From the Ground Up - McCain Foods Limited

McCain’s first overseas plant
was in Scarborough, England.
Scarborough Castle, on the
North Yorkshire coast, can be
seen at cliff’s edge.
In retrospect, the decision taken in 1967 to build a factory in Britain and become
a major producer of frozen food in that country was a masterstroke, a perfectly
timed move that would begin the transformation of a small Canadian company into
a global powerhouse. Of course, Wallace and Harrison McCain couldn’t know that
at the time. What they did know was that if McCain Foods was going to continue to
grow, it had to expand outside Canada. Building a plant in Britain was a gamble, but
it seemed like one they had to make.
The alternative of expanding into the United States might, at first glance, seem
the more logical choice. After all, it was right next door, its people spoke the same
language, and it was the biggest french fry market in the world. The problem was
that it was also the most competitive french fry market in the world. In the early
1950s, Simplot had led the way in developing the technology to make frozen french
fries. Then, in 1960, Gilbert “Gib” Lamb, president of Lamb Weston, an important
producer of frozen peas, turned his attention to frozen potatoes. By the latter years
of the 1960s, the two companies were well entrenched as the dominant frozen french
fry processors in the United States. McCain Foods didn’t have the financial muscle
to take them on.
Great Britain was a different story. Here was a nation of fifty million people, just
a day’s trip from Florenceville. Its people also spoke the same language as Canadians
– more or less. It didn’t matter that they called french
fries “chips.” What mattered was that chips were one
of their favourite foods and per capita consumption of
them was among the highest in the world. Best of all,
the American french fry giants weren’t there in a big
way. “Our major competitors grew up in the United
States and stayed in the United States,” explains McCain
Foods chairman Allison McCain, who worked for the
company in Britain for sixteen years before returning
to Canada. “Because their own domestic market is so
large, they didn’t have as much need as we did to expand
internationally.”
This didn’t mean that McCain had no competition in
Great Britain. Other companies were producing frozen
chips there, but the market wasn’t nearly as developed
as in the United States: McCain Foods could build a
new market for its products rather than having to wrest
existing market share from others.
Exporting to Great Britain from Canada was not a good long-term option after the
pound sterling sharply devalued, as it meant Canadian-made products were not competitive
in price with locally produced products. In addition, because of the primitive
shipping methods of that era, McCain’s products often arrived badly damaged. If
McCain wanted to sell chips in Britain, it had to make chips in Britain.
McCain Foods was not a newcomer to the British market when it made the decision
to build a factory. It had been present since 1960, when Harrison McCain went
over to try to unload surplus peas. At the time, McCarthy was production director for
Eskimo Foods, a processor of frozen fish, chicken, and vegetables. It just so happened
that Britain had a pea shortage just when McCain had a pea surplus. The young company
urgently needed to sell the peas because it did not have the money to finance
another year’s production with the previous year’s still unsold.
“I wrote to the Canadian High Commission to give me addresses of people who
freeze peas in Canada,” says Mac, who insists on going by his nickname (indeed, being
addressed as such testifies to the unusual degree of informality at McCain at the
time, especially in England). “One of them was McCain Foods. The very next day I
had a phone call from a fellow saying, ‘I’m Harrison McCain. Can I come and sell
you some peas?’”
40 From the g round up
crossing the AtlA ntic 41
Harrison and Mac McCarthy,
1970.