From the Ground Up - McCain Foods Limited

McCain gives out free
samples to launch its retail
products in England, c.1976.
The ability to make decisions quickly gave McCain a
big advantage over its competitors. In the mid-1980s, the
Scarborough and Whittlesey plants had a severe problem
with potato blight, a devastating disease in which a fungus
causes internal rot. In the past, it has destroyed entire potato
crops and led to mass starvation, as with the Irish potato
famine of the 1840s, when one million people died.
The factories could control the advance of the disease
by using fans in the potato storage areas, but they didn’t
have enough of them. “I remember going with Allison to
see Mac to tell him we needed to increase the fan capacity
promptly, and it would cost us ₤275,000,” says Finn. “Mac
understood immediately, and said, ‘Let me call Harrison
to give him a chance to have his input.’ He called and, ten
minutes later, said, ‘Okay guys, go ahead.’”
The building of the British and Australian businesses set a pattern that would be
followed wherever in the world McCain decided to go. The first step is to establish a
market by importing McCain products to sell to the food service industry. Then, if
the market potential is sufficient and good potatoes can be grown at a competitive
cost, McCain either builds or buys a factory to produce locally. The final step is to
enter the retail market.
McCain entered the British retail market in 1976. Since then, its retail french fry
business has been hugely successful. Happily for McCain, the British supermarkets
were moving to central warehousing systems rather than requiring processors to ship
products directly to individual stores. This made it easier for a new competitor to
enter the market because it would not have to acquire a fleet of trucks to deliver to
hundreds of locations all over the United Kingdom.
Mac gives credit to Roger Lillyman, his first marketing director, for establishing
a successful retail business in the United Kingdom. The big breakthrough occurred
in 1978 when McCain GB launched Oven Chips, the British version of the product
known in Canada as Superfries. Although market research for fries that could be
baked in the oven wasn’t favourable, McCain had seen the success of the product in
Canada and had confidence consumers would accept it once they understood they
could have deep-fried taste without the inconvenience, smell, and danger
of deep-frying at home.
McCain succeeded in retail through consistent advertising, aggressive
selling, and product quality. By focusing on one product, Oven Chips,
McCain stole the frozen chip market away from its competitors, including
Birds Eye, Findus, and Ross. Steady innovation helped increase both
the chip market and McCain’s share of it. The company relaunched Oven
Chips on a regular basis with new cuts and fresh marketing. And, in 1985,
it introduced Micro Chips, which could be prepared in the microwave.
During the late 1980s and early 1990s, although McCain’s retail business
continued to grow, private labels were growing faster and overall
market growth was declining. McCain revolutionized the market again
in 1997 by introducing McCain Home Fries, a thick-cut chip that used
coating technology to deliver a crispy outside and a moist, fluffy texture
inside, just like a British homemade chip.
Home Fries were an overnight success. Despite an initial dip in Oven
Chip sales at the time of the launch, the total sales of Home Fries and
Oven Chips by 2007 was almost two and half times McCain’s chip sales
before the launch of Home Fries. Today McCain has more than a 50 percent
share of the British frozen chip market, a share five times bigger than
the next brand. Private labels are McCain’s main competition.
“McCain in Great Britain today is primarily a potato business,” says
Nick Vermont, “but this hasn’t been for lack of trying other product
categories.” Indeed, buoyed by the success of Oven Chips, McCain GB
tried to establish itself as a broad frozen food business during the 1980s.
It launched a range of products, including pizza, ready meals, breakfast
meals, frozen orange juice, desserts, fish products, and snack foods. Some
of these categories were already successful in Canada. But the same competitors
that McCain had quickly beat in the french fry market were well
established and committed to these categories – and better prepared for
another attack from McCain. While McCain was a brand leader in the
retail market for frozen pizza for many years, its other categories were not
as successful and have since been dropped.
In 1983, McCain GB acquired Britfish, a frozen fish supplier in the
Yorkshire city of Hull. However, the competition from Birds Eye was too
strong and McCain decided to get out of the retail frozen fish market.
58 From the g round up
crossing the AtlA ntic 59
The evolution of Oven Chips: (top to
bottom) 1985, the first health positioning
– 40 percent less fat than deep frying; 1991,
the focus is on 5 percent fat and the use of
sunflower oil; 1998 sees a broader health
message; 2006, the It’s All Good campaign
– just potatoes and sunflower oil.