the year, I mean, it is important to address the tariff environment. New tariffs have been introduced since our last earnings call, and as you know, it is a fluid environment. But our approach in principle remains the same.
We're going to offset as much as we can with the use of CCI programs, efficiencies across the P&L, alternative sourcing, and obviously pricing for the residual impacts. You will see some of that is starting in Q4 of 2025. We do have a very experienced revenue management team in place, you know, supported by data and analytics, and they continue to have a disciplined approach towards pricing as we think about all the moving parts there. Then in Q4, we anticipate some elasticity impact, but still we expect a volume growth in the Consumer segment. We'll be monitoring elasticities, obviously, to help inform our plans beyond 2025. Additional context I would say is that price gaps, they continue to narrow as, you know, we see prices climbing on private label, and we are monitoring that very closely.
And then finally, I would say that as Brendan said, I mean, our approach is really aligned to the strategy of meeting the consumer where they are, being relevant in the moment, and we'll remain balanced in terms of our execution to sustain our volume momentum as well as protect our profitability.
Got it. Great. Brendan, maybe you can frame the opportunity you have with some of the high-growth innovators that you talk about in the flavor business. How big is the opportunity? Do you expect to continue to soften the volume weakness we continue to see across the larger CPG customers, as well as the weakness across the QSR channel?
You know, our view of the food industry is there's constant innovation going on at all times to really address, you know, what are the latest in consumer trends. And, you know, right now we've talked about that as, you know, prioritizing health and affordability. And you see that, you know, certainly play out in the regulatory landscape or also in health and wellness trends, and that is helping to shape the competitive landscape in food broadly overall. And companies are responding with faster innovation and trying to meet, you know, this agenda and these needs and these trends. And they're focused on better-for-you offerings, more regional flavors, even premiumization. You know, and that's where we're seeing a lot more activity, I think, from the food industry overall.
And in this environment, you know, we're leveraging what is, you know, strong flavor capabilities and innovation to make sure that we can help our customers continue to grow, and that's the environment that we feel like we're operating in right now. For McCormick, if I could just describe a little bit of how we look at our customer base, because it's very, you know, diverse in a lot of ways, so think about it as a combination of large global CPG companies, you know, food service operators and QSRs, regional CPG leaders, you know, that might not operate around the world, but certainly are strong within the markets in which they operate in, and we also operate a lot with private label brands as customers, part of our customer base.
And then what we're calling high-growth innovator customers, which tend to be smaller, faster-growing, you know, sort of emerging, particularly in sort of fast-growing categories. And so we see broadly a lot of this growth happening across these health and wellness categories being right now, you know, driven by those high-growth innovator customers and private label brands. And that's what we're seeing. So let me talk a little bit about sort of each group individually just to provide some context overall on them. On the high-growth innovator customers, you know, these are companies right now that are distinguished by just, you know, certainly very high growth rates compared to the categories in which they're operating in. So they're growing volume within the industry, they're grabbing share, and they're disruptive with innovation and unique positioning overall.
I called out some of these examples before, but it's probably worth talking about it because it's a very large group of, you know, activity. But, you know, snacks, hydration, bars, energy drinks, gummies, that recently was in the news, I think, in the last 24 hours, but, you know, flavoring those. And we see even pet food. So we're seeing, you know, a lot of flavor opportunities in some of these fast-growing emerging brands. And that helps fuel our growth and definitely helps offset what we're seeing, you know, in terms of trends with other customer bases overall. But we're not only just helping them reformulate, we're also helping them innovate and scale for growth because they're smaller operations. And so we're gaining share in that customer segment. Private label is also another area.
I don't think it's growing necessarily as fast, but it's definitely providing us some pretty nice growth. And, you know, those types of customers right now are certainly, you know, putting a lot of momentum around, you know, sort of health and wellness offerings, you know, overall in their portfolio. And this is a pretty broad set of categories that we would participate in. What gives us a kind of strategic advantage in this part of the marketplace is they also happen to be our customers in our Consumer segment. And so we know them well. We talk with them a lot about how we can help them with flavor across their store. And so that tends to be a growing area. And then, you know, I kind of conclude lastly with these large-growing CPG, these large-growing, you know, sort of CPG customers at a global level.
Definitely there's been some softening, you know, certainly within this last year. But historically, we've driven growth with this group, and we believe that we will in the future. The way we measure success is, are we gaining share with them? You know, are we driving, you know, sort of, you know, being on the core list of some of these companies more often? Are we driving innovation and reformulation for them overall? Are we cross-selling our technologies with these customers? And that allows us to often soften the blow. But we're seeing just an overall, you know, Circana data coming through in terms of overall consumption happening in the market. So when we take a look, ultimately, we remain, you know, I think, pretty positive about how we look at this part of our business, you know, moving forward.
Across these customer segments, we believe our results are better than the food industry at large, and so we believe that we're performing pretty well in what has been a soft marketplace right now, but it is the combination of all these different customer segments and this diversity that's helping us, you know, deliver the type of performance that we're delivering right now.
Got it. Got it. Thank you. Brendan, can you speak to the current trends in your China business? Is the pace of recovery still in line with your expectation? And sort of what are your perspectives over the longer term on China, which is a significant business for McCormick?
Yeah, as we said at the beginning of the year, we expect, you know, that market to remain, you know, challenged, but we are expecting sort of this, we called it slight to gradual growth in 2025. And broadly, I will tell you that is what we're seeing. But just some context in terms of our thoughts on China. You know, with our team on the ground and also Marcos and I, we're just there earlier this year, we still can see, you know, sort of consumer weakness in their sentiment overall. A lot of activity in those value-seeking behaviors is also present there too. I think what's even more fascinating is just the shaping of the retail environment there. We still see a lot of change happening, a lot of growth in the small format stores, especially also in smaller cities.
There's been more of a move away from the large format, you know, sort of hyper stores and even in the large cities overall. Our team has been doing a really good job in execution and trying to pivot on how we, you know, sort of respond to this, you know, change in the marketplace that we've seen over the last two years. Importantly, I think we're seeing some good execution there. Year to date, our business in China has been performing relatively close to what we said we thought would happen overall. In our consumer business, we're seeing growth in herbs and spices driven by a lot of strong brand marketing, as well as this new penetration in these new formats.
And in our food service business, we're seeing growth there too through a lot of, you know, sort of limited-time offer type and promotions that we're seeing in the marketplace with existing but also new QSR customers that we're finding in the market there. So, you know, broadly speaking, we think we're performing year to date with the way we thought we would, that gradual level of growth. But, you know, in this market, it's kind of unique. Public policy can really change things pretty quickly. And so we watch that very closely just to make sure that we're staying very close to what the trends are. But so far, we think it's performing like we thought it would.
Right. Marcos, McCormick's delivered solid year-to-date results, particularly on the top line. How do you think the business is performing both in consumer and Flavor Solutions? And sort of what are your expectations for the remainder of the year, which is admittedly, as you've all acknowledged, fourth quarter weighted in terms of profitability?
Yeah, that's right. So as you know, Andrew, we cannot speak to the current quarter. We're closing the books right now and we'll be reporting in about a few weeks from now. So, but just to give a little bit of context, I mean, year to date, we continue to accomplish the things that we said we would accomplish. We delivered total organic growth at the midpoint of our constant currency guidance range. In Consumer segment, we drove volume growth across all regions. In Flavor Solutions, despite softer industry trends, I would say that we're performing well in this environment. And then we delivered operating profit growth of 4%. So year to date, we delivered top line and we expanded margins at the same time.
As you think about the third and fourth quarters, you know, some of the things that we, you know, you can have to keep in mind, I would say, which is pretty much consistent with what we said at the Q2 earnings call. Starting with the top line first, in the Consumer segment, we expect to continue volume growth for both quarters as consumption remains strong. And in addition to that, we're going to realize additional benefit from pricing, surgical pricing due to tariffs that's going to kick in in Q4. In Flavor Solutions, as we said for both quarters, we expect softness in customer volumes driven by large CPG customers, as well as the QSR channel softness, particularly in EMEA. This is being offset by high-growth innovators, as well as the QSR channel in APAC, which is performing well, right?
Also in Flavor Solutions, you will see benefits from FX and tariff-related pricing in Q4. So you're going to see pricing in Q4 for both segments coming in and benefiting the P&L. So that is on top line. In terms of profitability, Q3 results will be impacted by increased commodity costs and tariffs, as well as continued SG&A investments. We continue to invest behind our brands and brand marketing and continue to invest behind our digital transformation agenda around technology, digital transformation in general, I would say. In the fourth quarter, though, we expect the benefits from the pricing plans that we have in place, as well as increased productivity savings. This is why the profitability is expected to be more weighted towards Q4 than Q3. Also, we want to maintain our flexibility to continue to invest behind our proven strategies that have yielded great results so far.
We're making investments in supply chain for capacity, optimizing our operations there. We'll continue to make investments in brand marketing, in R&D, and in technology. And as always, our CCI program is very robust and will continue across all lines of the P&L, including the SG&A space, to generate fuel for these investments.
Great. And maybe, Marcos, sticking with you for a minute, how do you see the trajectory of your growth and operating margins over the next few quarters, just given commodity cost trends, tariffs, which are still a moving target to some extent, productivity initiatives, SG&A streamlining, and the pricing dynamics? And then perhaps also you can remind us of what tariff impacts are currently embedded in your outlook and how the mitigation actions are taking hold. And again, given it's a bit of a moving target, I guess when might you be in a position to provide, you know, any update around incremental tariff impact to the extent updates are needed?
Yeah, absolutely. Yeah, sure. So near term, there's certainly pressure on gross margin driven by rising commodity costs and tariffs. But we're staying agile with mitigation plans in place across all lines of the P&L and with the goal of maintaining our volume momentum, but also protecting profitability. In terms of tariffs, we remain well-positioned with our manufacturing and sourcing strategies. You know, our exposure is primarily related to raw materials, ingredients that are not grown in the U.S. that we have to bring from over 80 countries into the U.S. And just for perspective, you know, more than 90% of what we sell in the U.S. is manufactured in the U.S., right? So it's really about the raw materials piece that we bring in from outside of the U.S. We do have a dedicated cross-functional team monitoring developments and developing mitigating strategies.
Brendan and I meet with this team on a very regular basis, and we are always considering options on how to go about it and always having the consumer in mind and how we can continue to protect the debt volume that we earned over the last 18 months, but also with an eye on profitability, so we're going to remain balanced, as I said. I mean, first, we're going to use CCI, you know, productivity savings, and we're pulling all the levers that we can across the P&L to be able to offset as much as we can of the tariffs impact. Data analytics will continue to play a role in terms of our sourcing capabilities, as well as revenue management capabilities, so data analytics is playing a very important role these days for us.
But then obviously, there's going to be some surgical price increases, and we're going to be very specific and very surgical to those increases. To the point about the impact that we mentioned in the Q2 call, so we said that our gross annualized impact from tariffs is about $90 million, of which $50 million impact in 2025, right? And this projection assumed an incremental 30% from China, 10% from the rest of the world. And then we also assumed USMCA compliant for imports from Canada and Mexico, so that's close to zero. So since then, tariffs have continued to evolve, continue to change. We're right now fully assessing the impact of those tariffs, and we'll be in a position to provide an update on the exposure, as well as the mitigating strategies for our Q3 earnings call in about a few weeks.
Got it. Great. Thank you. Maybe a question for both of you. With balance sheet flexibility that you have, even following the close of the McCormick de Mexico transaction that we talked about earlier, what are you focused on in terms of M&A? Is there a segment or a market focus? And will you be looking to pursue larger transactions or smaller ones? McCormick has considered both in the past. Just trying to get a little bit more sense of how you're thinking about it. I know M&A is obviously part of your sort of DNA, but if that's changed or evolved at all over the last couple, let's call it two years.
Indeed, it is. And I don't think our attitude towards M&A has really changed broadly in the last two years. It's been pretty consistent. But let me just, you know, from a high level first start off, and that is when we think about M&A, you know, we believe there are opportunities across the world, you know, geographically, but also across a lot of the flavor categories in which we compete. And we always view McCormick as having a very broad set of opportunities, you know, as we think about, you know, what we're focused on overall. And our pipeline reflects this overall. We look for opportunities that, you know, give us, you know, greater penetration in existing markets or in existing categories. And that's certainly something that we try to, you know, do.
But we also consider, when we look at all that, we consider bolt-on opportunities, and we consider transformational opportunities at the same time, because we have done both overall, but importantly, our focus is on that long-term organic growth. Can we still deliver on that based on the acquisitions that we bring in, so that's kind of an important, you know, principle, if you will, that we focus on. Geographically, we like the places that we are, and we look to expand our scale in the markets that we already operate in, but having said that, there are many opportunities around the world where we don't have really a strong presence that has high flavor growth, and so that becomes an opportunity too, which includes emerging markets.
And, you know, I'd point to the transaction with McCormick de Mexico as a good example of that type of application of our thinking and our strategy overall. From a category perspective, you know, we're looking to advance our flavor leadership across both segments, both consumer and also Flavor Solutions. And as we talked about before, our broader M&A strategy is underpinned by a couple of things. One is it's one-third of our growth algorithm. So that's one of the things to keep kind of in mind long-term. And we've delivered on that historically overall. I think the targets need to strengthen our flavor leadership globally, first and foremost. We also need to be creative or at least match the type of sales growth rate and margin that we currently operate at.
And then it also has to be, you know, sort of financially sound and create value overall across our portfolio. So those are kind of the underpinnings. And we typically ask ourselves, are we the right owner for either this particular, you know, business or brand? Or said another way, you know, what is this business or brand going to do for McCormick, and what will McCormick be able to do for that business or brand? When we look at consumer, you know, we're looking for brands that operate in the seasonings and spices and herbs category and also condiments and sauces. And ideally, we're looking for brands that offer still a lot of upside in terms of household penetration growth.
But we've also looked at brands also that, you know, offer that they're still kind of fundamentally healthy, but we think we can really drive and improve the growth rate of those businesses. And so we look at both of those, and that kind of is how we think about what is the right asset for us to go after, whether it be bolt-on or transformative. On the Flavor Solutions side of our portfolio, we kind of look at three things, and we call them the three Ts. That's a little bit of a thing we found out more recently is they all started with a T, and that is, first of all, does it reinforce our taste competencies? We've been very clear. We have a lot of focus in savory, heat, naturally sweet, and also, you know, an emerging area we think is citrus overall.
The third area is, does it really allow us to strengthen talent? That is so critical for us in the flavor industry is without really strong talent, it's hard to compete really well. And so we're always looking to upgrade from a talent perspective. And then lastly, it's technology. And are we able to acquire technologies that add to our capabilities, you know, overall? Sometimes when you're looking at assets and, you know, we see one of those three missing, you know, and then that doesn't really start to fall apart for us. But when we hit all three, it really does become the right target. FONA was a good example, you know, of that overall. And so that's broadly how we look at M&A and what's interesting to us and whether or not it needs to be a bolt-on or a transformational.
I mean, am I missing anything, Marcos?
Yeah, I mean, just building on what you said, I mean, we are going to continue to be focused on growing all of our core categories: consumer Flavor Solutions in the U.S., outside of the U.S. And this growth is going to be both organic and inorganic. It is difficult to speculate on future deals or size, but as we have demonstrated in our most recent transaction, the McCormick de Mexico transaction, we are going to stay very disciplined. It depends on, obviously, on the opportunities being presented and the integration required. We evaluate assets as they come available, and we have been successful in both bolt-on and transformative acquisitions in the past. And we do have a track record of selecting the right assets and integrating them well right away and getting the synergies right away. So we're going to continue with that playbook going forward.
Great. So perhaps in our remaining moments, Brendan, I guess looking longer term over the next sort of five to ten years, what are the sort of two or three trends that would be top of mind for you?
I'm frequently thinking about, you know, five, so it's not two or three. First is the role of flavor. That's central to our company. And trends are constantly changing. Consumer behavior is constantly changing. So I think about the role of flavor as almost an evergreen opportunity for us because it's always at the top of the list for consumers. It's something that you never give up a compromise on. And so that's really important because it shapes culinary trends, and it's all about us being at the forefront of that and making sure that we're leading the thinking when it comes to flavor in terms of what trends are emerging or how do we mainstream them overall. More recently, I think what's really occupying a lot of my thinking right now from a trend standpoint is how we think about organizational and importantly operational resiliency.
You know, and I would say even more pointed, it's about sourcing agility, you know, overall. There's a lot of change going on in the marketplace, whether it be climate, geopolitical, trade policies, and this is an area we spend a lot of time on. We think we're one of the best out there in the industry on this, but you can't be complacent about that because there's always a lot of constant change there, and we expect it to continue, but that supply integrity for our part of the business is really, you know, pretty important, and so, you know, that could be, you know, agricultural practices or, you know, different sources of supply, or it could mean a lot of things, and we have a lot of active, you know, effort going on there.
I think digital transformation really impacts the way we think, we work, the way we compete, you know, overall. The speed of technology is certainly awe-inspiring at times overall. But, you know, right now we have a very focused agenda. It's an ERP platform. It's data synchronization. It's analytical maturity. And these are trends that I think I spend a lot of time thinking about and talking about with our leadership team. And I'll just wrap it up. You know, our business is really driven by innovation. And so from a flavor company standpoint, what new platforms through our R&D organization are we going to create and develop for the future to address those needs of the future? And so that's a big area that we focus on. And I'll just wrap it up. It is, you know, McCormick, it's a lot about culture of the company.
When you think about our ambition to get bigger, how do you retain the culture as you try to get bigger overall? Within that, we're trying to develop those leaders and those capabilities that we're going to rely on in the future. At the same time, we need to make that entire workforce future-ready if you think about really the impact that digital has in all of our organizations. Those are the trends I keep thinking about. It's those five. Sometimes they morph into four, sometimes less than that, but they're always around, you know, those four, it seems.
Great. Perfect. All right. I think that's a great time to cut it there. Just a reminder, McCormick is not holding a breakout session, given where they are in their fiscal quarter. And please join me in thanking Brendan and Marcos for being here. Appreciate it.
Appreciate it. Thank you.
Thank you.