From the Ground Up - McCain Foods Limited

McCain India: In the middle row, fifth from the left, is agriculture manager Devendra Kumar, the longest serving member of McCain’s India
team. Engineering manager Dominic Rush is sixth from the left in the back row, finance director Rajeev Chauhan is fifth from the left, and
country manager Jaideep Mukherji is fourth from the left. John Allan, factory manager, is fourth from the right in the second row from the back.
China is not the only country that’s home to over one billion people. Like China, the
other member of the exclusive billion-population club is undergoing rapid economic
development and creating a vast, newly affluent middle class.
In one important way, India is even more attractive than China as a market for
McCain Foods: unlike the Chinese, Indians already have a taste for potato specialties.
And so, the McCain plant in India’s Gujarat province produces a variety of potato
products, including savoury wedges, spicy wedges, rösti fingers, rösti rounds, and
pom poms. “In India, potatoes are an almost daily staple food,” explains Terry Bird.
“They are cooked in a wok-like pan called a karahi. The wedges and crunchy potato
specialties we produce in a frozen format are similar to what Indians traditionally eat
as snacks.”
On the other hand, almost nobody in India eats french fries. The challenge for
McCain will be to increase the market for french fries. If it succeeds, the rewards
will be great. “In North America,” says Bird, “the average person eats almost fifteen
kilograms of french fries a year. What if we could get the average consumer in India
to eat just half a kilo?”
As elsewhere, McCain started its business in India by shipping in its
product. Then it began to produce McCain products at a Mumbai factory
partly owned by McDonald’s. Finally, it decided to build a plant of its own.
As in Argentina and China, it was Ghislain Pelletier’s job to travel the
country and analyze the suitability of various areas for growing potatoes to
supply a large processing plant. Before McCain invests millions in a plant,
it needs to have a good understanding of the risks involved. The better
the market, the more risk McCain can afford to take. If business can be
established beyond quick-service restaurants, in the broader food service
market and in retail, then perhaps construction of a plant is warranted. If
not, it might be too risky. Another major issue is the likelihood of drought or some
other weather disaster that could lead to a potato shortage. If McCain is going to invest
$50 million in a factory, it needs to be sure it will have enough raw materials to fill it.
In India, potatoes are a winter crop, as the summers are too hot to grow them successfully.
They are planted in November and harvested in March. Pelletier travelled
around India with Jaideep Mukherji, the country manager; agronomist Devandra
Kumar; and business development officer Dan Singer. Eventually, they settled on the
province of Gujarat as the right place to build a factory.
Although Gujarat produces potatoes that so far are smaller than McCain would
like, the quality is good in terms of both solids and colour. “There are always some
trade-offs,” says Pelletier.
As in China, introducing to India the potato varieties McCain favours was a long
process. The company imported tissue culture, which had to remain in quarantine
for more than a year before being released as plantlets. It then had to set up a seed
program to multiply the plantlets for three years before they were ready for the local
growers to plant.
214 From the GrouN d up
New w orlds to CoN quer 215
tOP lEFt: Indian street vendors
offer a range of deep-fried
potatoes and other snacks.
tOP MIddlE: An insulated
minivan for short-distance
deliveries in Pune, a city in the
western Indian province of
Maharashtra. The van can hold
twenty cases of french fries.
tOP RIGHt: A McDonald’s in
Mumbai.
BOttOM: Taking part in the
groundbreaking ceremony for
the Gujarat factory on August 28,
2005: (left to right) Simon Jones,
Terry Bird, Derrick MacDougall,
Devendra Kumar, Robert Martin,
Larry Derrah, Tom Kaszas, Lloyd
Borowski, Rajeev Chauhan.