From the Ground Up - McCain Foods Limited

Rolando Palazzi (right)
receives the Best Partner
of the Decade award from
Jean Bernou, 2005.
six, that’s what they want – not seven. I got thousands
of complaints. When you are in the consumer marketing
business, you don’t make those mistakes.”
An important aspect of the McCain philosophy is
that problems exist to be overcome. Rather than being
demoralized by setbacks, the company’s founders
were energized by them. Van der Wel was called at one
o’clock on a Saturday morning in February 1984 by the
Lewedorp plant manager, who reported that part of
the factory was on fire – but that it didn’t look too bad.
Later, he called to say that the wind had picked up and
the fire had spread to the roof. By the time Van der Wel
got there, three hours later, the building was destroyed.
That afternoon, Van der Wel called Harrison McCain
with the bad news. Harrison said, “Paul, make a proposal.
We are going to rebuild.” Van der Wel, along with
John Huige and his production and engineering people,
wrote up a proposal indicating what had to be done
and what it would cost. He sent it by telex on Monday.
Within twenty-four hours, he got a telex in reply. It read
“Please proceed.”
The rebuilt – and much improved – factory was
running six months later. The episode, Van der Wel told The Star later, was “an
example of McCain spirit and true cooperation and of very fast decision making,”
as well as an example of the confidence the company’s leadership had in its regional
management.
A high point of Van der Wel’s McCain career was the surprising success of McCain
fries in Italy, the land of pasta. McCain’s sales went from four thousand metric tons of
french fries a year to forty thousand metric tons during the 1980s. Some of the credit,
Van der Wel believes, should go to Pope John Paul II. The Vatican owns several restaurants,
which played host to thousands of potato-eating tourists from Poland after
the Polish Pope was elected in 1978. “We sold the Vatican restaurants hundreds of
tons of french fries,” says Van der Wel. “The Vatican was our best customer.”
More important than the Pope to McCain’s fortunes in Italy was Rolando Palazzi,
who has represented McCain there since 1976. Palazzi first met Harrison McCain in
1956, when Palazzi was a boy of fifteen. McCain Foods had been in business just a few
months when Harrison decided to scout business opportunities in Europe. Palazzi’s
father, Nino, ran one of the best restaurants in Rome and also catered for airlines, including
the now defunct Canadian Pacific Airlines. Someone at the airline suggested
to Harrison that he contact Palazzi. They talked about the food business, and Palazzi
introduced his young son to the Canadian visitor.
In the mid-1970s, Rolando Palazzi was working for a state-owned frozen food
company that was doing business with Favorita, one of the Dutch plants purchased
by McCain. Anton de Boef, who joined McCain when that factory was acquired,
wanted someone to represent the company in Italy. Palazzi decided to quit his job and
go into business for himself as a distributor. His first supplier was McCain.
In his first year, he sold four hundred metric tons of french fries for McCain.
PomFrit, a Dutch company represented by another Italian agent, sold nine hundred
metric tons. As of 2007, McCain’s Italian sales were ten times those of its Dutch
competitor.
Such success was the fruit of much hard labour. To help build up the Italian market,
Anton de Boef and later Tony van Leersum spent eight or more days per month
criss-crossing the country with Palazzi setting up a distribution network. When the
weather made it too dangerous to cross the mountains at night, they slept in the car.
By 2007, McCain was selling more than thirty potato products in Italy. Its Italian
business was being managed by twelve area managers and 250 distributors servicing
thousands of restaurants. Italy is unusual in that the quick-service chains have not
done as well as they have in most other industrialized countries. McDonald’s operates
in Italy, but it doesn’t have many outlets and the food service industry remains
dominated by independent restaurants.
The end-user system – demonstrating the advantages of McCain frozen fries to
chefs – has been instrumental in cementing the company’s dominant position in the
Italian food service industry. This has been achieved even though competitors can
offer lower prices. McCain has been able to get the message across that a small additional
cost per portion is worth it for the better quality. Just as the proprietary name
Kleenex has come to mean a tissue, so the McCain brand has become synonymous
with french fries in the Italian food service industry. “Give me one McCain means
give me one case of french fries,” says Palazzi.
In an ideal world McCain would make french fries only under its own brand, but
in the real world it can’t avoid the private-label business entirely. Supermarkets want
low-cost products bearing their own labels, and if McCain won’t provide them, the
competition will. The acquisition of Beaumarais in 1986 gave McCain two factories:
86 From the Ground up
Across the chA nnel 87
Alain Olivier, CFO for
continental Europe, 2002.