From the Ground Up - McCain Foods Limited

The Daylesford factory, 1974.
Meanwhile, McCain was trying to carve out a place
for itself in a market dominated by a well-known local
company, Edgell.
McCain decided to replace the Daylesford plant with
a new one in nearby Ballarat, in the heart of the Central
Highlands potato farming district. The construction
company hired to build it went broke in the middle of
the project. Relations with the Australian labour unions
were often hostile. So were relations with the farmers
who claimed McCain wasn’t paying enough for their
potatoes. The environmental authorities threatened
to close down the new plant. McDonald’s decided the
quality of the product coming out of the new Ballarat factory was so poor, because of
inferior raw material, that it dropped McCain as a supplier, leaving it with a new plant
and no business from any quick-service chain.
All of that was thirty years ago. Today Australians buy the most McCain products
per capita of any market in which the company operates. McCain is the leader in
frozen dinners in Australia, the only country where it is strong in that category. It
also has good businesses in frozen vegetables and pizza, as well as french fries and a
full array of other potato products. McCain has seven factories in Australia and New
Zealand and employs sixteen hundred people in the two countries. Mention McCain
to someone in Australia and chances are they will reply, “Ah, McCain, you’ve done it
again,” the catchy slogan that ends every TV commercial. “I would say 90 percent of
the population in Australia know the McCain brand,” estimates John Clements, the
man Wallace McCain hired in 1975 to fix his Australian problems.
To those who remember the early difficulties, McCain’s success in Australia is
still a source of amazement. Ian Cameron, a Canadian sent by McCain to Australia
shortly after the business was launched there, thinks only a privately held firm with a
long-term perspective could have overcome the many early setbacks. “If it had been a
public company, you’d have closed her,” he says. “You had to have deep pockets to stay
in and a lot of balls. It would have been easier to walk away. Australia wasn’t the most
sophisticated country. You had to wonder whether there was any future in it.”
Certainly, it was reasonable at the time to ask why a New Brunswick–based food
processor would want to start a business on the other side of the world in a country
with barely half as many people as Canada.
For Wallace, who as of the mid-1970s had primary responsibility for Australia,
the answer was obvious. Australia is a wealthy, potato-
eating nation and one whose official language is the
same as Canada’s – an added advantage. Also, the quickservice
chains were growing in Australia, so the market
for frozen french fries would grow with them. It never
occurred to him that McCain Foods, despite its early
problems, would not become a major player in the food
business down under.
As it had been in Canada in 1956, McCain Foods was in
the right place at the right time in Australia in 1968. The social trend that favoured
convenience food in North America – the movement of women into the workforce
– was also happening in Australia, but it had started later. So by coming to Australia
in the late 1960s, McCain’s timing was perfect.
McCain started by bringing in product from Florenceville in refrigerated vessels.
Boxes weighing fourteen kilograms were stacked two metres high in bulk holds. If
the refrigeration during the ocean trip was cold enough to keep the contents frozen,
the shipment usually arrived in decent condition. But, in the beginning, the cardboard
containers McCain was using weren’t strong enough and sometimes arrived
badly squashed.
The quality after the long voyage was poor. Fortunately for McCain, the quality
of the products offered by the local competition wasn’t any better. But importing
was not a long-term solution. Australia was too far from the potato fields of New
Brunswick, currencies were subject to unpredictable fluctuations, and the Australian
government charged duties on imports.
However, the Daylesford plant turned out to be more of a problem than a solution.
“If you thought the one we built in Florenceville was bad, this was a hundred
times worse,” says Wallace. From the outside, the plant looked like a small barn with a
house attached. It produced about 2,225 kilograms of french fries an hour, compared
with the 32,000 kilograms the largest modern plants produce today.
None of the effluent created in the manufacturing process was treated – wastewater
went straight into the sewer system. The resulting pollution wiped out a local trout
hatchery and killed a popular trout stream. (Both have since been restored.)
One manager thought he had a solution to the peel waste problem: he would feed
104 From the Ground up
down under 105
Wallace McCain inspects an
Australian potato field, 1974.