From the Ground Up - McCain Foods Limited

McCain desserts for the
food service trade: Bananas
Foster Cheesecake Bites,
fresh-frozen fruit, and
New York Style Cheesecake
Bites – delicious paired with
ice cream.
analyses McCain had done didn’t fully reveal their strategic and financial contribution
to Ore-Ida’s business. As it turned out, appetizers were a great companion sale
with the potato products.
The appetizer “accident” has turned into a big success for McCain that provides
the company with welcome additional diversification from its potato business and
excellent growth prospects. Many of McCain’s appetizer and snack products are customized
and thus difficult for competitors to duplicate. All this adds up to competitive
advantage.
McCain quickly realized this was a business worth expanding, and it began hunting
for more companies to buy. In 2001, it acquired the food service business and factories
of a family-owned business, Anchor Food Products, in a three-party transaction in
which Heinz bought Anchor’s retail brands. Included in the deal was the main Anchor
factory in Appleton, Wisconsin, which, in 2003, received an $18 million upgrade.
The Anchor acquisition was relatively easy for McCain to absorb, as by then
McCain USA had developed deeper management strength. “Again, I think they were
all surprised at the family culture of McCain and the willingness for all levels of management
to be involved in the business,” says Randy Myles.
The Anchor purchase turned McCain into the world’s largest appetizer company.
CEO Howard Mann asked Lessard to make the Anchor purchase part of a new
company-wide strategy. “There is great potential in finger food products,” Lessard
said in 2003. “We are well on our way to growing this business worldwide.”
Two of the former Ore-Ida appetizer plants are also located in Wisconsin. “The appetizer
business started there as an offshoot of companies that battered fish out of the
Great Lakes,” explains Peter Reijula, who became president of McCain Snack Foods
when McCain reorganized its U.S. business into
snack foods and potato divisions. “When that battered
fish business declined in the 1960s and 1970s,
companies like Anchor started looking to extend
their business. From battering fish, it wasn’t a long
leap to battering cheese.”
While McCain often applies its brand to newly
acquired businesses, the Ore-Ida brands were too
well known to discard. For example, Moore’s, one
of the Ore-Ida brands, was recognized as the company
that invented the onion ring. Another brand
acquired in the Ore-Ida deal was Brew City, a line
of appetizers, such as Spanish onions, jalapeño peppers,
and french fries battered in a beer-flour combination,
that are a staple in many U.S. bars.
McCain also retained Anchor as a brand, because,
says Reijula, it was so well respected in the restaurant industry. “Anchor was
very much a leader in the appetizer food service business,” he explains. “Their marketing
practices were on the leading edge. They were a leader in the sale of valueadded
appetizer products. We wanted to keep that legacy alive and we wanted to lift
McCain by associating with that brand. Purchasing Anchor elevated McCain Foods.
All of a sudden we became much better known and much better recognized. We have
won a number of industry awards that we never could have contended for before.”
A research and development team at the Anchor factory in Appleton works to satisfy
the restaurant chains, which have an insatiable demand for new products. As Reijula
points out, “Applebee’s doesn’t want to sell what the other chains sell. What research
and development does is customize for large chain accounts. It’s hard to match our
scale. And when you add customization to that scale, it’s an unbeatable combination.”
Scale allows McCain to serve large chains and customization protects it from competition.
That’s why appetizers have become key to the profitability of the U.S. company.
As part of its commitment to the snack category, McCain bought two Canadian
companies specializing in Asian frozen foods and, in 2002, acquired Taiwan’s largest
producer of frozen Chinese dumplings from Goodman Fielder International. In 2006,
McCain USA bought a California-based, family-owned firm, Jon-Lin Foods. It produces
a range of frozen appetizers, including sautéed, grilled, fire-roasted, and smokehouseroasted
vegetables. Jon-Lin fits neatly into McCain’s business strategy of diversification.
182 f rom the Ground up
south of the border 183
Executive chefs John DaLoia
and Brooke Brantley of
McCain Foods USA, stay on
top of consumer preferences,
creating menu dishes and
presentations to pass on to
McCain’s restaurant clients.