Crisis and Opportunity at Ben and Jerry's

It is hard to Imagine Ben and Jerry's ice cream without founders Ben Cohen and Jerry Greenfield. It's kind of like the Grateful Dead without "Cherry Garcia."

Believe it or not, the company is indeed in jeopardy of losing its charismatic and progressive leaders. In April of 2000, Ben and Jerry's (B&J) was bought by the huge multinational company Unilever. At the time of the sale, many observers were concerned that the values-driven mission of the company might take a back seat to the profit drive of a large corporate parent.

Events last month indicate that these concerns are valid. When it came time to appoint a new CEO for the company, Unilever ignored the suggestions of Ben and Jerry's advisory board and appointed a twenty-four-year Unilever veteran. In response, company co-founders Cohen and Greenfield put out the following statement: "We strongly supported a different candidate, a longtime member of Ben and Jerry's Board of Directors, whose commitment to our social policies was clear and established. As owner, Unilever of course has the legal right to manage Ben and Jerry's in the way it sees fit. We have not decided whether or not to remain with the company."

To its credit, Unilever retained many of the progressive practices initiated by the founders. They agreed to keep the company in Vermont and use rBGH-free milk from local farmers. Unilever also is continuing to give over a million dollars a year to the Ben and Jerry's foundation for charitable donations.

Yet, the problem goes deeper than the new CEO. "I am troubled because there were a bunch of commitments made by Unilever which I thought were legally binding, but now I understand they are not," says Ben Cohen. These include increasing the number of suppliers who use fair trade products (these are products that pay premiums to the small farmers who grow them); exploring the opportunity for an organic line of ice cream; and working with a reputable consultant to do an audit of Unilever's business practices to evaluate their social responsibility.

There is no doubt that losing Cohen and Greenfield would cost the company sales and customer loyalty. This was made clear when the news of the rift appeared in media across the country. Most of the coverage focused on the fact that the Ben and Jerry's brand could suffer considerable damage. An article in Business Week summed up the risk, stating: "...some marketing experts say valuable brand equity would disappear if Cohen and Greenfield were to go. It would be similar, for example, to Paul Newman disassociating himself from the Newman's Own brand."

Many financial analysts have pondered the long-term financial impact to Unilever of losing Cohen and Greenfield, particularly since the company hopes to quadruple B&J worldwide sales to a billion dollars by 2004. Even the staid Wall Street Journal wondered about the impact, quoting John McMillin, a food-industry analyst with Prudential Securities Inc. "‘This company has been built on their spirit,' Mr. McMillin said. ‘Hopefully, Ben and Jerry's won't become the next Snapple,' he added, referring to the iced-tea and fruit beverage maker whose sales plummeted after it was acquired by Quaker Oats Co. in 1994."

Many industry observers think that the idea of an organic line of B&J ice cream would not only appease Cohen and Greenfield, it would be a huge business opportunity for the company. "The organic dairy business is growing faster than nearly any other food sector right now," says Reed Glidden, president of Choice Marketing, one of the top U.S. brokers of natural food. "Ben and Jerry's great flavors and strong distribution would make them immediately competitive within the organic ice cream niche. It will also give the company and its founders something that is truly socially responsible to focus on."