From the Ground Up - McCain Foods Limited

AbovE: McCain’s U.S. headoffice
employees work in
a modern building in the
Chicago suburb of Lisle.
bELoW: McCain has a wide
range of speciality potato and
sweet potato products.
The Ore-Ida employees who stayed with us were, in general, very happy with the
change in style,” reports Sanchez. “You could not ask for two more contrasting styles
than us and Heinz. Heinz was slow, did not take risks, was overly analytical and fairly
political. Almost everyone who came over, mainly in production and sales, thrived
in the McCain culture.”
As well as inheriting skeptical employees, McCain inherited skeptical customers,
such as Sysco, the largest U.S. food service distributor. “The challenge over the next
few years, from 1998 to 2001, was to establish ourselves in the marketplace as people
who could produce good product, get it to where it needed to be, and help our customers
build their business,” says Van Schaayk.
McCain has succeeded brilliantly in winning the confidence of Sysco. Every year,
Sysco selects the top one hundred manufacturers, whose representatives are invited
to a banquet in Houston. The winners are chosen on the basis of quality, fill rates, and
sales and marketing support. McCain finished among the top five in three of the years
from 2002 to 2006 and is almost always in the top ten.
In addition to the Ore-Ida purchase, McCain spent $70 million in 1978 to expand
the Easton plant, doubling its capacity. Between 1998 and 2005, it completely renovated
all its U.S. potato facilities. As a result, McCain has become the second-largest
french fry processor in the United States. And its U.S. business encompasses much
more than standard french fries. The wide variety of other products includes Sweet
Potato fries and Baby Cakes. The latter is a small, homestyle potato pancake made
for the restaurant industry that was given the grand prize for best new product by a
chefs association in 2004. “That’s a particularly pleasing award,” says Van Schaayk,
“because chefs, the actual users of the product, are saying, ‘This is a great product.’”
Because of the sharp regional differences in the United States, some products have
appeal in certain areas but not in others. Fried okra, for example, was popular in
Georgia and other parts of the South but so difficult to sell anywhere else that McCain
dropped it. Shredded hash browns are a bestseller in the west but a non-seller in the
east. “They’re a western breakfast thing,” Van Schaayk explains.
“The biggest mistake people make is coming to the United States and thinking it’s
one culture. It’s not. The Deep South is completely different from Minnesota, and
Seattle is different from southern California. There are different ethnic roots, different
eating styles, different consumer styles.”
As chairman Allison McCain points out, McCain got into appetizers almost by accident,
and yet now the category is a large and growing part of its business. When
Ore-Ida decided to sell its food service potato business, it insisted that the buyer take
its appetizer business as well. McCain wasn’t sure it wanted to. McCain’s strategy had
been to grow into a major player in french fries, not to enter into a category it didn’t
know. Moreover, it didn’t understand the economics of appetizers. The financial
180 f rom the Ground up
south of the border 181
The executive team of
McCain Foods USA, 2007.
Front row: (seated left to
right) Chuck Gitkin, Des
Doucette, Anne Linsdau,
Patrick Davis, Laurie
Jecha-Beard, Randy Wieland,
Randy Myles.
Back row: Keith Orchard,
Peter Reijula, David
Cowperthwait, Frank van
Schaayk, Dan Dolan,
Kevin Burdett.
AbovE: Moore’s jalapeño
onion rings, and Brew
City battered appetizers,
acquisitions in the Ore-Ida
purchase.