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."

The growth in organic dairy has been stunning. According to SPINS, a company that tracks sales in the natural product industry, organic dairy has grown tremendously in the U.S. over the past two years at an annual rate of 47.2 percent. And the consumers driving this growth are relatively educated and affluent -- just like Ben and Jerry's traditional customers.

"Ben and Jerry's could make a huge difference with an organic line of ice cream, while creating a new product that would appeal to their core customers plus plenty of new ones'" says Katherine DiMatteo, president of the Organic Trade Association. It would be a win-win scenario for Unilever, benefiting customers, farmers and the environment, while building a great new business." Over the past decade, DiMatteo has overseen 20 percent growth in the organic industry in the U.S., which has grown to over $6 billion in annual sales.

And the prospects in Europe are even better. In recent years the organic food industry has grown quicker in Europe than in the U.S. According to a recent New York Times article, organic sales are up 500 percent in Great Britain since 1996 -- with most of the sales occurring in conventional supermarkets. In recent months the deadly Mad Cow disease has become one of the biggest political and consumer issues in the rest of Europe. Since Mad Cow was a significant factor driving organic sales in the U.K., it's likely that the new crisis will create huge demand for organic products in the rest of the European Union.

Since Unilever has its roots in Europe, they could clearly use the B&J brand to quickly penetrate the burgeoning European organic market for ice cream and become an industry leader. It could also be a launching pad for a full line of organic B&J food products.

And the sky is the limit. A study last year indicated that Ben and Jerry's was one of the most trusted brands in America -- right up there with Disney. With such a popular image, the chance for success with a full line of organic food would be significant.

"I have always thought that Ben and Jerry's is the perfect brand to introduce organic to a wider consumer audience." says Ben Cohen. So the question is whether Unilever will take advantage of the opportunity

Only time will tell.

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