From the Ground Up - McCain Foods Limited

Opening of the Lelystad
plant, 1997: Harrison; Folkert
Sneep, managing director for
northern Europe; and Howard
Mann, president and CEO,
McCain Foods Limited.
focused his attention. “There are more people and more
money in Germany, and the Germans pay more for quality
than the Dutch,” says Van der Wel. As well, German consumers
prefer to prepare their french fries in the oven.
“The value-added is higher in oven fries than in regular
ones,” says Van der Wel. “They are more difficult to
produce, so competitors can’t copy you as readily, and
you have a competitive advantage, which you can market
in an advertising campaign, building yourself a strong
market position. In the Netherlands, we could not do that
because there was not the money to advertise, and the demand
for oven fries was much lower than in Germany.”
To become intimately acquainted with the German market, Van der Wel spent six
weeks there, travelling with each of McCain’s German salespersons. This allowed him
to see stores and restaurants, to meet customers, and to evaluate the strengths of the
sales force. After that, he went to Germany every other week.
In 1983, Van der Wel became CEO for McCain Foods for Europe, including France,
which had been under separate management before. At the same time, Tony van
Leersum moved to Florenceville to take on responsibility for corporate development
in Europe and the Middle East. He also served as McDonald’s international account
manager.
The following years were a time of rapid growth for McCain in Europe, with sales
over a ten-year period ballooning from $70 million to $450 million. The growth was
the result of increasing the market for french fries, introducing many new products,
and acquiring new businesses. These included a frozen food company, Frima, with
production facilities in Ostend and Grobbendonk, Belgium, which became McCain
Frima NV; and Beaumarais, a fries and potato-flake manufacturer in Bethune, France,
near Harnes. In 1988, McCain spent $33 million to double production at Harnes.
And in 1991, McCain picked up its fourth french fry plant in the Netherlands, in the
town of Lelystad.
Van der Wel cites several reasons for McCain’s rapid growth. For one, the senior
management team collaborated well and were all committed to rapid expansion.
Van der Wel has worked at several major food companies but at McCain he experienced
“by far the best teamwork I ever had in my career.” Also, McCain was
entering big markets – Germany, France, and Italy – that were underdeveloped in
processed potatoes.
A strategic decision by Harrison and Wallace was another important factor. They
differentiated McCain from competing companies by strongly supporting their own
brand rather than private labels. “That requires heavy investments in marketing,
which reduced short-term profitability, but it was an excellent long-term decision
because it is now very profitable,” says Van der Wel. “We were marketers. The competition
were merchandisers.”
Sometimes, however, marketing doesn’t work the way it’s supposed to. The selling
point of oven fries is that they have less fat and less odour than their fried counterparts.
In the early 1980s, an advertising agency came up with a French TV commercial
that showed a poodle coming into the kitchen while fries were being prepared. The
dog has its tail in the air when fries are in the oven, but when the dog comes back into
the kitchen and the fryer is going, he runs away in disgust.
“It got the prize for the least effective commercial in Europe,” says Van der Wel. “You
don’t identify human food with dogs. It was humorous, but it didn’t work at all. And
it was premature for France because the French weren’t interested in oven fries.” The
advertising agency and marketing director were both fired. “We lost a lot of money.
McCain was down the drain. We couldn’t get listings, we couldn’t get distribution. Later,
we changed our whole approach to fried french fries in France.”
Another miscue occurred in Germany with a new product, onion-flavoured hash
browns called Rösti Ecken. The art on the package showed six triangular potato pieces.
But the equipment in the plant making them couldn’t be relied on to produce six per
package. Although the total weight of the package contents was accurate, sometimes
there were seven pieces instead of six. “The Germans are meticulous,” says Van der Wel.
“They want what is inside to be the same as what is shown on the bag. If the bag shows
84 From the Ground up
Across the chA nnel 85
LEFT: The 1984 fire at the
Lewedorp factory reduced
the building to a burnt-out
shell. The ground is littered
with potatoes.
RIGHT: Jan van der Neut-
Kolfschoten, chief engineer,
Europe; Paul van der Wel; and
Harrison at the site of the fire.