From the Ground Up - McCain Foods Limited

lEFt: McCain Argentina
management, 2007.
Front row: (left to right)
Néstor Zanolli, Carlos Becerra,
Pedro Lelkes (retired),
Graciela Parafita.
Back row: Javier Montenegro,
Adolfo Lopez Rouger, Juan
Manuel Fluguerto Martí
(retired), Fabián Bojalil.
RIGHt: Management, sales
and administrative staff of
the Buenos Aires office, 2003.
sales of the company’s primary product, french fries. In North America, most of the
people who would be interested in buying frozen french fries to prepare at home are
already doing so. Not so in South America, where many people can’t afford what is,
for most North Americans, a low-cost food option.
“People living in a developed country like England, France, or Canada, where income
per capita is high, can afford to pay for a convenience product,” explains Rouger.
“When income per capita is low, there is not a big market for these products, and there
is less retail business. This makes us much more focused on the quick-service chains,
which is why we came here hand in hand with McDonald’s.”
Per capita consumption of frozen french fries in South America is one-tenth that
in the United States. Because there is so much room to grow in that category, the
company has chosen not to expand yet into other product lines. French fries account
for 90 percent of what McCain sells in South America; the remaining 10 percent consists
mostly of other potato products.
When Rouger says it took guts for McCain to make a major commitment to South
America, he means that the company was placing a bet on a region prone to political
unrest and economic crisis. Beginning in 1999, the entire region suffered from a
series of bank and currency crises, accompanied by political unrest that often spilled
into the streets. As of 2007, the economy was growing again and so were the quickservice
chains. But, because of the bad years, McCain South America in 2007 was two
years behind where it thought it would be by then.
Meanwhile, the town of Balcarce has benefited from McCain’s presence. When
McCain first arrived, employees did not have bank accounts and their wages had to
be paid in cash under the supervision of armed guards. Since then, retail banking has
become common, a giant supermarket has opened, and hotel accommodation is much
improved. The growth in Balcarce is typical of what happens whenever McCain opens
a factory in a rural area. The multiplier is 3.5, meaning that for every dollar invested
by McCain, 3.5 dollars are invested by service industries, fertilizer and agrichemical
companies, farm equipment suppliers, supermarkets, banks, transport companies, car
dealerships, clothing stores, and others.
Once the factory was up and running smoothly, the group Dennis Jesson had
dubbed the “foreign legion” – McCain people from Canada, Australia, Great Britain,
the Netherlands, and France who came to get the Argentina operation off the ground
– went home and left local management in charge. Like the other McCain operations,
McCain South America makes no effort to stress its Canadian nationality, preferring
instead to blend in with the community. Indeed, on one occasion, being Canadian
was a distinct disadvantage for McCain in Brazil. That was during the 1990s, when
the Canadian aircraft manufacturer Bombardier was embroiled in a dispute with its
Brazilian competitor, Embraer, each company claiming the other benefited from illegal
government subsidies. Opponents of Bombardier in Brazil urged a boycott of
McCain since it is a Canadian company. “It didn’t affect the business; it was only a
couple of leaflets,” says Rouger. “That’s in the past now.”
206 From the GrouN d up
New w orlds to CoN quer 207
Argentina management,
Balcarce, 2007: (left to right)
Gustavo Scioli, Marcelo
Aguirre, Carlos Becerra,
Patricio Gonzalez Roelants,
Juan Andrade, Maria
Echeverria, Ana Alanis, Adolfo
Lopez Rouger, Ana Sudan,
Enrique Sanchez Acosta,
Alejandra Ibarra, Fernando
Mendoza.