SPARKS, MD. — Given its broad portfolio and global footprint, McCormick & Co., Inc. has had a unique vantage point of the coronavirus pandemic since it first surfaced in China and rippled throughout the world, said Lawrence E. Kurzius, chairman, president and chief executive officer.

“We have experienced the COVID-19 disruption from the beginning and also from a variety of perspectives, both geographically and from a channel viewpoint,” Mr. Kurzius said Sept. 8 during a virtual presentation at the Barclays Global Consumer Staples Conference.

McCormick sees continued strong demand, including broad-based household penetration gains, for its branded seasonings, spices and condiments as more consumers across the world are cooking from scratch and eating at home more. Mr. Kurzius cited data indicating 85% of US consumers said the pandemic has changed their food habits and are inspired to cook, eat, shop and think about food differently. Additionally, about a third of consumers said they add spices to takeout or delivery meals from restaurants.

“Another third say they're adding or dipping in sauces or condiments that they have at home, which further fuels demand for McCormick’s flavor products,” he said, adding, “Think about all the French's mustard being used on sandwiches that are now being made at home during lunch time, when consumers are dining in when they might have been out before.”

Results are mixed within McCormick’s industrial business driven largely by shutdowns in away-from-home channels, Mr. Kurzius said. He cited signs of recovery among McCormick’s quick-service restaurant customers in the Americas and Europe, Middle East and Africa regions.

“The rest of foodservice, however, is continuing to struggle across all regions,” he said. “We expect this to be the case for some time as restaurants and other foodservice venues like stadiums and cafeterias continue to be largely closed or operate under a limited capacity.

“From a food-at-home perspective, with our packaged food customers, we see a lot of variability in their demand. Some are up solid double digits, and some are down. It’s very customer specific. But taken all together, we expect to return to pre-COVID growth rates on our custom flavor manufacturing products.”

The company is benefiting from several initiatives already underway prior to the pandemic that have gained greater relevance in recent months, said Michael R. Smith, executive vice president and chief financial officer.

“We were already planning to increase our brand marketing investments in 2020, as an example, with the campaign focused on consumer education of how to use our products and build confidence in the kitchen, which is even more relevant in the COVID-19 environment,” Mr. Smith said. “And as needed with the agility we have built in our marketing organization, we were able to quickly pivot our messaging to target consumers’ needs and help them in this environment.

“We’d also planned to strengthen our consumer connection every day during their digital flavor journeys, and with the increase of consumers online, we’re even better positioned to do that now. We’re gathering real-time insights and creating and deploying new content for our McCormick owned properties and providing solutions for them.

“Third, with the acceleration of the e-commerce channel by approximately three to five years, during this pandemic, as evidenced by our second-quarter triple-digit growth, not only have our previous investments paid off, the investments we have planned such as making all touch points shoppable and our products just one click away have been even more valuable during this time.”

The tremendous demand due to increased at-home consumption and earlier pantry stocking has challenged McCormick’s supply chain, Mr. Kurzius said.

 “Coming into the crisis, there was a lot more finished good inventory on hand for us and stock for the retailers than there is today,” he said. “And as this inventory has been depleted, we’ve had to put product on allocation, and that means both the consumer and the customer have been limited in how much they can buy as we try to fairly support the market.”

As it prepares to enter its busiest quarter, McCormick plans to expand its workforce and increase manufacturing capacity through partnerships with third-party manufacturers.

“By the end of the year, we will have added the equivalent of an additional plant of US manufacturing capacity,” Mr. Kurzius said. “This capacity has really just started coming online in August. And we’ll continue to ramp up over the next few months until it’s completely in place by the end of the fourth quarter. So we’re making good progress. Our service levels are continuing to improve. We’re confident in our ability to meet demand, and we’re positioning ourselves for continued success.

“Of course, as COVID-19 was an unknown disruption starting the year, we couldn’t have anticipated the growth that we’re now experiencing. And thus, we are scaling up rapidly in response to this dynamic situation, which obviously carries quite a cost.”

The rapid scale-up will create additional costs and short-term inefficiencies, Mr. Smith warned. Previously, the company forecast COVID-19 related costs to be approximately $30 million, mostly split between the second and third quarter with minimal fourth-quarter costs.

“This estimate partially includes costs related to scaling up for the big demand growth,” Mr. Smith said. “As we also mentioned, this amount could fluctuate depending on the pace of COVID-19 recovery as well as the level of demand, both of which remain uncertain. With the continued high level of sustained demand, we now expect our COVID-19 related costs are likely to be higher-than-anticipated and carry into the fourth quarter.”

Another effect of the pandemic may be additional merger and acquisition opportunities for McCormick. The company remains interested in both bolt-on and transformational transactions across its consumer branded and industrial flavor solutions businesses, Mr. Kurzius said.

“It’s a very interesting time for many companies, and we think as we come through this crisis, there are going to be some opportunities that become available,” he said. “Many family-owned, private companies are reevaluating their risk profiles, especially families with multiple generations involved and maybe a divergence of interest where some may want to diversify the family wealth. We've seen quite a bit of activity from private family-owned companies in our target area and think at least in the near term, that's where some of the most interesting opportunities are going to come from.”