Questions 1. Do you think the objectives of Ben and Jerry’s will have had to change after this acquisition? 2. Do you think it will now feel like ‘a different place to work’, with different priorities?
Mini Case: Ben and Jerry’s Ice Cream
This idiosyncratic business was founded and developed by two partners, both entrepreneurs but, at face value, unlikely businessmen. Ben Cohen was a college dropout who had become a potter. His friend from his
schooldays was Jerry Greenfield, a laboratory assistant who had failed to make it into medical school. They had become ‘seventies hippies with few real job prospects’. They decided they wanted to do something themselves
and ‘looked for something they might succeed at’. They ‘liked food, so food it was!’ They could not afford the machinery for making bagels, their first choice, but ice cream was affordable. In 1977 they opened an ice-cream
parlor in Burlington, Vermont, where there were ‘lots of students and no real competition’. They fostered a relaxed, hippy atmosphere and employed a blues pianist. Their ice cream was different, with large and unusual
chunks. They were instantly successful in their first summer, but sales fell off in the fall and winter when the snow arrived. They realized they would have to find outlets outside Vermont if they were to survive. Ben went on the
road. Always dressed casually, he would arrive somewhere around 4.00 a.m. and then sleep in his car until a potential distributor opened. He was able to ‘charm the distributors and the business began to grow. Ben and Jerry’s success provoked a response from the dominant market leader, Häagen Dazs, owned by Pillsbury. Their market share was 70 per cent of the luxury ice-cream market. Häagen Dazs threatened to withdraw their product from any distributors who also handled Ben and Jerry’s. The two partners employed a lawyer and threatened legal action, but their real weapon was a publicity campaign targeted at Pillsbury itself, and its famous ‘dough boy’
logo. ‘What’s the Dough Boy afraid of?’ they asked. Their gimmicks generated massive publicity and they received an out-of-court settlement. More significantly, the publicity created new demand for luxury ice cream, and the company began to grow more rapidly than had ever been envisaged. A threat had been turned into a massive opportunity. Soon Ben and Jerry’s had a segment market share of 39 per cent, just 4 per cent behind Häagen
Dazs. The company has expanded internationally with mixed success. They have enjoyed only limited success in the UK ‘because there was only limited marketing support’. Perhaps not unexpectedly, given their background, Ben and Jerry have created a values-driven business; some of their ice creams have been linked to causes and interests they support and promote. Rainforest Crunch ice cream features nuts from Brazil; the key ingredients for Chocolate Fudge Brownie are produced by an inner-city bakery in Yonkers, New York; and they favor Vermont’s dairy-farming industry. When the business needed equity capital to support its growth, local Vermont residents were given priority treatment. Ben and Jerry argue they are committed to their employees who ‘bring their hearts and souls as well as their bodies and minds to work’ but acknowledge that their internal opinion surveys show a
degree of dissatisfaction with the amount of profits (7.5 per cent) given away every year to good causes. The two realists with an unusual but definite ego drive later dropped out of day-to-day management ‘... the company needed a greater breadth of management than we had ...’ and were content to be ‘two casual, portly, middle-aged hippies’. In early Spring 2000 the business was acquired by Unilever, the multinational foods, detergents and cosmetics business. Unilever already owned the UK market leader, Walls ice cream. Unilever and Walls had
recently been investigated by the UK competition authorities because of their strategy of insisting that retailers only stock Walls ice cream if Unilever provide them with a freezer cabinet on loan.
Questions
1. Do you think the objectives of Ben and Jerry’s will have had to change after this acquisition?
2. Do you think it will now feel like ‘a different place to work’, with different priorities?
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