From the Ground Up - McCain Foods Limited

lEFt: Adolfo Lopez Rouger
with Eduardo Hadad, chief
engineer, next to the potato
specialty line at Balcarce.
RIGHt: Gustavo Martin,
quality-assurance supervisor
at Balcarce, with an array of
packaging, including those
for french fries and potato
specialties.
get into factories during construction. I let the cat go
and went to the hospital and was bandaged up like a
mummy for a week.”
Dennis Jesson, who had been a key player in launching
McCain’s first foreign plant, in Scarborough,
England, came out of retirement to start up the factory’s
operations. Importing expertise was necessary
because in Balcarce McCain faced a situation similar
to that Wallace and Harrison confronted when they
started the Florenceville factory in 1957: the local area lacked the infrastructure and
personnel to support a major manufacturing operation.
Demand was strong enough that McCain expanded the plant in 1996, 1997, and
again in 2000. The total cost, including the two expansions, was U.S.$160 million.
However, the sharp devaluation of the Argentinean peso in 2002 severely diminished
the market for McCain’s products, and it took several years to recover. A Brazilian
currency crisis three years previously also had a severe impact on McCain’s South
American business. “A lot of companies would have just shut down,” says Terry Bird,
vice-president of corporate development and emerging markets. “But we stuck with
our South American plant, and it has become a valuable contributor.”
In 1996, Adolfo Lopez Rouger, an executive with the international manufacturer
Unilever, got a call from a recruiter to inquire whether he would be interested in a job
as managing director of McCain Argentina. CEO Howard Mann had told Tony van
Leersum, then president of McCain Argentina, to look for an experienced marketing
person for that position. But Van Leersum thought that, to serve the McDonald’s
account well, the managing director
needed manufacturing experience.
Rouger was hesitant to make the
move. It seemed risky to leave a huge
company like Unilever for a smaller
company that was not yet well established
in South America. It took several
meetings to convince him that it would
not be a great risk for him and his family,
because McCain does not walk away
from its investments, even if the results
are poor in the short term.
Mann had asked for at least three candidates, but Van Leersum convinced him
and Harrison to meet Rouger in Toronto. During the meeting, Rouger asked about
the company’s bonus scheme. Harrison said, “Adolfo, we really love to pay good bonuses.”
Rouger got the message: McCain pays good bonuses when it makes money
– and it likes to make money.
Rouger took the job. Based in Buenos Aires, he oversees McCain’s operations in
Argentina, Brazil, Chile, Uruguay, Paraguay, and Colombia. “We have a big market
share in the region because McCain had the guts to come to a non-developed region
well in advance of other companies,” says Rouger. “And that has been the tradition of
Wallace and Harrison.”
McCain International, the sales and marketing division responsible for areas of the
world where McCain has not set up a separate operation, was active in South America
for many years before McCain decided to build a plant there. It had been selling its
products through exclusive deals with local distributors. This system worked especially
well in Brazil, where McCain’s distributor had built up a substantial food service business
for the McCain brand. Once McCain had its own factory in Argentina, however,
it wanted to build up its own sales and marketing organization, rather than be restricted
to exclusive agreements with distributors. The distributors weren’t pleased about
losing their exclusivity. The Argentine distributor sued McCain, while the Brazilian
one stopped its payments, forcing the company to take the distributor to court.
McCain didn’t want to rely on just one distributor, especially in Buenos Aires,
where 70 percent of its Argentine business is and where there are thousands of restaurants.
Instead, it made arrangements with many small distributors, some of them
table-potato distributors and others individuals new to the food industry who were
202 From the GrouN d up
New w orlds to CoN quer 203
Adolfo Lopez Rouger at the
output end of the dryer on
the fifteen-metric-ton-perhour
french fry line.