From the Ground Up - McCain Foods Limited

TOP: McCain produces an
assortment of pizza products
in Canada, Australia, the
United Kingdom, and several
European countries.
BOTTOM: Karen Basian,
vice-president of corporate
strategy, mergers and
acquisitions, and innovation,
2006.
Bird said, “I can’t do that; I’ve been an operator all my life, I don’t
know finance.”
Harrison replied, “It doesn’t matter, it doesn’t matter. Don’t worry
about any of that nonsense, you can hire financial guys. Just go out
and buy me some damn businesses.”
On reflection, Bird decided he could do the job after all. “I had
no skill in finance, but I was a good negotiator and I was diligent.
Harrison felt I had good interpersonal skills and could put people
at ease.”
Bird has taken the lead in many acquisitions. Since 1995, he has filtered
out more than five hundred potential targets. Of the twenty-two
companies acquired, the most significant of these were the Anchor
appetizer business and the Ore-Ida food service business, which
made McCain USA a major player in the American food industry.
Corporate strategy has to adjust for changes in the marketplace. In the first decade
of the twenty-first century, the growth of fast food business in the developed countries
is slowing down. In addition, consumers are more health conscious. Rather than
ordering a super-size french fries, the typical consumer in 2007 is more likely to ask
for a regular-size portion. The result is that the total volume of french fries sold is
down, while the number of servings is up. Because of more convenient and healthier
options, including microwaveable and oven-prepared potato products, consumers
continue to make potatoes a core part of their diets.
Karen Basian is vice-president of corporate strategy, mergers and acquisitions,
and innovation. She believes changing demographics in the developed markets and
the shift to healthier, more convenient products offer McCain a huge opportunity to
grow through innovation. “The consumer’s concern about health and convenience is
a function of aging populations, increasing obesity, and busy lifestyles,” she explains.
“At McCain, we are part of people’s everyday lives. With this new focus, we see the
opportunity to provide them with better-for-you products and more accessible solutions.
Our transition to healthy oils around the world is a great example of basic
things we can do to help our consumers and customers.”
It’s an exciting time to be the head of strategy and innovation, she says. “There
is so much opportunity to innovate and continue to build McCain while delivering
good food that is fun, easy, and affordable. That’s our magic. We like to think of it as
‘creating smiles.’
“And we are excited about our emerging markets. McCain has always been ready to
invest in developing markets. We think of South America,
China, and India as presenting the same opportunities as
Europe did in the 1970s and look forward to seeing them
grow and become significant parts of the McCain family
of companies.”
A major win for McCain in the United States had been
the appetizer business it entered via acquisitions. It is expanding
this business through further acquisitions because
of the growing popularity of the category, as well
as its good profit margins. In Canada, McCain in 2002
bought Wong Wing Foods, the largest manufacturer in
the country of frozen Chinese dinners and appetizers
such as dim sum and egg rolls. The Wong Wing purchase was part of an overall
strategy to build McCain’s strength in appetizers, a strategy that also included the
purchase of a Chinese food manufacturer in Taiwan. McCain bought Belleisle Foods,
a New Brunswick company specializing in egg rolls, in 2003.
“There’s no such thing today, in our perspective, as Chinese food, Indian food, or
Mexican food,” says Bird. These have become global foods, and McCain’s marketers
look for new ways to use them, perhaps combining various ethnic foods or tastes into
innovative products.
At the same time, the company won’t neglect its “country jewels” – product categories
in which McCain has a strong presence but in one region only. So, because
McCain is the market leader in frozen dinners in Australia but nowhere else, it might
undertake acquisitions in that category in Australia. In Canada where, uniquely in
the McCain network, the company had a strong position in frozen and aseptic juices,
it acquired the Old South brand in 2000.
That McCain is a privately owned company is an advantage for its strategic planners,
observes Rick Pryde, vice-president of finance: “We don’t have to worry about
what Bay Street or Wall Street says our quarterly earnings should be. We have the
luxury, as long as we don’t abuse it, of taking long-term approaches to issues.”
McCain Foods began investing in Day & Ross in the 1960s, not because McCain was
eager to expand into a different business but out of necessity. The company it had
been relying on to get its goods to market, Maine Maritime, was bankrupt. McCain
150 f rom the Ground up
the home front 151
TOP: McCain acquired Wong
Wing Foods of Montreal in
2002.
BOTTOM: Fang Zhao Ce
works on battered chicken
ball production, Wong Wing.