Hello, Mr Chips

Posted on 4 Jan 2010 by The Manufacturer

In the year that the humble but revolutionary oven chip turns 30, TM interviews Nick Vermont of oven chip trailblazer McCain, and finds out that process technology and a willingness to confront the health agenda has helped McCain to be a world-leader in this important food manufacturing market.

It’s an educated guess, but very few people in the UK over the age of two will not have eaten a McCain chip. And, rather worryingly, there are allegedly some children who would prefer these chips to their Daddies.

The frozen food manufacturing company, headquartered in Canada, is synonymous with the oven chip – a concept it pioneered – but also produces many other potato products, frozen vegetables, pizzas, appetisers, desserts and more.

In 2009 the McCain oven chip, a perennial of so many British dinner tables for decades, turned 30 years old. Chips get a bad press, particularly at the height of the war on fast and unhealthy food in school dinners during 2006/07. But it is poignant to note that McCain’s success is in large part due to its decision to make a healthy alternative to the “bad” deep fat fried chip, a staple diet of low and middle income households in the 1960s and 1970s.

Nick Vermont is a company man. The chief executive of McCain for GB, Ireland and South Africa joined McCain just over 26 years ago, arriving after three years at Travellers Fare, the catering division of British Rail. In 1991 he was made managing director of PAS, a subsidiary of McCain that packs frozen potato products for supermarkets and other companies in their own labels, where he stayed until 1998. “This was a fantastic training ground in operations and manufacturing general management, because I came from a marketing background.” He has been with McCain Foods GB since 1983, is a member of the Food and Drink Federation council and chairs the British Potato Council’s marketing committee.

Vertical integration
Weather, Vermont says, is the single biggest constraint on raw materials. Most of McCain’s potatoes are on a contract – at this time of year the company will agree with its growers on the crop that they will grow next year and deliver over the year. “But they are to a point constrained by the weather,” says Vermont.

To mitigate fluctuations in supply, McCain GB owns a seed potato business in Montrose, and a large proportion of its growers grow exclusively for McCain.

“We are a very vertically integrated supply chain,” he says. “Our seed potato business would supply the seed to most of our growers, for most of our contract material.” When McCain started in the UK in 1969 most of the varieties grown here were not suitable for making chips, so it invested in seed development to get the varieties established.

“If you don’t have a good base raw material in any industry, you will struggle,” says Vermont. “Our business is basically a high volume, low margin business and success or failure is about how effectively you source raw material and turn it into the finished product.

Manufacturing innovation
Vermont is straight-up about the simplicity of making chips. “We take potatoes, wash them, peel them, cut them into strips – it’s essentially like how you’d make chips at home, but very highly automated, with loads of PLC control, cameras and smart electronics that measure performance.” But he picks out two main drivers of innovation at McCain GB, where both have been consumer-led.

The first, health, has two parts. First is health and product quality that is driven by coating technology.

The Home Fries oven chip, the biggest selling product, uses a very thin wash of potato starchbased batter which allows the product to eat like a fried chip but is cooked in the oven. This product won the Queen’s Award for Enterprise: Innovation in 2003 for its coating technology. “Before then you had oven chips but this was a leap forward in quality and performance. Oven chips are quite sensitive to time and temperature in cooking, whereas home fries are more forgiving, a more robust product.” Coating technology began life in North America as a method to keep fries more crisp for longer, but McCain applied it here to a retail product. “We were the first to do so in the UK,” says Vermont.

The second part of the health driver concerns obesity. Technologies are now used to ensure the absolute minimum amount of oil is put into the product in the manufacturing process. “Post-frying we use an array of techniques to remove all the excess oil. We can control this accurately and leave the right amount of oil for each product,” he says.

After health, Vermont highlights process efficiency and waste reduction programmes as being a main business driver. “Why is this consumerled? The consumer is increasingly concerned about sustainability of agriculture and, especially in the last 18 months, he is looking for value. We conducted a lot of value work streams looking at energy, water usage, raw material usage, to specifically drive out waste and effectiveness there.”

Blow me over, it’s a gas
McCain’s biggest and most visual example of resource efficiency are the three wind turbines and the anaerobic lagoon at the Whittlesey plant in Cambridgeshire. The 80m turbines, once the highest onshore turbines in the UK, produce 60% of the site’s electricity needs, each powering a 3.3MW generator.

At the size of four football pitches, the anaerobic lagoon uses starchy water, a bi-product of the manufacturing process, to produce methane that is used to drive a generator which produces another 10% of the site’s power. Where does the initiative for such projects come? “Energy, water and raw material usage are global work streams, but each regional business has the flexibility within their remit of trying to be more efficient, to adopt global best practice but if there are also opportunities locally, to pursue those. The wind turbines were a local initiative, the lagoon is a global one.” Are there plans to install more such plants at other UK sites? “We continue to look at this, but planning for wind turbines and lagoons is not easy, and not all of our sites are well-suited. We’ve got other initiatives at other sites which we are in the planning stage.”

The health agenda
McCain pioneered the oven chip as a healthy alternative to deep-fat frying. Nevertheless, when the chips are down, a chip is a chip. How has McCain GB tackled the healthy eating lobby? “We started marketing the health benefits of oven chips back in 1986. Oven chips have 40 per cent less fat than deep fried chips, and we started to prepare oven chips in sunflower oil. In 2006 – at height of the post- Jamie Oliver inspired health frenzy – we decided to move all of our products in both retail and catering to sunflower oil.” At this time McCain reformulated all of its products to remove any artificial ingredients, when it launched our “It’s All Good” campaign. “To remind people that potatoes are basically a healthy vegetable and sunflower oil is one of the healthiest natural oils there are. As the market-leader we saw a duty to fight back against the negativism.” Vermont is clearly proud of McCain’s food standards. “We were the first food manufacturer to put both Food Standard Agency traffic lights and the Guideline Daily Amount declaration on the front of our packs, in September 2006,” he says “It shook some people that there wasn’t a single red on any of the McCain portfolio at the time. The Rustic Oven Chips get four green lights – for salt, fat, saturated fat and sugar. People have come around to the idea, but had you landed from Mars you wouldn’t have expected to see that with all the tabloid headlines.” Vermont says consumer feedback prompted McCain to publish both standards – the FSA and GDA – on its food, which is non-mandatory.

“Healthy eating is really about giving consumers the correct information so they can make the right choices for their lifestyle.”

Now and tomorrow
McCain has fared better than some companies in discretionary sectors in the recession, Vermont says, clocking between 2% and 5% growth across its three core categories in the last year. But he’s not complacent. “Unless you’re innovating, unless you’re providing value for money, you get into trouble. As a premium product you have to make sure you’re driving value for the consumer.” Its three categories are retail, food service (general catering market) and quick service restaurants.

In 2010 Vermont hopes McCain GB will continue to look for green energy opportunities, and the company will continue to supporting its numerous CSR activities including the McCain Community Fund and youth education programme. “We think of ourselves as a consumer-led company. Future success will continue to be driven by looking after our consumers’ needs through the right kind of innovation, while continuing to drive efficiency and sustainability which is good for us, our consumers and the environment at large.”