Lawrence E. Kurzius
Chairman, President and Chief Executive Officer at McCormick & Company, Incorporated
Thank you, Kasey. Good morning, everyone. Thanks for joining us. Starting on Slide 4, our fourth quarter completed another year of robust and sustained growth. In 2021, we remained focused on growth, performance, and people driving another year of strong results and continuing our momentum. We drove record sales growth by executing on our long-term strategies, actively responding to changing consumer behaviors, and capitalizing on new opportunities all while remaining forward-looking in an ever-changing global environment.
The profit-driven by our strong sales growth in 2021 while tempered by the well-known headwinds of higher inflation and broad-based supply chain challenges was also strong. Our 2021 operating performance underscored the strength of our business model, the value of our products and capabilities and the resilience of our employees. We have a demonstrated history of managing through short-term pressures and did so again in the fourth quarter and we expect to do the same through this inflationary environment using pricing and other levers to fully offset cost pressures over time.
The breadth and reach of our global flavor portfolio ideally position us to fully meet the growing demand for flavor around the world and drive continued differentiated growth. This has never been more evident than over the last two years as consumers adapted to the ever-changing environment. Our compelling offerings in our Consumer and Flavor Solutions segments for every retail and customer strategy across all channels create a balanced and diversified portfolio to drive growth and consistency in our performance.
It also gives us significant flexibility to adapt to changing conditions wherever they may arise and continue on our growth trajectory. This is a significant differentiator in the dynamic environment in which we currently operate. We are delivering flavor experiences for every meal occasion regardless of whether the occasion is consumed at home or away from home through our products and our customers' products, we are end-to-end flavor.
Now turning to Slide 6 and our fourth quarter results, our performance was at the high end of the guidance range we provided for sales and adjusted operating profit on our last earnings call and exceeded the guidance range we provided for adjusted earnings per share. On our topline versus the year-ago period we grew fourth quarter sales 11%, both of our segments delivered strong growth with contributions from base business growth, driven by higher volume and pricing actions as well as new products and acquisitions.
Our fourth quarter adjusted operating income and adjusted earnings per share both increased 6% driven by growth from higher sales and CCI-led cost savings, partially offset by cost inflation. Let's turn to our fourth quarter segment business performance, which includes some comparisons to 2019 pre-pandemic levels, which we believe are meaningful given the level of demand volatility from quarter-to-quarter experienced in 2020. Starting on Slide 7. Consumer segment sales grew 10% including incremental sales from our Cholula acquisition.
The increase was driven by strong volume growth and the impact of pricing actions phased in during the quarter as we discussed on our last earnings call. Our Consumer segment, organic sales momentum on a two-year basis was up double digits highlighting how the sustained shift in consumer consumption continues to drive increased demand for our product and outpaces pre-pandemic level.
Our Americas sales growth was 13% in the fourth quarter, with incremental sales from our Cholula acquisition contributing 3% growth. Our total McCormick US branded portfolio consumption as indicated in our IRI consumption data and combined with unmeasured channels grew 1% following a 17% consumption increase in the fourth quarter of 2020 which resulted in 19% increase on a two-year basis. As we previously discussed, in the year ago period elevated demand challenged our supply chain whereas in 2021, but the actions we took to add capacity and increase resilience we were far better positioned and able to shift in line with consumption.
Demand has remained high and we continue to realize the benefit of our US manufacturing capacity expansion. Although some products remain stressed by sustained high demand. Shelf conditions are improving as is our share performance with another sequential improvement in the fourth quarter as we expected.
We continue to see further improvement in our recent performance as we begin 2022. Importantly, and as I just mentioned, we are better positioned than we were a year ago and are confident in our continued momentum. Focusing further on our US branded portfolio, our 19% consumption growth versus the fourth quarter of 2019 was the seventh consecutive quarter that our US branded portfolio consumption grew double-digits versus the two year-ago period.
Our key categories also continued to outpace the center of store growth rates versus the two year-ago period. Household penetration and repeat rates have also grown versus 2019. And when consumers shop, they are buying and therefore using more of our products than they were pre-pandemic.
Now turning to EMEA. During the fourth quarter, we continued our momentum with strong consumption growth in key categories compared to the fourth quarter of 2019. For the full year, we gained market share in key categories and across the region. Similar to the US, our household penetration and repeat rates have also grown versus the two year-ago period and on consumer shop they're buying more than they were pre-pandemic. And in the Asia Pacific region, our fourth quarter performance continued to reflect the recovery of China's lower branded foodservice sales last year as well as consumer consumption growth across the region.
Turning to Slide 9. Our Flavor Solutions segment grew 14% reflecting higher base volume growth and new product as well as pricing actions to partially offset cost inflation and contributions for our FONA and Cholula acquisitions. On a two-year basis, our sales also increased double digits, with strong growth in all three regions. In the Americas, our FONA and Cholula acquisitions made a strong contribution to our fourth quarter growth.
Additionally, we continue to see robust growth momentum for our consumer packaged food customers as well as the recovery of demand from branded foodservice customers as more dining out options are open versus a year ago. We continue to execute on our strategy to shift our portfolio to more value-added and technically insulated products in the region, both through the addition of FONA and Cholula through our portfolio as well as the exit of some lower margin business.
Turning to EMEA, which has continued its strong momentum we are winning in all channels with double-digit fourth quarter growth to Quick Service Restaurants or QSRs branded foodservice customers and packaged food and beverage customers, recovery has been robust and the away from home, part of the portfolio and growth in our at-home offerings has been outstanding. Notably for the full year, on a two-year basis, we have driven 19% constant currency growth across the portfolio. And APZ our momentum with our QSR customers remain strong driving double-digit growth versus 2020 as well as on a two-year basis.
As for the fourth quarter and in line with what we've said in the past limited time offers and promotional activities can cause some sales volatility from quarter-to-quarter. Moving to our fourth quarter results, I'm pleased to share highlights of our full fiscal year, including an update on our Cholula and FONA acquisitions starting on Slide 10. We drove record sales growth in 2021 growing sales 13% to $6.3 billion with strong organic sales growth and 4% contribution from our Cholula and FONA acquisitions. Notably on a two-year basis, we grew sales 18%, reflecting a robust and sustained growth momentum in both of our segments.
Our Consumer segment sales growth of 9% was driven by consumer sustained preference for cooking more at home, fueled by our brand marketing strong digital engagement, and new product as well as growth from Cholula versus 2019 we grew sales 20%, which reflects the continuation of consumers cooking and using flavor more at home and the strength of our brands. Our Flavor Solutions segment growth of 19% reflected the strong continued momentum with the at-home products in our portfolio, including a record year of new product growth and a robust recovery from last year's lower demand for away from home products as well as contributions from FONA and Cholula.
Notably growth was driven equally from both the at-home and away from home products in our portfolio. On a two-year basis, we grew sales 15% driven by the at-home part of our portfolio the demand for the away from home portion recovering to pre-pandemic levels. We have consistently driven industry-leading sales growth, resulting in McCormick being named to the latest Fortune 500. We're proud of our sustained performance and for being included in this prestigious group industry-leading company. At year-end, our Board of Directors announced a 9% increase in our quarterly dividend marking our 36th consecutive year of dividend increases. We have paid dividends every year since 1925 and proud to be a dividend aristocrat.
Finally, we continue to be recognized for doing what's right for people, communities and the planet. During the year McCormick was named the United Nations Global Compact Lead company and awarded the Inaugural Terra Carta Seal from His Royal Highness, the Prince of Wales for our industry leadership in creating a sustainable future. And just last week, Corporate Knights ranked McCormick in their 2022 Global 100 Sustainability Index as the World's 14th Most Sustainable Corporation and for the sixth consecutive year, Number 1 in the Food Product sector.
Moving to the one-year anniversary of our two fantastic recent acquisitions Cholula and FONA are creating value, achieving synergies, and delivering the results according to our plan. Importantly, we have achieved a one year sales and earnings per share accretion expectations for both Cholula and FONA. I'd like to share some comments about the successful execution of our growth plan and then in a few moments Mike will cover in more detail our delivery on the acquisition plans.
Starting with Cholula on Slide 12. The addition of this beloved iconic brand with authentic Mexican flavor is accelerating the growth of our global continent platform and our consumer segment unlocking Cholula significant growth potential are using our category management expertise leveraging e-commerce investments launching new products and optimizing brand marketing expense. We executed on initiatives this past year, including optimizing shelf placement in assortment, expanding into new channels, gaining momentum in e-commerce where Cholula had been under-penetrated increasing awareness both their brand marketing investments and brand partnerships, such as with DoorDash and leveraging promotional scale across McCormick brand.
We are excited about the results our initiatives are yielding. During 2021, we gained significant momentum on top of lapping elevated growth in 2020 adding over a million new households and growing Cholula's consumption 13% in 2021 versus last year. Cholula is continuing to outpace category growth and gain share combined with 19% total distribution point growth in the fourth quarter of 2021. It is clear our plants are driving accelerated growth and notably we drove Cholula to the Number 2 hot sauce brand in the US joining Frank's RedHot the Number 1 ranked brand at the top of the category. We are just as excited about Cholula's performance as part of our Flavor Solutions portfolio with our broad presence across foodservice channel we have strengthened Cholula's go-to-market model through 2021.
We continue to build on Cholula's strong front-of-house presence, which builds trial and brand awareness beyond foodservice with significant double-digit growth a portion control packs as more restaurant meals are now concerned as delivery or takeaway. Leveraging our culinary foundation and insights on menu trends we've also driven, double-digit growth in our back-of-house foodservice penetration, the recipe inspiration, and increasing Cholula's menu participation. We are growing with big national accounts and smaller independent restaurants as well as expanding distribution to leveraging the strength of our distributor relationships where Cholula was less developed.
We are succeeding with new menu items including both permanent launch and limited time offers. Our momentum with Cholula is very strong and we are confident our initiatives will continue to build our consumers' growing passion for heat and drive further growth of this fantastic brand.
Now turning to FONA. The addition of this leading North American flavor manufacturer is accelerating the growth of our global flavors platform. We are thrilled our first year of owning FONA has been a record year for the business with double-digit sales growth compared to last year. Beverages with particular strength in the fast growing performance nutrition category continued to drive significant growth for FONA of 15% compared to last year. FONA's new product wins and its pipeline potential have also hit record highs fueling future growth. We are continuing to drive growth and create new opportunities with our global footprint.
We are leveraging Giotti's infrastructure to expand FONA's flavors into the EMEA region. In our APZ region, the combination of our infrastructure, which includes our recent flavor capability investments in China and FONA's local application in flavor creation talent is unlocking further potential to accelerate flavor growth in that region. And just a few months ago we began our expansion of FONA's footprint to increase our Americas flavor manufacturing capacity an investment we planned as part of our acquisition model, enabling us to deliver the future growth we expect.
By expanding our breadth and depth in developing flavors, while also combining our infrastructures to provide greater scale as well as increasing our manufacturing capacity and technical bench strength we are providing our collective customers with a more comprehensive product offering at fueling more opportunities for growth across our entire portfolio. We are cross-selling products across our customer base and we've also realized the benefits of our combination within our own portfolio. For instance, with FONA now leveraging McCormick's USDA savory flavors in developing flavors for pet food applications.
The combination of our capabilities has created new opportunities to participate on [Indecipherable] that capitalize our core strength across McCormick and FONA enabling us to build a robust pipeline of opportunities and importantly win and grow with our customers. We are thrilled with both Cholula and FONA, our enthusiasm for these acquisitions as well as our confidence that we will continue to achieve our plans, accelerate growth of these portfolios, and drive shareholder value has only continued to strengthen.
In summary, for 2021, we continue to capture the momentum we have gained in our Consumer segment and the at-home part of our Flavor Solutions segment. We have successfully navigated through the pandemic-related disruption in the away from home portion of our Flavor Solutions segment and Cholula and FONA have proven to be fantastic additions to our portfolio. All of this reinforces our confidence for continued growth in 2022.
Global demand for flavor, remains the foundation of our sales growth and we have intentionally focused on a great fast growing category that will continue to differentiate our performance. We are capitalizing on the long-term consumer trends that accelerated during the pandemic healthy and flavorful cooking, increased digital engagement, trusted brands, and purpose-minded practices. These long-term trends and the rising global demand for great taste are as relevant today as ever, but the younger generations fueling them at a greater rate. Our alignment with these consumer trends combined with the breadth and reach of our global portfolio, and the successful execution of our strategies sustainably positions us for future growth.
In this current dynamic and fast-paced environment, we remain focused on long-term sustainable growth. As I mentioned earlier, we continued to experience cost pressures from higher inflation and broad-based supply chain challenges similar to the rest of the industry. To partially offset rising costs, we raised prices were appropriate late last year and began to realize the impact of those actions in our fourth quarter sales growth. As costs have continued to accelerate, we are raising prices again were appropriate in 2022. These pricing actions are on track and we appreciate our customers working with us to navigate this environment.
Additionally, our plans to mitigate cost pressures include our CCI-led cost savings, revenue management initiatives, and taking prudent steps to reduce discretionary spend where possible. Throughout our history, we have grown and compounded our growth regardless of short-term pressures and plan to do so again in 2022 as we continue to accelerate our momentum and drive growth from a position of strength. Across our consumer segment, our 2022 plans include continuing to build consumers' confidence in the kitchen, inspire their home cooking and flavor exploration and accelerate flavor usage including delivering on the global demand for heat.
We also plan to strengthen our consumer relationships at every point of purchase as well as creating delicious healthy and sustainable future. With our investments in brand marketing category management and new products, we expect to drive further sales growth. For our Flavor Solutions segment, the execution of our strategy to migrate our portfolio to more technically insulated and value-added categories will continue in 2022. Our plans include targeting opportunity to grow with our customers in attractive, high-growth category, continuing to leverage our broad technology platform to develop clean and natural solutions that taste great and strengthening our leadership in heat. With our culinary inspired innovation and our passion for creating a flawless customer experience, we plan to continue our new product momentum to drive further sales growth.
Our achievements in 2021, our effective growth strategies as well as our robust operating momentum all bolster our confidence in delivering another strong year of growth and performance in 2022. We're looking forward to sharing more details regarding our 2022 growth plan in just a few weeks at CAGNY.
In summary, we have a strong foundation and are well equipped to navigate through this ever changing environment responding with agility to volatility and disruption, while remaining focused on the long-term objectives, strategies and values that have made us so successful. We are in attractive categories and are capitalizing on the long-term consumer trends that are in our favor. The combination of our strong business model, the investments we've made, capabilities we've built, and the power of our people, position us well to continue our robust growth momentum.
Importantly, our strong growth trajectory supports our confidence and our long-term financial algorithm to drive continuous value creation through topline growth and margin expansion. Our fundamentals momentum and growth outlook are stronger than ever. McCormick employees around the world have done a tremendous job of navigating this past year's volatile environment, their agility, teamwork and passion for flavor drive our momentum and success and I want to thank them for their dedicated efforts and engagement. Now, I'll turn it over to Mike.