McCain plays it safe with Lottery link-up

For such a secretive company, frozen chip maker McCain was remarkably brazen. It broke all its own rules, stepped into the spotlight and announced it was linking with that most publicity-hungry of brands, the National Lottery.

McCain will be Camelot’s first official marketing partner, with rights to use National Lottery logos and slogans in on-pack promotions connected to the draw. It will pool its 5m annual below-the-line spend across all products into this single initiative – the biggest in the UK operation’s history.

The deal offers McCain an ideal opportunity to piggyback on the the success of the Lottery brand, and inject some excitement into its own rather dull image. For despite the company’s size and success, and its 10m annual spend on TV advertising, McCain is still largely anonymous.

For Camelot the attraction is equally obvious. Having originally announced its marketing partnerships scheme in March, it was forced to postpone revealing them because of potential problems with restricting under-age players. It hopes McCain will be the first of up to 12 partners but has consciously gone for a safe, non-controversial first tie-up.

The deal is seen as an “additional revenue stream”. McCain will have paid at least 100,000, and probably rather more, in what was a closed envelope bid for the partnership. And Camelot is threatening renewed legal action against any companies who use the Lottery logo illegally.

McCain Foods was founded in 1956 in Canada by two brothers, Harrison and Wallace McCain. It has grown into a global food empire – but is still a privately-owned, family firm with a reputation for intense secrecy. Harrison’s nephew, Allison McCain, is managing director of the UK operation, set up in Scarborough in the late Sixties.

The operation brought work for a local labour force affected by seasonal fluctuations. With a philanthropic chairman Charles “Mac” McCarthy, McCain has a reputation for supporting the local community. It sponsors the football team Scarborough Town, “The Seasiders”, who play in the McCain stadium, and has put money into the town’s theatre.

But outside Scarborough, the company has always had a low profile not in keeping with its size. It took months to appoint a marketing director to replace Doug Frawley, which some observers blame on its geographical position. Julie Leivers, marketing controller from Coca-Cola Schweppes Beverages, was finally appointed in August.

She has responsibility for marketing a UK operation with a 330m annual turnover, that claims the credit for building the country’s 350m frozen chip market singlehandedly. It dominates the sector, with a 33 per cent value share. Its main rival is own label, which has 56.5 per cent of the market (Taylor Nelson AGB Superpanel).

McCain also makes pizzas, under the brand Pizza Perfection, but must fight for share in a much more open market against brands such as United Biscuits’ San Marco, Goodfellas from Green Isle, and Schwan’s Chicago Town.

Its objective with the Lottery deal is to increase its brand share by ten per cent, by attracting shoppers at the point of sale with new on-pack promotions. The first of these appears in January and offers consumers the chance to win free Lucky Dip lottery tickets, branded with the McCain name, and supported by a 500,000 advertising campaign through Poulter Communications.

Chris McDonald, managing partner at the HHCL Brasserie, which made McCain pizza ads before the account moved to Bartle Bogle Hegarty earlier this year, sums up the benefits of the partnership: “It gives McCain one of the most powerful promotional tools in a market where there is very little perceived difference between products.”

But if the frozen chip is seen as the ultimate commodity, McCain has invested in variants to add value and extend its interests. Microwaveable Microchips in 1986 and Southern Fries (shaped and coated chips) in 1991 were among the first. According to figures from Taylor Nelson AGB Superpanel, value growth in the market has stagnated in the past 12 months compared with the past two years when bad potato crops forced up prices.

Industry sources say McCain’s dominance in branded frozen chips, together with its contracts to make chips for McDonalds, Burger King and KFC and its separate business in private label chips, means it exerts a strong influence over supply.

A spokesman for McCain claims the company buys ten per cent of the annual UK potato crop. “It makes it very difficult for others to buy potatoes cheap enough to be able to compete,” says a source.

McCain offers Camelot a safe and uncontroversial partner. Potato products and pizzas are unlikely to become the focus of food scares. The company cannot be accused of tempting children into gambling – frozen chips and pizzas may be eaten by the under-16s but it is up to parents to buy them in the first place. By linking with McCain, Camelot will see its logo and its brand spread into millions of homes.

Eric Jagger, McCain senior marketing manager, who was the driving force behind the deal, says: “We saw the National Lottery as an ideal partner. We are both number one brands in large sectors. Chips are mass market, and the profile of lottery players is mass market.”

But the partnership needs to be more than just two big players coming together. McCain has most to gain, but for Camelot it is an important opportunity to prove how this scheme, which has caused controversy in the past but could raise more than 1m, can work.