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. Last Updated: 07/27/2016

McCormick Victorious in Spice War ...

BALTIMORE, Maryland -- The Spice War is over, and McCormick & Co. Inc. won.


Burns Philp & Co., the Australian conglomerate that waged an expensive battle of attrition against the spice giant, is getting out of the business completely.


The company said it will sell the money-losing spice business, and that three of its top executives are quitting.


McCormick had trouble containing glee at beating back a decade-long challenge to a franchise it started building in Baltimore 108 years ago.


"When you've been engaged in a global war and the other guy who started it waves a white flag, it's tough not to feel good about it,'' Carroll Nordhoff, McCormick's executive vice president, said last Tuesday.


Burns Philp said it's selling a business that includes the Durkee-French, Spice Islands, Tone's, British Pepper & Spice, Euroma and Ostmann brands.


McCormick would not rule out the possibility of a bid for the business.


McCormick, the world's largest spice company, employs about 7,300 worldwide and has roughly $1.7 billion in sales.


McCormick shares rose one-quarter to close at 26 -- part of a steady climb in recent months as the company persuaded Wall Street of a turnaround and Burns Philp continued to struggle.


Burns Philp's tactic was to engage McCormick in a bidding war for shelf space. The idea was to capture the shelf space, lower prices, gain customers and then slowly ratchet prices back up. Its aim was to become the single line of spices carried by most grocery stores.


The war proved costly for both companies.


McCormick spent millions to keep its products on the shelves and Burns Philp's off. The company's "prepaid expenses,'' which mirror multi-year shelf space agreements with retailers, increased by 53 percent from $137 million in 1994 to $210 million in 1995.


The war with McCormick helped drive Burns Philp company to a loss of about $48 million in the year that ended last June 30. The company rebounded in the first half of the current year, with a profit of $37 million. Burns Philp reported losses of $19 million in the third quarter.


Burns Philp said it will focus on its yeast and vinegar businesses.


Analysts said Burns Philp company will likely suffer a loss of more than $155 million from a fire sale of their businesses. The company values the assets of the spice business at about $659 million but will likely fetch far less.