From the Ground Up - McCain Foods Limited

LEFT: Celebrating McCain’s
first contract with Polish
potato growers.
RIGHT: The Polish sales force
on a team-building rockclimbing
expedition led by
Edgar Thiel, a sales manager
from Germany.
Lessard decided to launch a better quality frozen french fry for deep frying at
home. He put them in an attractive retail package with a premium price. It worked.
The new McCain fries took the French retail market by storm.
Despite the existence of a customs union and a common currency that is shared by
many of its countries, Europe remains a complex market. Differences persist in cuisines,
language, consumer behaviour, working habits, laws, market structures, and
distribution systems. In 1989, when the Berlin Wall came down, Van der Wel’s job as
the head of McCain Europa became more complex still. Overnight, Communist East
Germany joined capitalist West Germany. The West German retail stores McCain was
supplying rushed into the former East Germany. They bought land and started building,
but they couldn’t wait to start selling. So they erected tents with freezers to sell
frozen food supplied by McCain.
It fell upon Van der Wel to train a group of East German salespeople. Inevitably,
there were culture clashes. The salespeople he hired were accustomed to driving
Trabants, two-cylinder East German cars infamous for being noisy, slow, and prone
to falling apart. McCain gave them brand new Volkswagen Golfs as company cars.
The East Germans were thrilled by the power and speed of their new vehicles – too
thrilled, as it turned out. “Within a month, most of them had driven their cars into
a tree or ditch,” recounts Van der Wel. “Nobody got killed, but the cars were ruined.
I had to make it a rule that anybody who wrecks his car would be fired. After that,
everything was fine.”
The most intriguing market for any consumer products company is the most
populous. Among the former Soviet satellite countries of central Europe, that was
Poland, with almost forty million people. Poland was also a potato-producing and
potato-eating country and therefore of great interest to McCain. Van der Wel hired a
Polish sales manager, and the two of them drove all over Poland looking for a french
fry factory to buy. But the existing factories bore the same relationship to modern
ones as Trabants did to cars manufactured in the West. “In every building we saw, the
cafeteria was larger than the factory floor, and the equipment was from forty years
ago,” says Van der Wel. Worse, the Polish government imposed strict conditions on
potential buyers. If McCain took over one of the existing small factories, it would be
able to run it with about thirty employees. But under the existing staffing policy, the
Polish factories had about four hundred employees, including quite a few idle welders,
carpenters, and cleaners. The government would not allow a buyer to fire any of
these employees.
Given these circumstances, Van der Wel advised McCain to delay entering Poland
as a manufacturer and instead build up a market by importing from other McCain
factories. After most of a decade had elapsed and capitalism was better entrenched
in Poland, McCain, in 1998, spent $79 million to build a new factory in Strzelin near
Wroclaw. As well as supplying Poland, it exports to neighbouring Russia and other
central and eastern European markets.
90 From the Ground up
Across the chA nnel 91
LEFT: The opening of
Moscow’s first McDonald’s,
in Pushkin Square, 1990.
RIGHT: The lineup for a
hamburger and fries wound
around the square.