Alan D. WilsonThanks, Joyce. I'll add my welcome to everyone who's joining us this afternoon. McCormick Brings Passion to Flavor. Flavor is the foundation of our business, and we have a simple mission: we're off to save the world from boring food. Our headline for this conference is "A World of Flavor." In the past 12 months, we expanded our world, both organically and through acquisitions, making inroads in Eastern and Central Europe, Russia and India. And we expanded our supply of industrial customers as they grew globally in markets like the Middle East, Russia and parts of Asia. Today, annual sales of our business reached $3.7 billion in 2011. We have 9,500 employees worldwide. Our brands reach consumers in more than 110 countries and we're serving customers, both consumer and industrial, from nearly 50 locations in 24 countries around the world. We like to say that every day, no matter what you eat, you can enjoy food that's flavored by McCormick. With the current reach of our products and the global reach of our industrial customers like PepsiCo, McDonald's and YUM!, we're adding on the word everywhere. Our world of flavor is expanding not only geographically, but with a broader portfolio of flavors. We've entered new categories like mustards and basmati rice; expanded the boundaries of our regional products with innovations like Recipe Inspirations and frozen Zatarain's entrees. And we're at the forefront of taste trends, the future of flavor. For more than a decade, we've demonstrated our thought leadership by publishing an annual Flavor Forecast. Last year, we had various forecasts across our major markets. In 2011, our chefs and other flavor experts from around the world created our first global Flavor Forecast, which is the theme for our reception this afternoon. Our Flavor Forecast has an excellent track record predicting flavor trends and is eagerly awaited by a growing following of customers and media.
Customers are demanding more flavor. In the U.S., our pantries average 40 spices and seasonings, up from fewer than 10 just a decade ago. Consumption of spices has grown almost 3x as fast as population growth. About 1/3 of us watch cooking shows regularly, and nearly 2/3 like to get creative with the foods that they cook.In January 2012, Food Technology magazine published its report on what, when and where America eats, and indicated that 87% say taste is the most important driver of food selection. 69% like to try new flavors. This is up over 5% over the past 2 years. 53% are more likely to visit a restaurant that offers new or innovative flavors, and preference for spicy foods grew 9% among those ages 25 to 34 and 13% among ages 35 to 44 just in the past 2 years. And there's a lot more room for growth. Did you know that half the steak and chicken that's prepared in U.S. homes is flavored with just salt and pepper or nothing at all? So we've got a lot of work to do and a lot of opportunity. Outside the U.S., similar forces are driving consumer demand for flavor. Shown here are healthy category growth rates for spices and seasonings in international markets where we have a significant presence. Consumer trends in emerging markets are also in our favor. Our growing middle class is eating more protein, which is usually flavored in some way. These consumers are interested in brands that they can trust, in particular, the trust and convenience of spices and seasonings as a packaged food item rather than an open-air bulk purchase. These trends play to our strength, and as you will learn today, we're making excellent headway on our strategy to play in these important markets.
The greater interest in flavor from an increasingly affluent and connected world population is one of the major trends that we see for the food industry. Another is a continued rise in demand for products with healthy attributes, and McCormick is well positioned with a foundation in natural spices and herbs. Consumers want to increase their consumption of spices and herbs. This is in sharp contrast to many other food categories where consumers really are trying to cut back. You'll hear more today about the digital consumer searching for recipes, sharing information and shopping online and how we're connecting with them. And in both our consumer and industrial businesses, we have significant innovation underway to meet the rising demand for products, offering convenience and value, 2 product attributes that never go out of style.While there are trends in our favor, we're not immune to the difficult economy, struggling consumers and volatile input costs. In each part of our business, we're taking steps to address these challenges and position ourselves for future success. These steps include innovation at all price points, managing the value of our brands, tactical pricing actions and optimal product assortment. Regardless of the economic environment, we continue to deliver high performance. We have delivered consistently higher profit, even in this latest round of steep cost inflation. Shown here is our steady improvement in earnings per share on a comparable basis over the last 10 years. Another metric we use extensively within our business is economic value added or EVA. Looking back over the same period, while EVA drops a bit immediately following an acquisition, over time, we've increased EVA and expects this measure of our business success to correlate to a higher share price. Behind this success is our strategy for growth: to invest in our business and product development, brand marketing and in acquisitions; to drive sales and profits; and to fuel our investment with Comprehensive Continuous Improvement, our CCI program. Whether it's our CCI program, product development, supply chain operations or another vital role, each McCormick employee is a key ingredient to our success. We foster a culture of respect, recognition, inclusion and collaboration. In fact, McCormick is a pioneer in participative management, with a multiple management philosophy that dates back to 1932.
In our latest employee survey, we had an 87% participation rate, which is ahead of the 77% benchmark. And around the world, our employees are highly engaged and the catalyst behind our growth.Our focus in today's conference is on our initiative to grow sales and profit. We'll share a snapshot of 2015 and how we're building on our momentum to expand our presence around the world of flavor. As we project out to 2015, we'll be operating in more regions, extending our portfolio of flavors into more categories and increasing the globalization of our organization and of our resources. In both our consumer and industrial businesses, we're expanding our geographic footprint, further penetrating alternate channels, filling distribution gaps in developed markets and accelerating our growth in emerging markets, both organically and through acquisitions. We believe sales in emerging markets can grow to 20% of our business by 2015. And we're growing profitably in these markets by acquiring established brands and forming joint ventures with solid business partners. Our flavor portfolio will be broader as we accelerate innovation. We've already begun with more than 200 new consumer products launched in 2011 and a strong pipeline of innovation in our industrial business. By 2015, we expect at least 10% of annual sales to come from new products launched in the past 3 years. Organically and through acquisitions, we anticipate that 75% of sales will be value-added products versus ingredients. This will have both greater growth potential, and in our industrial business, higher margins. We're moving toward a more global approach to our organization and our resources in areas such as product development, supply chain and technology. We expect this to lead to superior consumer insights and greater customer intimacy, and it'll be embedded in our participative, high-performance culture globally. We've laid the groundwork for this growth with uniform system platforms including SAP. And with the divestment of non-core businesses and the streamlining of our industrial products and customers, we have a much more focused flavor portfolio. We have restructured the 4 manufacturing centers of excellence and eliminate redundancies, and we formed shared services and are rolling this out globally.
More recently, we're positioning McCormick as the foremost leader in flavor, and we're doing it globally. And in 2011, we expanded our portfolio of brands with Kamis and Kohinoor, and we've taken steps to foster a global perspective among our current and future business leaders by forming global and regional multiple management boards, creating new roles like Chief Science Officer and naming leaders responsible for our global supply chain and global customer relationships.We're taking steps to better position ourself for the future. These include acquisitions. We have a robust pipeline of opportunities in both developed and emerging markets. We're equally excited about our innovation plans that you'll hear more about today, and we'll continue to develop our global resources, including people, systems and processes. Our path toward 2015 aligns with our long-term financial outlook. We start with the top line with mid-single-digit sales growth. We're projecting operating income to grow 7% to 9%, and earnings per share to grow 9% to 11%. We expect a double-digit increase in total shareholder return. Our confidence behind these goals is based on our track record over the past 5 years as shown here, with compound annual growth rates of 6% in sales, and on a comparable basis, increases of 9% in operating income and 10% in earnings per share. We're confident in our ability to grow this business and increase shareholder value. In today's conference, we'll share with you how we're driving this growth, meeting an increased demand for flavor in markets around the world with investments, growth initiatives and an increasingly globalized approach to our business. We have a strategy to deliver high performance and a talented team committed to this success. We're going to turn next to our 2 business segments and growth drivers. And that will -- and after that, we'll discuss our fuel for growth and other financial projections. Dr. Hamed Faridi will cap our remarks by sharing our vision of the future of flavor. Throughout the day, we'll allow plenty of time for an open dialogue to make sure that we're meeting your objectives for the day.
I'm going to turn it over now to Mark Timbie, our President, Consumer Foods Americas, and our Chief Administrative Officer. Mark will begin by outlining our overall product framework and a global view of our flavor categories. He will introduce our key growth initiatives. We'll then ask Malcolm Swift, President of Europe, Middle East and Africa, EMEA; and Ken Stickevers, President of U.S. Consumer Products, to provide insight into the initiatives that are driving our growth.Lawrence Kurzius, President of McCormick International, with a [ph] responsibility for both EMEA and Asia/Pacific, will discuss our expansion in emerging markets and provide some wrap-up remarks. At that point, we'll move to your questions and have Angie Francolini, our Vice President of Global Consumer Platform Strategy, to participate. Mark? Mark T. Timbie Thanks, Alan. Our global Consumer Foods business has a leading portfolio of flavor brands. These brands are all powered by McCormick. Our passion for flavor and expertise in developing great-tasting products drives our differentiation in the marketplace. From flavors consumer crave like Old Bay, to big-bull [ph] grilling flavors and Grill Mates, each brand has a unique point of difference in our portfolio. In 2011, the Global Consumer business sales accounted for 60% of the total company across our 3 regions: Americas, EMEA and the Asia/Pacific. We have a global focus on 2 core growth platforms: herb, spices and seasonings and recipe mixes plus a portfolio of regional flavors, branded leaders like Zatarain’s in the U.S., Vahiné homemade desserts in France and Billy Bee in Canada. Each of these is a top brand locally in its respective category with attractive growth prospects. I want to start by explaining why we are excited about the growth potential of our 2 global platforms. Worldwide, herbs, spices and seasonings sold as packaged food is a $9 billion category. Importantly, we estimate that only half of herb, spices and the seasonings are sold as packaged food items. This means global sales of spices and seasonings are approaching $20 billion. In many emerging markets like India and Turkey, most are sold as a bulk ingredient, but are beginning to transition over time to packaged foods. Read the rest of this transcript for free on seekingalpha.com