The Mission of Ben & Jerry’s

Ben Cohen and Jerry Greenfield founded Ben & Jerry’s Homemade Ice Cream in 1978. Back in 1966, when they were working out in a school gym, they both realised that they hated running but loved food. Years later in 1978, Ben had been fired from a series of jobs while Jerry had failed for the second time to get into medical school. So, they decided to do a $5 correspondence course in ice cream making and later opened their first scoop shop in a dilapidated gas station in Burlington, Vermont. They soon became popular in the local community for the best all natural ice cream. By 1979, they began wholesaling pints of ice cream out of Ben’s VW campervan.Over the years, Ben & Jerry’s evolved into a socially-oriented, independent-minded industry leader in the super-premium ice cream market.All Ben & Jerry’s frozen dessert products are being manufactured in the company’s three plants located in Vermont. The company distributes ice cream, low fat ice cream, frozen yogurt, sorbet and other novelty products (1).

While the majority of corporate managers were under constant pressure to meet their shareholders’ demands, Ben and Jerry were quite the opposite; they were only interested in short-term gains and large profits. In fact, at first they panicked by their quick business growth, as they thought about severing ties with the fast growing company. They did not place any emphasis on cash, equipment and inventories which are considered to be the “tangible assets” of the firm. Instead, their focus was on “intangible` assets” such as reputation, quality of life, joy, social concerns; all of which they considered to be as valuable as material assets- and as Jerry put it ‘if it’s not fun, why do it?’.

Recently, Unilever, a multinational food and personal products company acquired Ben & Jerry’s in spring 2000. The Ben & Jerry’s Board of Directors approved Unilever’s worth £ 230m. Under the terms & conditions of the agreement, Ben & Jerry’s will function separately from Unilever’s existing ice cream business. There will be an independent Board of Directors and their main role would be to maintain Ben & Jerry’s social mission and brand integrity. Both co-founders will keep on working with Ben & Jerry’s, and the company will continue to be Vermont-based (3).So, although it is under Unilever but it still continues to maintain its individual identity.

Ben & Jerry’s Mission

The underlying mission of Ben & Jerry’s is to search for new and innovative ways of addressing all three parts (social, product and economic), while holding a profound respect for the community of which they are a part and also to the individuals inside and outside the company. Their mission consists of three interrelated parts shown below.

“To operate the company in a way that actively recognizes the central role that business plays in society by initiating innovative ways to improve the quality of life locally, nationally and internationally” (2).

“To make, distribute and sell the finest quality all natural ice cream and euphoric concoctions with a continued commitment to incorporating wholesome, natural ingredients and promoting business practices that respect the Earth and the Environment” (2).

“To operate the company on a sustainable financial basis of profitable growth, increasing value for the stakeholders and expanding opportunities for development and career growth for the employees” (2).

There has been an increasing demand for indulgent ‘treats’ in the British diet. Around £1.3 billion ice cream market is tapping into this demand with rising sales in luxury and premium ice creams at the expense of standard varieties. About 14million adults buy ice cream as a treat. The growing demand for indulgent desserts has helped grow the sales of ice cream. Since 2007, value sales of ice cream have grown by 8% (4). All these statistics show that Ben & Jerry’s have great potential in the U.K. market.

Strategic Analysis

Political factors

There had been rumours accusing Ben & Jerry’s of supporting the defence ofMumia Abu-Jamal, who was convicted in 1982 of killing Philadelphia Police officerDaniel Faulkner. Misunderstanding stemmed from the fact that Ben Cohen, one of the co-founders, joined hundreds of other people in signing a petition in 1995 asking that American justice should be followed fully in the case. Apart from these reports, there had been allegations that Ben & Jerry’s had introduced an ice cream flavour whose name is connected to this case.As a consequence of this alleged support, the National Fraternal Order of Police had publicly called for a boycott of all Ben & Jerry’s products (6).

Again in 2006, Ben & Jerry’s had to apologise to Irish consumers for launching a new flavour “Black and Tan” evoking their worst days of British military oppression. Black and Tans was the term used for recruiting an irregular force of British ex-servicemen during the Irish war of independence and renowned for their brutality (9).

Ben & Jerry’s were again in news when PETA sent them a letter asking them to use breast milk instead of cows to prevent cruelty to the dairy cows (5).

Moreover, ever since Ben & Jerry’s have been taken over by Unilever, the Vermont firm, famous for donating part of its profits to charity, has been criticised for having changed their commercial focus.

Economic factors

The high costs related to manufacturing each different unique flavour. Ben & Jerry’s primary marketing goal is to create products that cannot be reproduced but the technological developments of the company has not allowed them to launch the products within a realistic time limit. It takes them many years to come up with a new different flavour. Even after that there is no surety if the product would be successful or able to penetrate in the market. Not only this, it also gives the competitors a chance to take over their place in the market.

Back in 1994 also, sales dropped, profits went down, and the company’s stock prices fell to half its value. Cost of sales increased approximately $9.6 million or 9.5% over the same period in 1993, and the overall gross profit as a percentage of net sales decreased from 28.6% in 1993 to 26.2% in 1994. This loss might have been a result of several reasons, such as high administration and selling costs, a negative impact of inventory management, and start up costs associated with certain flavours (8).

The company realising its fall in sales, quickly responded to the changes in consumer demands and introduced Ben & Jerry’s ‘Lite’. The line failed miserably. It looked like that Ben & Jerry failed to forecast and acknowledge the changes in consumer tastes, and was faced with increasing competition with Haagen-Dazs, which introduced its ‘low-fat Ultra Premium ice-cream’.

Social factors

Partnershops are Ben & Jerry’s scoop shops that are independently owned and operated by community-based non-profitable organizations. These organizations use the funds generated to train and counsel disenfranchised youth who are in need of a helping hand to get back into the work environment. Other than this, they are working on sustainable dairy farming programme and fair-trade (which is the premium they pay for the ingredients which enables the farmer to take positive steps towards providing basic needs for their families, such as healthcare, education and safe housing) (1).

Such efforts had been made to attract over ‘like-minded’ consumers, however it’s debatable as in to what extent this will have an impact on appealing the hearts of their consumers. The question then arises as to how much their social unique image gets affected by their consumer behaviour.

Environmental factors

U.K. experienced poor weather in the summer of 2007 in comparison to that of 2006, with an average temperature of 14.10C compared to 15.80C in 2006. This had a negative effect on the ice cream market, especially in the impulse sector, and value sales went down 1.5% compared to 2006. In the last two years (2008 and 2009), summer temperatures appear to have picked up, reaching approximately 14.70C in 2009 (4).

UK Mean seasonal temperature (°C), 2004-09*

January-August
Seasons: Winter=Dec-Feb, Spring=Mar-May, Summer=June-Aug, Autumn=Sept-Nov
Data are provisional from December 2008 and Winter 2008/09

Source: Met Office/Mintel

Technological factors

In order to improve the company’s infrastructure and with the aim to automate their production to keep up the intense competition, they invested a lot of money in property and equipments in 1994 increasing their long term debts by almost 45%.

SWOT analysis

Strengths

• Prestigious, established and recognized brand name and successfully operating in many countries.

• Ben & Jerry’s make a yearly contribution of minimum $1.1 million from pre-tax profits to charitable foundation. It also sponsors Partnershops, Ben & Jerry’s scoop shops, which are operated by non-profitable organizations. These organizations help the disenfranchised youth to get them back in the working environment. They also have a long term partnership with Fairtrade foundation which works toward paying farmers the premium that enables them to fulfil the basic needs of their families. Till now, they have launched four Fairtrade certified ice cream flavours.

• Product differentiation- the use of natural, good quality ingredient, different flavours and the strategic use of quirky flavour names such as Wavy Gravy, Chubby Hubby, Phish Food and Chunky Monkey gives them a competitive edge over other conventional ice cream products of other companies.

• Ben & Jerry’s have also introduced other products like sorbets and frozen yoghurts along with their ice cream range for targeting customers demanding for healthy desserts.

• Ben & Jerry’s acquisition by Unilever in 2000 has provided the company with greater financial backing allowing them to be even more productive and socially active in the ice cream business.

• Thermoacoustic refrigeration- Ben & Jerry’s company developed the first prototype eco-chilling unit which recycles and re-uses the energy used to maintain the ice surface.

• Advertising support- introducing flavours with clever names in order to promote them. For example, ‘Yes Pecan’ referring to the Barack Obama’s winning the presidency elections (7), ‘Hubby Hubby’ in order to support the cause of marriage equality for same-sex couples (11).

Weaknesses:

• Limited target market as Ben & Jerry’s is a super-premium brand and is seen as a special treat by consumers and depends on their level of indulgence.
• Too much focus on charity work which has added up to the unnecessary costs and has caused them to neglect the upcoming changes in trends.
• Lack of professionalism in management and due to their employee oriented approach has made them to suffer a great loss in 1994.
• In order to fulfil their mission statement of providing consumers with ice creams of innovative flavour, they take a really long time to come up with a new flavour which is absolutely unnecessary as even after that there is no guarantee if the product would be successful in market. In fact, it gives the competitors a chance to take over their market share.
• High cost involved in transportation as most of their suppliers are scattered throughout the world. For example, nuts from South African rain forests, peaches from Georgia, etc.

Opportunities

• As people are becoming more and more health conscious, Ben & Jerry’s should launch more variety in fat-free ice creams and even greater range in healthy alternatives like frozen yoghurts.
• They should work towards globalizing their product to compete effectively in the market. Their geographical reach is limited to North America and Western Europe mainly.
• Environment friendly freezers- In 2009, they have announced the plans to roll out (Hydrofluorocarbons) HFCs-free freezer which is a major step towards saving the planet as HFCs are one of the major factor responsible for ozone depletion (10).
• Ben & Jerry’s are currently working on using bio-gas digester to convert the waste produced during the manufacturing of ice creams into energy (1).

Packaging- Ben & Jerry’s ice cream tubs are presently made from 90% renewable paper stock but to prevent it from leaking, they coat it with polyethylene which makes it difficult to recycle them. So, they should work on making tubs which are fully recyclable.

Threats

Consumers tend to change their product preferences based on their discretionary income and the extent to which they want to indulge in these fattening dessert products.

There are many substitute products available within the desserts and frozen food industry. Therefore, they not only suffer competition from other ice cream brands but also from other desserts such as chocolates, cookies, pies, etc.

Slow product development- the duration during which a new flavour is launched is really long which gives competitors a chance to take over the market during that time.

Their major competitor is Haagen dazs as can be deduced from the table below which gives the take-home sales from 2007 to 2009 (4). Haagen dazs’s ‘low fat ultra-premium’ ice cream range is extremely popular. Moreover, they have a competitive edge over Ben & Jerry’s as it is geographically more spread than Ben & Jerry’s as the brand is marketed by two multinational companies- Nestle and General Mills.

Take Home sales 2007-09

Source: Mintel

Recommendations

• Recent acquisition by Unilever could create a negative image in public which need to be cleared by ensuring them that even after being taken over by Unilever, their missions have not changed and they would continue to produce new innovative flavours of ice creams.
• They should maintain a balance between their social and product mission. Instead of focussing more on social causes and adding up the unnecessary costs, they should rather study the upcoming change in trends and launch new flavours to maintain or increase their share in the market.
• Since it is now owned by Unilever, they have the financial support required for them to expand their production globally.
• They should decrease the duration of product development process so that they can launch a new flavour every month or so to keep the customers engaged on a regular basis.
• They should continue to implement their recycling programs in order to lower down the production costs.
• They should develop additional manufacturing plants and distribution centres outside of Vermont to cut down on the transportation costs.
• They should change the consumer perception of having the ice cream only in summers or spring time to anytime dessert i.e. they should work towards deseasonalising their sales.

Conclusion

Ben & Jerry’s even after acquisition by Unilever in 2000 has continued to maintain its own identity. Their strong product differentiation gives them a competitive edge over their competitors. The only need is to expand globally to compete effectively with other brands. The innovation factor in their ice creams distinguishes them from the conventional flavours of other brands. Their efforts in becoming green e.g. by planning to launch environment friendly freezers which would reduce green house gases emission sets them apart from other companies. All they need to do is to remain focussed on their missions with equal emphasis on all of them keeping in mind the customer’s demands.