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McCain Foods CEO Dirk Van de Put talks about stakeholder expectations and how McCain is working towards a broader purpose beyond just making a profit.
Since it was founded almost 60 years ago in the community of Florenceville, New Brunswick, Canada, McCain Foods has grown to become one of the world's largest manufacturers of frozen French fries, and potato and appetizer specialties. The family-owned company employs more than 17,000 people at its 41 plants spanning six continents, and works with 3,200 farmers around the world to produce 6.5 million tonnes of potatoes each year. McCain Foods also works with a broad range of global stakeholders from farmers and suppliers, to communities and consumers, operating under a sustainable business model.
Gino Scapillati, Vice Chair of PwC Canada, recently sat down with McCain Foods CEO Dirk Van de Put to talk about stakeholder expectations and how the company is working to ensure its business has a broader purpose beyond just making a profit.
Gino: Let’s start by discussing who the broader stakeholder group is now for McCain Foods.
Dirk: Like all companies, we have a number of stakeholders and their needs are constantly evolving. As a business making mostly potato products, we deal with many farmers and as a result we have a significant role to play in determining the future of agriculture.
The consumer is another critical stakeholder, buying and consuming our products daily; and as a business that operates internationally, we also have a role to play in the communities in which we operate.
The McCain family is another important stakeholder, being the owner of the business and having a vision for the company – are we a company that just exists to make profit or are we a company that has a dual financial and social purpose?
While our purpose remains the same – which is good food, good business and good farming – what this means today is very different to what it meant when the company was founded back in 1957.
Gino: Can you give us some examples of how expectations are changing?
Dirk: As a company, we say that we need to ‘be good’ and ‘do good.’ ‘Be good’ is making good food and doing the right thing for the environment, for our employees and consumers. All of us care about the environment, and it’s become a critical factor for us and how we operate. Secondly, we produce food, and where that food is coming from, and how that food is being produced has become very important for consumers. Sustainability includes an environmental impact, but also how do we do business. That brings us to the ‘do good’ part, and how we structure the organization to do something other than just sell products and make money. For us, that’s supporting the development of social businesses. These are businesses whose main objective is not to make profit. It’s to have an impact on society, while at the same time at least breaking even or making a small profit. Those are the different things that we’re seeing.
Gino: Can you tell us about how global economic shifts are impacting your business?
Dirk: The shift from developed to developing countries is one that we see clearly in our business. Our business in developed countries is growing slowly, while our business in developing countries is growing rapidly in those markets such as China, India, Brazil, Mexico.
The consumer is different in developing markets, so you need to have more adapted products. The supply chain is different, so you need to adapt to your supply chain. Often the overall needs of your workforce or the society you’re operating in are different, so you need to adapt. What worked in Western Europe and North America is not necessarily going to be the recipe for developing countries. That’s a big shift that we’re seeing. Food is also under greater scrutiny today. People increasingly want to know how food is made and what’s in it. As a company you need to be much more transparent about the entire process.
Gino: How would you describe McCain’s purpose today? Perhaps you can share the example of what you’re currently doing with communities in South Africa.
Dirk: The founders of our company wanted to make good food products, and sell them, and make a profit. That was the purpose of the company. These days employees and consumers understand that that’s a need for the company, but that needs to be a basis that leads to something bigger.
We’ve defined our purpose in one phrase: McCain Foods is a family company that makes people happy around the world every day through good food, good business and good farming. We behave as a family company both internally and externally. We try to do that in an ethical way, by being as good to the environment and to society as we possibly can be. For example, we support a number of social businesses. In South Africa, for instance, we are working to educate small farmers about running a successful farming business. This, in turn, helps them provide employment in their communities. We have communities in South Africa where 90% of the village is working on the farms that provide McCain with its potatoes. I believe we’re creating a model that is sustaining itself, that helps the local community, and helps McCain with its business. Overall we’re very happy with that model and it seems to be something that we easily could expand around the world.
Gino: It’s important that business purpose be aligned with all elements of an organization. Can you give us an example of that in your business?
Dirk: We supply products straight to retailers, but we’re also working in food service. We have another step between us and the consumer. One of the key things that we need to do as a buyer is to make sure that our purpose is aligned with their purpose. The best example would be our relationship with McDonald's, which has embarked on a strategy where it wants to be much more transparent about what’s in its food. That includes how its fries are made: Which potatoes have they used? Can we reduce the pesticides? Do we get high yield on the field? These are some examples. As McDonald's defines what they want to stand for, such as low environmental impact and clarity of what’s in the food, it comes back to our purpose. We need to make sure that our suppliers, the farmers, are also aligned with that.
Gino: Some people see a trade-off between business results and meeting the wider societal expectations. What’s your view on that?
Dirk: I think that’s the easy way to talk about it. I think there’s another way, which is to say, a lot of the things we do benefit the business so there’s a win-win. For instance, with the environment, everybody knows that if you’re trying to reduce your energy usage, your energy costs come down. If you’re trying to find new potato varieties that give a higher yield, the cost of your potatoes will come down. You need to find the win-win situations where the company feels good because it helps the company progress and, in turn, our people feel good because it makes them progress. Results like these can be found, but it requires a little bit more work.
This interview has been edited and condensed.