McCormick Gourmet Spices

Kennon-Green & Co. Fiduciary Financial Advisor, Wealth Management, Global Value Investing

I’m reading a book called Spice: The History of a Temptation by Jack Turner.  As the review said, “There was a time, for a handful of peppercorns, you could have someone killed. Throw in a nutmeg or two, you could probably watch. There was a time when grown men sat around and thought of nothing but black pepper. How to get it. How to get more. How to control the entire trade in pepper from point of origin to purchase.”

[mainbodyad]The history buffs among you know this, but throughout much of human experience, wealth was not measured in stocks and bonds, but in real estate, spices, gold, and silver.  It’s odd for us to think of it today but two thousand years ago, Pliny the Elder left written records indicating the price of cinnamon to be worth roughly 15x the value of silver on a weight basis.  Wars have been fought over spices, and it was the promise of a bounty of new spice trade that convinced many European monarchs to back expeditions that eventually resulted in the colonization of North and South America.

It makes sense.  Food was typically rancid and / or heavily salted for preservation before the rise of electricity and effortless refrigeration.  Travel was difficult so transporting large amounts of spice quickly enough to stay fresh and remain halfway around the world was almost impossible.  Now, even someone who can barely make ends meet and lives on food stamps can walk into Wal-Mart and pick up a generic bottle of cinnamon for less than $2.50 and a gourmet bottle of Vietnamese cinnamon for less than $5.00.  Some spices are still extraordinarily valuable – a cup of the highest quality saffron will cost you $150 – but the world has changed.  Peasants now live like kings.

McCormick Gourmet Spices

Two thousand years ago, this spice rack would have been extraordinarily valuable.  It could have been converted into almost anything – including real estate, gold, silver, merchandise, or even Roman slaves.  People would have killed you to take possession of these spices.  Now, these six bottles cost around $40 at Wal-Mart.

Go to your pantry or cabinet and grab some cinnamon or, if you don’t have cinnamon, some other spices.  Shake some into your hand.  Look at it.  For thousands of years, your forefathers and foremothers would have looked at that little brown powder with the same wonder as you might holding a large, rare diamond or a pile of gold.

That’s where the interesting thing about psychology comes into the picture.  If you are like most people, you don’t even bother to have a decent spice collection in your house.  The bounty available at the corner store is so far beyond what our ancestors could have imagined that it now sits, almost ignored, by a vast majority of the population simply because it is common.

Spices are so common that the undisputed global leader in the spice trade, McCormick & Company, is publicly traded and valued at around $8.5 billion.  Anyone with a brokerage account and some cash can become an owner.  (It is, in my opinion, overvalued relative to its intrinsic value so I won’t be buying shares anytime soon, but if they were to become cheap enough, it’s exactly the sort of the business I would want to pick up for the KRIP portfolio.)

McCormick Spices

Even the “cheap” non-gourmet line of spices would have been enough to cause a war in the right time and place in days gone by.  Those McCormick peppercorns would have been locked in a vault under armed guard.

What are the spices of tomorrow?  That is, what sort of things do we consider valuable today that will be common place centuries from now?  

On the flip side, what sort of things are common today that will be rare in the future?  

Humans value things that give pleasure to their basic biological makeup – sight, sense, smell, taste, and touch.  They vote with their claim checks on society (money) to acquire these things; studying how they vote is called economics.  We use these words to describe individual sub-areas of life but they are all the same thing.  Almost everything is rooted in biology and genetics.  The human brain wants novelty and comfort, as well as actively seeking to avoid boredom and discomfort.  Art, music, love, food – it all goes back to the brain demanding sensory input.

The next time you are in a store and see spices, don’t just look at the little bottles.  Consider that the entire course of human history was radically altered because of those tiny herbs, plants, and seeds.  Fortunes were built and lost.  Lives taken.  Wars fought.