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McCormick CEO defends acquisition of Reckitt Benckiser brands, touts millennial-facing strategy

  • "Mad Money" host Jim Cramer sits down with Lawrence Kurzius, the chairman and CEO of spice manufacturer McCormick.
  • Kurzius defends his company's recent acquisition of Reckitt Benckiser's food division in the face of criticism that the $4.2 billion price tag was too high.
  • The CEO also expands on the company's strategy to draw in millennials, who are drawn to bold flavors.

McCormick Chairman and CEO Lawrence Kurzius had an explanation prepared for critics who said his spice company's $4.2 billion acquisition of Reckitt Benckiser's food division was too costly.

"You know, I wish I could've bought my house for a discount, but if I had tried to, somebody else would be living in it. And it's the same with this," the CEO told "Mad Money" host Jim Cramer on Tuesday. "It's a quality asset, these are leading brands, they've got strong growth characteristics, they're on-trend and they're tremendously profitable. A lot of other companies saw value in this."

Kurzius said the acquisition, which put top condiment brands like French's Mustard and Frank's RedHot in McCormick's portfolio, had been on the company's strategic list for over a decade.

McCormick had approached the U.K.-based Reckitt Benckiser about buying the brands more than once and had maintained a conservative balance sheet in preparation for the acquisition, Kurzius said.

"We did it when we bought the Ducros business, and today that is the centerpiece of our European business. We did it when we bought Lawry's, and today that is a great buy. And nobody asks today what those brands cost," the CEO said.

Kurzius also said the acquisition was particularly strategic for drawing millennials to McCormick's products. Not only are younger generations more prone to cooking from scratch, which often requires plenty of spices, but they also like bold flavors, he said.

"If you look age group by age group, as you get younger and younger with the consumer, they have a higher and higher desire for spicy, flavorful flavors," Kurzius told Cramer. "You know, Frank's RedHot is the real gem in the portfolio of brands that we bought. This is a brand that was launched in 1920, so it's almost 100 years old, but it's really 100 years young. Millennials use this brand on everything."

That burgeoning trend is taking the world by storm, not just the United States, the CEO added. In the past, Italian and Mexican foods were considered spicy. Now, data suggest that millennials have more adventurous tastes in cooking and dining than ever before.

"Today, consumers are challenging themselves with all kinds of spicy cuisines and the younger millennial consumer is the most adventurous of all," Kurzius said. "What we're really doubling down on is growth, and doubling down on flavor."

Watch the full segment: McCormick CEO talks changing tastes

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