Ben & Jerry

BEN & JERRY

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Introduction Successful people stress the virtues of hard work as a key ingredient in their success. But sometimes people are in the right place at the right time, and sometimes luck plays a part as well.

Ben Cohen and Jerry Greenfield were two hippies who lived in the New England state of Vermont.

Cohen couldn’t sell his pottery and Greenfield was rejected by three medical schools, so just for fun they thought they would start an ice cream business together.

They took a $5 correspondence course on ice-cream making and in 1978 opened the first Ben & Jerry’s shop in a converted filling station in Burlington Vermont, a student town that didn’t have an ice cream parlour.

They started their business with $4,000 each and borrowed another $4,000 from a bank.

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Ben & Jerry’s Their ice cream was made with natural ingredients and plenty of butterfat. They chose imaginative names for their products, like Chunky Monkey, Rainforest Crunch, Whirled Peace, and Wavy Gravy.

Jerry created unique flavour combinations and tested them on students before they were launched.

Their shop quickly became a favourite with the local community thanks to its rich ice cream and creative flavours.

Ben and Jerry made it a point to connect with the community, hosting a free film festival and giving away free ice cream on the store’s first anniversary.

The business caught the public’s imagination and expanded like wildfire across New England. In 1980, they began supplying local grocers, and in 1981 opened their first franchise store.

As the business grew they hired professional managers to run operations, distribution and procurement.

In 1984 the company went public, and Ben and Jerry were suddenly worth 25 million dollars each.

By 1987 there were over a hundred Ben and Jerry’s ice cream franchises in 35 states.

In 1988 Ben and Jerry were named U.S. Small Business Persons of the Year by President Ronald Reagan. 6

From the outset, Cohen and Greenfield were deeply committed to supporting Vermont’s economy and preserving its environment.

They used local milk suppliers and hired local artists to design their cartons and graphics.

When they needed capital, they sold shares to Vermont residents.

B & J’s hippie founders believed that companies have a responsibility to employees, suppliers and society as a whole, as well as shareholders.

They set up the Ben & Jerry Foundation, which donated 7.5% of the company’s profits to worthy nonprofit organizations. These causes included safe houses for children, drug-addicted pregnant women, environmental groups, HIV-positive individuals, and the homeless.

Because of its socially conscious image, and the owners’ unconventional personalities, the company had to do very little marketing.

Media coverage of its various antics was guaranteed, providing free publicity for the company, its products, and its values.

Over time, Cohen and Greenfield came to view their business as, in Cohen’s words, “an experiment to see if it was possible to use the tools of business to improve society.”

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Ben & Jerry’s Ben & Jerry’s mission statement consisted of three parts: Product Mission: To make, distribute, and sell the finest quality, allnatural ice cream in a variety of flavors made from Vermont products.

Social Mission: To operate the company in a way that recognizes the role that business plays in society, by initiating ways to improve the quality of life of the community.

Economic Mission: To operate the company on a sound financial basis of profitable growth, increasing value for our shareholders, and creating career opportunities and financial rewards for our employees.

Ben & Jerry’s was run on democratic lines. All employees were expected to attend staff meetings, and issues affecting women, minorities, and gays in the company’s work force were freely discussed. Cohen and Greenfield set a salary policy that no manager would be paid more than seven times the salary of the lowest-paid employee.

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Ben & Jerry’s All staff voted on the company’s liberal employment policies.

Company-wide staff benefits included: •

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Reimbursement of study fees for any course at all, flexible employee loans, paid gym fees Twelve paid weeks of maternity, paternity and adoption leave, child care centers at work, freed body massages, and sabbatical leave for all Paid adoption expenses, life insurance for unmarried partners, and free ice cream at all times for all employees

Ben and Jerry were admired inside and outside the company for their policies and were viewed by many as the company’s two biggest assets.

But there were also those who criticized them for “not walking their talk” in terms of equal treatment of their employees.

Despite the firm’s often stated and politically correct policies, employees in fact held less than 1% of the company’s shares.

And while Ben and Jerry often pointed out that their own salaries were only $130,000 per year, they didn’t say that their combined shareholdings were worth $50 million.

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Ben & Jerry’s Ben & Jerry tried to be equally responsible when choosing suppliers.

Rainforest Crunch ice cream featured nuts grown in South American rain forests. Wild Maine Blueberry ice cream was made with blueberries grown and harvested by the Passamaquoddy Indians of Maine. The brownies used in the Chocolate Fudge Brownie ice cream were bought from a bakery that used its profits to build shelters for the homeless.

Similarly, for the milk and cream that form the bulk of its products, Ben & Jerry’s was committed to buying from Vermont dairy farms at abovemarket prices.

Ben & Jerry’s sales grew steadily throughout the 1980’s. But in the early 1990’s sales started to decline.

The consumers who had loved Ben & Jerry’s super premium ice cream were now entering middle age and growing more health and weight conscious.

The FDA introduced new labeling rules. Customers could now see the amount of fat each scoop contained.

These customers started to move to low-fat ice cream products offered by new competitors who entered the market.

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Ben & Jerry’s With falling sales and increasing costs, shareholders felt the company’s social mission was a luxury it could no longer afford. The B & J shares consistently underperformed the market.

The investor community said the business was putting its social responsibility principles way ahead of its shareholders.

At the same time Ben and Jerry, tired of arguing with shareholders, were losing interest in the business and disappearing on unannounced holidays, which did not go down well at all on Wall Street.

The company suffered its first financial loss in 1994. By 1999 the share price had fallen nearly 50 percent from its peak.

Ben & Jerry’s low share price naturally attracted interest from prospective buyers.

In early 2000 international food giant Unilever bought Ben & Jerry’s for $326 million.

Shareholders, frustrated by the poor performance of their socially conscious shareholdings, loved the deal.

Ben and Jerry said they hoped their company would stay in Burlington, remain true to its social responsibility policies, and continue to operate independently of Unilever’s other U.S. ice cream businesses.

They were wrong.

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Ben Cohen and Jerry Greenfield still live near each other in Vermont. According to Wikipedia both men have an estimated net worth of $150 million.

Today, thanks to Unilever International, Ben & Jerry's ice creams are available in all the major cities in South Africa.

You can even buy them at Woolworths.

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