McCain – growing against the odds?

In a recent blog I argued how nuanced the impact of Covid has been both on consumers and businesses. Firms have all been challenged, but for some it has been furloughing staff and sales dropping off a cliff; conversely for others it’s been securing enough raw materials and keeping up with demand.

One of the grocery categories that’s glistened most brightly in the late Spring sun has been Frozen.

A recent Grocer report highlighted that over the last month, sales were up +16.7% versus 2019 and – unlike segments like tinned foods and ready meals which enjoyed early stockpiling then fell back – the uplift on Frozen has been sustained throughout the pandemic.
One of the beneficiaries of this surge has been McCain, the Canadian-owned potato products supplier and lords of the oven chip. McCain is ultimately a private family-owned business, so information about strategy is sparse. However, it’s characteristic of one of my favourite types of business – the unsung workhorse – one that’s making determined & strong progress despite potentially tough terrain.

Landscape

For many years in the UK the frozen category struggled with an outdated image and pressure on space. Most savoury products were carb-based and available in a limited spectrum of colours – mostly shades of brown, orange or yellow.
In stark contrast with our Mediterranean friends who terrorised children with whole-cut proteins and naked vegetables, in the 80’s we cunning Brits embraced all foods that were disguised in an envelope of alluring breadcrumbs.
Breadcrumbs got 1980’s kids off their BMXs and seated around the dinner table
Over the last decade or more the desire for healthier products is something that perhaps should have killed off a lot more of the carb-centric frozen category. But on the contrary, even before Covid, it has had something of a renaissance.
This regeneration is at least partly driven by manufacturers like Birds Eye re-framing the category with messages like ‘freshness locked in’ and changing perceptions with product innovation.

McCain performance

Analysis of reported accounts shows that McCain has grown sales at a pretty consistent +5% a year over the last decade. It has done so at healthy margins averaging 27% and an operating profit of circa 12%. That bottom line number is fairly sound for a mass market food business and one that will have netted the parent company around £ ½ billion in profit contribution over that time.

So what strategic choices have helped McCain overcome the inherent challenges and grow ahead of many established food brands?

Communication choices

McCain is a mass-market family brand – it’s messaging, and media choices reflect that. In 2017, the brand debuted its current “We Are Family” campaign – slices of domestic life featuring a diverse range of family structures.

Last year the firm invested around £2.5m behind the campaign which ‘celebrated the differences in opinions in families across the nation, from pet preference to political views. Media included TV, radio, video-on-demand, out-of-home, cinema, PR, print and online media as well as social channels.
Since the start of ‘We Are Family’ McCain has enjoyed a considerable improvement in brand metrics, with favourable perceptions growing +10% according to marketing director, Mark Hodge. Meanwhile brand difference increased +14%, a key measure in a naturally quite commoditised category.

McCain’s ads have depicted a variety of family structures

The brand has been keen to emphasise its diversity credentials, for example featuring same-sex parents and their kids in its creative. That approach has attracted some criticism on social media, although the extra attention has probably done little harm.

Although the marketing press is preoccupied with the diversity angle, ultimately, McCain succeeds in reflecting family life in a realistic but uplifting way. I’m convinced the main appeal for consumers is the implicit lack of judgement – a sort of rejection of the idea of a “perfect family” and a sense that the brand “gets” real life.

Despite the positive trajectory, the latest advert airing during lockdown which “celebrates everyone staying at home” delivered poor ad tracking scores.

Although the Covid ad was consistent with the preceding campaigns it scored low on memorability and brand association (KantarMilwardBrown). My pet theory is that almost every advert in April/May looked like a McCain advert, the ironic byproduct of which being that its own advertising became less distinctive.

Innovation choices

Proving that there’s a surprising number of ways to flog potatoes, McCain has premiumised its range and grown through an innovation agenda.
Firstly, the brand is providing healthier choices. Although inherently better for you than the deep-fried chips so common in the 1980’s, McCain’s assortment now includes lighter (lower fat), vegan and gluten-free varieties.
McCain has a large food service business and it has been deliberate in applying food service trends to its grocery offer. In late-2016 the brand moved into the chiller aisle with Sweet Potato Fries to appeal to consumers who prefer dining out. In recent months, McCain launched nine snacking SKUs in its “Brew City” range, to appeal to the gastro-pub and craft beer set. Although it has to be noted, a trawl of consumer reviews suggest this range may not survive long-term.

As Hodge notes, the move to snacking reflects modern consumption patterns: “The idea of meals is disappearing and it’s about eating occasions. A lot of us in the past used to have three meals a day [but] these other generations are having six or seven eating occasions each day”.

Portfolio & pricing choices

Another less obvious, but equally crucial, area of choice-making has been in managing range and pricing. McCain are almost unopposed in the frozen potato fixture, with most other competition coming from own label.
I believe this is because they have been so successful in occupying all price tiers – reaching into more premium pricing while maintaining a foothold in value/mass. As the figure below shows, within major grocery stores, McCain has products that span from under £2/kg right the way up to £7/kg+ (which represents a 1400% premium for the convenience of not manually chipping potatoes).

Premium spuds- this pricing hierarchy is a powerful demonstration of the value that can be added by marketing & product development

If we analyse the number of SKUs by brand in the four major grocers, the strength of McCain’s physical availability becomes apparent. The retailers are effectively running with the lead brand and own label, with other players only commanding 10-20% of space.

I imagine with such breath and depth of offer, the McCain category narrative to retailers goes along the lines of “why would you ever need to clutter the freezers with other brands?”.

That said, McCain is not completely without branded competition. Aunt Bessie’s and Albert Bartlett are both established and historically media-supported; but they are more closely associated with roast potatoes which is a smaller segment than oven chips.

Strong Roots plays on provenance and its positioning may bring new shoppers into frozen

There are also signs of some disruption in the category. Strong Roots launched in 2017 and features different vegetable bases (including root veg, sweet potato, cauliflower, broccoli & purple carrot). It has sought to take the high ground when it comes to health, ingredients and the “farm to fork” story.

Promoted as ‘tasty plant-based food for busy people’ this relatively new player looks well-placed to attract health-conscious consumers into the frozen category. And it may steal volume from McCain who as buyers of one third of the entire global potato crop, are intrinsically wedded to the humble spud.

Of course, time will tell if McCain can continue to thrive on a diet of potatoes alone, as it has successfully done for the best part of 80 years.

Good marketers write their own story

The performance of Frozen in grocery during Covid-19 has pushed brands like McCain and Birds Eye into the spotlight, but the McCain story has been years in the writing. It’s a story that demonstrates the value marketers can bring – even in less glamorous categories – by developing brands using relevant communications, relentless innovation and rigorous category management.

Looking for inspiration outside your category very often provokes better, more creative thinking for your own business. At Brand Ambition we bring cross-category understanding and brand examples – whether we;re facilitating strategy and planning, or developing team capability. If you’d like to chat, please get in touch.

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