McCain is now shipping its products to customers in at least eight African countries, from Angola to Zambia. “We believe wholeheartedly that the emerging market is a massive market,” McCain official Noreen Barnett said in a recent interview in the company's Johannesburg office.
One of McCain's top clients, McDonald's Corp., is a leading sponsor of the soccer World Cup in South Africa in June and July. It means big business for McCain, which will supply French fries to McDonald's outlets in all of the World Cup stadiums and outdoor fan festival locations across the country. Nearly 500,000 foreign visitors are expected in South Africa for the sporting event, and millions of tickets are being sold.
But McCain's expansion in South Africa has not all been smooth sailing. The difficulties of business in Africa were exposed when the company suffered a one-year delay and cost overruns on its showcase project, a factory expansion that would double the capacity of its potato-processing plant in Delmas, a farming community east of Johannesburg.
The project was originally projected to cost 500 million rand (about $69-million) but the final price tag will be closer to 800 million rand, Ms. Barnett said. The project, announced in 2006, was only completed a few months ago.
The delays were largely due to the need to bring in experts from around the world for the plant's state-of-the-art technology. Much of the expertise was unavailable in South Africa.
Along with the doubling of capacity, the plant expansion has allowed McCain to offer a new product – home fries – that it expects will differentiate it further from South African competitors. Otherwise, it would have to import the product from McCain branches abroad at a 20-per-cent duty.