McCormick buys Cholula in $ 800 million deal

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The company is acquiring the brand from L Catterton, the private equity firm, in an $ 800 million cash transaction, he said on Tuesday. He expects to close the deal this year.

The hot sauce market is constantly growing. Sales of hot sauce in the United States have grown an average of 9.7% each year for the past four years, according to Nielsen. The category took a boost during the pandemic: In the twelve months ending Nov. 7, sales jumped 24.6%.

With the purchase of Cholula, Mccormick (MKC) built a kind of hot sauce empire. The company acquired category leader Frank’s RedHot in 2017. Along with Cholula, the two brands account for about 30% of the U.S. hot sauce market, according to Euromonitor International and Nielsen data provided by Cholula. Together, this puts the pair far ahead of competitors like Tabasco and Huy Fong Foods, the maker of sriracha sauce.

Frank’s and Cholula are popular in different markets and attract different consumers, McCormick said.

McCormick Acquires Famous Hot Sauce Brand Cholula

Cholula, the hot sauce typically sold in a slender bottle with a wooden cap and an image of a smiling, dark-haired woman on its label, is made in Mexico and has been available in the United States for about 30 years. There are six flavors, including the original.

L Catterton, whose portfolio includes restaurant chain Noodles & Company and fitness enthusiast ClassPass, purchased Cholula for an undisclosed amount in April 2019. Soon after, industry veteran Maura Mottolese became CEO by Cholula. Prior to taking this role, Mottolese ran Tate’s Bake Shop, helping to triple the size of the business before it was sold to a packaged food manufacturer. Mondelez (MDLZ).

Under the leadership of Mottolese, the brand gained market share. The company’s net sales are around $ 96 million per year, according to McCormick’s statement about the deal. The company expects sales of Cholula to continue to grow.

McCormick could help accelerate this growth. The spice company plans to help grow Cholula’s online sales and distribution, and improve its restaurant business – a crucial growth engine for the company. About 40% of consumers discover Cholula in restaurants, according to McCormick.

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