Canadian Food Business
Interview By Theresa Rogers
Michael McCain knows the food biz. It’s been his life, having grown up and worked with his father, Wallace McCain, who started McCain Foods in 1956. Now, as President and CEO of Maple Leaf Foods, McCain is making a name for himself as the leader who captained the company through a tragic food recall in 2008 that resulted in the deaths of 23 people, to the leader now positioning the company for the future. After selling its bread business earlier this year, McCain is busy dealing with that restructuring, the opening of a new, large plant that will see others close, and navigating the waters of high pork prices as the industry continues to deal with the porcine epidemic diarrhea virus (PEDv). Canadian Food Insights listened in as McCain spoke at the June Grocery & Consumer Goods Leadership Symposium and caught up with him after the session.
Following are edited highlights.
What are your thoughts on health and wellness and what challenges does it present food retailers and food manufacturers?
Childhood obesity is the lightening rod issue but obesity in general is an issue. As a food industry participant, whether you’re a processor or a retailer, I think our obligation is active engagement of the issue, not resistance to it, understanding it and recognizing that the food industry doesn’t necessarily own the whole issue. There are all kinds of lifestyle and economic issues that connect to it but at the end of the day we have to be a participant to the solution. We believe it’s not a question of good foods or bad foods or diets and it leads people to a place of awareness and understanding and education about what a healthy diet looks like. The other aspect of the issue is lifestyle.
What are the opportunities for the food industry in this area?
Start with education. I’m involved with a group called the Grocery Manufacturers Collaborative which is five of the largest food companies and retailers in the country and health and wellness is the leading mode of our agenda. We’ve done some pretty good things around the need to educate consumers around what does nutrition look like. Then we have to take some leadership not just on our intake but on our nutritional offerings. In the last 10 years we’ve been focused on trans fat and sodium levels and we’ve taken proactive steps to reduce that and I think the industry has done some really good things there but also recognizing the next frontier in nutritional awareness is sugar.
Maple Leaf has done some work in this area and tried to provide some thought leadership. Has this translated into a competitive advantage?
Any time you plug into a consumer need and if you’re proactive and show some leadership, it will translate. Certainly in our case consumers have been asking us for more natural ingredients, natural components in the foods we offer and we responded to that a number of years ago with our Natural Selections brand. It’s been an extraordinary success because it’s offering consumers something as simple as, ‘Here’s a product made with nine ingredients, all of which you can pronounce.’
Let’s talk about consumer trends. What are you seeing in the marketplace creating an opportunity for Maple Leaf?
We’ve defined three major themes that are driving the majority of our work. Health and wellness is at the top but also convenience continues to be very important to the consumer. The whole shopping and eating experience has to be simple. Packaging and cooking is a subset of the convenience component. Then there is changing demographics. Every participant in the packaged goods industry has to look at the other components of consumer interest today and what that means. Consumers are either trading up or trading down. They’re not staying in the middle. They’re either looking for greater add-ins and are prepared to pay more or they’re trading down for a lower price so understanding that value equation is important and sustainability is there as well. Consumers are looking for products that reinforce the need to create a more sustainable future.
How is Maple Leaf communicating its brand promise though social media platforms and is the exercise worth it?
Is it worth it? Absolutely, yes. It’s part of our marketing journey where it wasn’t even five years ago. We use it both in terms of our marketing prospects but also our issues management. In marketing we have committed a reasonable portion of our marketing budget to social media, we’ve resourced it with people, we have a digital team. In many cases our marketing strategy is oriented to driving people to our social media sites. From an issues management perspective, equally important, clearly if there’s an issue we’re facing as a company, we’re going to address that in a social media context even before we do with conventional media. Being well-armed on Twitter, being able to respond to tweets proactively and factually and actually managing the intensity of these issues on Twitter and responding proactively is our go-to resource for issues management so it’s quite a change.
That brings me to a question of crisis management. No one has really forgotten the recall of 2008. You received a lot of credit on how that issue was managed. How do you think things would be different if that were to happen today?
When we had those incredibly tragic events in our history, the 23 victims that died on our watch, which was an absolute tragedy, we tried to deal with that with a sense of accountability and transparency and using it as a call to action to try to bring meaning to such a tragedy: How do we go from where we were, to being a world leader in food safety, which is our journey today. I doubt the substance of the response would change today; the message of accountability. Maybe where we were in a conventional media focus several years ago, probably would have had a materially greater social media component today.
How did that crisis change you? How have you had to evolve personally, as a leader, as your company has grown?
Evolving that leadership model is natural. I think leaders who are not willing to renew themselves on a frequent basis usually don’t have sustainability. For me, personally, the obvious is true where you replace intellectual agility with experience and wisdom. Your leadership model has to match the situation that you face. There’s no right or wrong and you develop over time more confidence around various situational environments that you might be in. Your emotional intelligence is more important in leadership than your intellectual intelligence. Certainly, that develops with age.
What do people need to be effective leaders?
Emotional intelligence is the cornerstone of sustainable leadership. I don’t think it can be taught. I think it’s more an experiential development. My mentor in my life was certainly my father who was a very successful entrepreneur who started running a business in the mid 50s and most of his leadership journey was through that period to the late 80s or early 90s. As much as he was a mentor, today, the organization that I’m involved in is very different than the organization he led. I remember one time screaming into his office to vent and rant as we were going through this massive restructuring and I remember I didn’t want a single piece of feedback, I just wanted him to listen and I said, ‘I could spend the next six months getting alignment around this organization which could be problematic and it’s going to take me six months to get everybody aligned where we have to go.’ He looked me in the eye and said, ‘Alignment? What the hell are you talking about? I’ll tell you how to get alignment. Get in line!’ I said, ‘Well I’m glad that might have worked for you but it doesn’t work for me and it doesn’t work for my organization.’ Today, organizations are more collaborative, more of a team. The role of a leader today carries the same ingredients of passion and energy and the ability to energize people, deliver results, but today the relationship is different with a leader. It’s more about servant leadership, transparency and collaboration and those things probably didn’t exist to the degree they do today in the organizations of 30 years ago.
Where are we with collaboration within the retail industry and grocery? How do we make the industry more effective in getting product from you onto the table?
There’s a very strategic relationship rooted in collaboration. It has to be transparent, rooted in trust, but it moves the relationship into a space where you can start not thinking about what happens next week or month, but where are we going over the next number of years. Not just how do we trade pieces of the pie, but how do we make the pie bigger and how do we make the pie bigger and more valuable to all of us in the industry? This is thinking strategically and that requires a level of collaboration that didn’t exist back in 1979 when we started this.
Are you a takeover target?
We’re very committed to the protein business. It’s a great business. There are lots of opportunities. We just completed a restructuring journey for the last seven years. We have another six months or year of activity and hard work to complete that. We’re really focused on that. We’re not focused on anything outside of our world other than completing that transformational journey. Not today. Obviously, as industry participants, we’re aware of what’s going on in the U.S. Certainly, protein companies in the food space are “hot” today and I think that’s reflective of where the consumer is in the sense that protein is really the nutritional profile of choice today and it’s recognized in most nutritional circles that protein is not just a valuable, but necessary part of the human diet and that protein consumption is contributing to better health. As far as what’s going on in the marketplace, I think in the U.S. there’s lots of activity. I see nothing that brings that into the Canadian marketplace. Maple Leaf is not for sale. It hasn’t been for sale.
Have you been approached?
No.
Do you know what will be happening in protein given the spike in pork prices and the virus? What’s the trend for the next year?
We don’t expect the impact of the PEDv virus to be long-term so by next year that will be history. In the short-term we will do our best to avoid raising prices unless we have to but we’ve been pretty clear with the magnitude of the increase as a result of this particular virus that we were forced to raise our prices at a pretty healthy clip and we’ve done that and we’re trying to keep our heads down and we’re pushing through it.
You mentioned sugar earlier. How is the company working to lower sugar in its products?
The good news is, most of our products are pretty low in sugar. We’re in the protein business. We’ve sold the bread business so we’re out of the bakery business that maybe has got some greater exposure to sugar-related issues. Having said that, we’re sensitive to it. There’s obviously product lines where, just like we have in looking at our trans fat profiles and sodium profiles, we will over time, evolve our portfolio in ways that will continue with the nutritional profile and sugar is part of that.
There have been questions about the Naturals line in terms of the claims and marketing of the nitrites. How do you address those claims?
We feel pretty strongly about this that nitrites are a healthy part of the human diet. They are prevalent in the human diet and the human body every day and the highest concentrations of nitrites/nitrates occur naturally in leafy green vegetables, for example. We think, and I think the science supports this, it’s one of the great myths of food technology is that nitrites/nitrates are bad for you. In fact, they’re required in human digestion. What we’ve done is convert what occurs naturally, in that line of products, an unnatural version of that which is chemically the same, into what the human diet would consume normally and naturally as a nitrite which happens to be celery extract. So both in terms of food product design and as a marketer, I actually think that’s a good thing, not a bad thing, and an important step forward.
Given some of the recent high-profile food manufacturing closures in the country, what are your thoughts on the state of food processing and manufacturing in Canada?
We’ve been really clear about that both in our discussions with various stakeholders – government, industry, shareholders – the big challenge facing Canadian manufacturing and in particular food processing, is a challenge of scale and technology. We’re a small country of 30 million people. We sadly approach that set of facts by taking a small country and making it smaller through regional segmentation which takes something that is the size of the state of California and tries to segment it even further and the consequence of that is our inability to achieve scale in the industries that we operate in. We can’t survive in that. As a small country we have to create champions and support large-scale enterprise. What’s large to us is actually small on the global scale. We have to support them in ways that recognize there is a direct link between scale, your ability to achieve large-scale competitive operations, and the technology required to complete. We’re just completing a facility that we’re investing close to $400 million in Hamilton, Ont. A very large facility consolidating many smaller, regional multi-purpose facilities into this one plant across the country. It’s a leading-edge facility. It’s got the latest technologies and the scale that can compete on a North American basis but it required a lot of resource – time, energy, commitment, courage, financial – to be able to make that investment. The Canadian industry has to recognize that this transition, the historical view of what constitutes a great facility – smaller scale, regional, low tech – can’t compete in today’s marketplace. It’s about scale and technology and those willing to make that investment in Canada will survive and thrive well into the future. We’re proud of the fact that we made that commitment.
Is there more that the government could or should be doing to help this industry?
We’ve had a number of engagements of government basically just to get that message through and I think they understand it. Canadians have a natural desire to be scale-phobic in some ways. It’s not a bad thing but it’s important to recognize in this world of manufacturing – food or other – scale and technology is the path to success. I think they get it and they understand they have to have a policy framework to support it moving forward.
