From the Ground Up - McCain Foods Limited

Plant manager Bill Goodridge
and project manager Paul
Andrew assess the sweet corn
waiting to be processed at
the Hastings factory in
New Zealand.
‘John, I have to get to the airport. We’re leaving here in
twenty minutes. Get the car; I’ll meet you at the door.’”
Clements and Scott left the room, leaving Wallace
and the Australian alone. “I wanted that business so bad,
I was licking my chops,” Wallace says. Finally, still without
an agreement, he got up to leave. The Australian followed
him to the corridor. Wallace pushed the elevator’s
down button. The elevator arrived and the door opened.
Just as Wallace was about to step in, the Australian said,
“It’s a deal.”
Ten minutes later, Wallace emerged into the parking
lot, looking glum. His son turned to him and asked,
“How did you make out?”
Wallace’s face lit up. “We own it.”
“I was there only as a bystander trying to learn from
my father,” says Scott McCain. “It was a great learning
experience.”
In 1987, McCain bought a frozen dinner business,
R.M. Gow’s Chalet Foods. In 1990, it expanded into New
Zealand by buying a frozen vegetable business from
Alpine Foods, in Timaru, on the South Island. In 1992, it bought Safries, a potato-
processing business in Penola, in southeastern Australia. In 1996, it bought Griff ’s
dinner line from Comgroup Supplies and, in 1997, another frozen vegetable business
in New Zealand, Growers Foods, in Hastings. And, in 2003, it bought a frozen potato
and vegetable plant from Heinz-Wattie’s Ltd. in Fielding, New Zealand.
In Australia, as elsewhere, McCain turns down more deals than it accepts. An
important key to the company’s success has been its ability to stay focused on the
businesses it understands. “You have to know what not to buy as well as what to buy,”
says Basil Hargrove, who in 1995 followed Clements as head of Australian operations,
later becoming CEO for the Asia Pacific region and a member of Opco, McCain Foods
Limited’s board of directors.
While it was buying up other companies, McCain did not neglect its existing facilities.
It continued to invest in upgrading them, with the objective of building McCain
into a dominant player. This strategy has succeeded. Nowhere, not even in its Canadian
homebase, does McCain have a more balanced market position than in Australia. This
unusual balance is the result of the Australian company’s strength in four separate
categories: frozen potato products including fries, other
frozen vegetables, pizza, and dinners.
In Britain, McCain dropped frozen dinners because it
was too far behind other brands; it does not like to be a
minor brand in any category. In Australia, the timing was
better. When McCain acquired the frozen dinner business
of R.M. Gow in 1987, the market for that category
was in its early stages but on the verge of major growth.
The acquisition immediately gave McCain a 20 percent
market share.
Clements says much of the credit for McCain’s success
in the dinner category belongs to marketing director
David Boyle and to Quinton Wilkinson, the research and development manager.
Steve Yung also played an important role.
Yung was born in Vancouver and raised in Australia. During his twenty-year career
with McCain, he has spent thirteen years in Australia, one in New Zealand, and
six in Canada. His year in New Zealand was sandwiched between two assignments in
Florenceville. “I think I’m the only one in the company who has ever been transferred
to Florenceville twice,” he says.
In 1987, Yung came to McCain from R.M. Gow as product manager for frozen dinners.
Although he wasn’t keen on moving from Queensland to the State of Victoria, he
was lured by the opportunity to manage a brand that he knew the company planned
to invest in – for example, through TV commercials. He also was attracted by the
Ballarat plant’s proximity to Melbourne, just 112 kilometres away. “It was a chance to
be noticed by the Melbourne marketing community,” he says. “I thought I might last
two years and then move to Melbourne. Twenty years later and I’m still here.”
As of 2007, Yung was managing director and CEO for Australia and New Zealand.
He thinks McCain Australia has done well in frozen dinners because it “just plunged
in,” undaunted by the notorious difficulty of the category. Dinners are more difficult
to manage than french fries, vegetables, or pizza, since each package is made up
of several items. Consumers want variety, so the producer needs to offer a range of
items, or what the trade calls SKUs (stock keeping units). “Every year we launched
twenty to thirty SKUs,” says Yung. “Sometimes we would get a little frustrated by how
hard it was, but I think we’ve come to realize our frustration was misplaced. It was
hard because the business was hard.”
When McCain first entered the frozen dinner business in Australia, it was the
114 From the Ground up
down under 115
Aerial view of potato fields on
a Tasmanian farm.