Ben & Jerry's Homemade, Inc. History
South Burlington, Vermont 05403-6828
Telephone: (802) 846-1500
Fax: (802) 846-1555
Incorporated: 1978 as Ben & Jerry's Homemade
Sales: $237.04 million (1999)
NAIC: 31152 Ice Cream and Frozen Dessert Manufacturing
Ben & Jerry's is dedicated to the creation and demonstration of a new corporate concept of linked prosperity. Our mission consists of three interrelated parts. Products: To make, distribute and sell the finest quality all natural ice cream and related products in a wide variety of innovative flavors made from Vermont dairy products. Economic: 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. Social: To operate the Company in a way that actively recognizes the central role that business plays in the structure of society by initiating innovative ways to improve the quality of life of a broad community--local, national, and international. Underlying the mission of Ben & Jerry's is the determination to seek new and creative ways of addressing all three parts, while holding a deep respect for individuals inside and outside the company and for the communities of which they are a part. Key Dates:
- Ben Cohen and Jerry Greenfield open their first ice cream shop in Burlington, Vermont.
- First out-of-state store opens.
- National expansion stepped up.
- Ben & Jerry's opens first international shops, in Canada and the Caribbean.
- Ben Cohen steps aside to let a professional manager take the CEO position.
- Ben & Jerry's acquired by Unilever.
Ben & Jerry's Homemade, Inc. produces superpremium ice cream, frozen yogurt, and ice cream novelties in rich and original flavors, loaded with big chunks of cookies and candy. The company uses natural ingredients almost exclusively and insists its diary suppliers not use bovine growth hormone on their herds. The company's plant in Waterbury, Vermont, is the single most popular tourist attraction in the state.
Ben & Jerry's has been distinguished by a corporate philosophy that stresses social action and liberal ideals in addition to profit making. Its innovative and creative marketing devices have further expressed this unorthodox spirit. When confronted with a declining market for superpremium ice cream, its founders turned increasingly to professional managers and finally sold out to Unilever, which promised to maintain Ben & Jerry's traditional values while taking the brand to new heights.
Ben & Jerry's was founded in May 1978, when Ben Cohen and Jerry Greenfield opened an ice cream shop in Burlington, Vermont. Cohen had been teaching crafts, and Greenfield had been working as a lab technician when the two decided that 'we wanted to do something that would be more fun,' as Greenfield later told People magazine. In addition, the two wanted to live in a small college town. In 1977, they moved to Burlington, Vermont, and completed a five dollar correspondence course in ice cream making from Pennsylvania State University. With $12,000 in start-up money, a third of which they borrowed, the two renovated an old gas station on a corner in downtown Burlington and opened Ben & Jerry's Homemade.
The first Ben & Jerry's store sold 12 flavors, made with an old-fashioned rock salt ice cream maker and locally produced milk and cream. Initially, ice cream production ran into some glitches. 'I once made a batch of rum raisin that stretched and bounced,' Greenfield told People. With time, however, the pair's rich, idiosyncratic, chunky offerings such as Dastardly Mash and Heath Bar Crunch gained a loyal following. In the summer of 1978, Ben & Jerry inaugurated the first of the many creative marketing ploys that would help drive the growth of their company when they held a free summer movie festival, projecting films onto a blank wall of their building.
By 1980, Ben & Jerry had begun selling their ice cream to a number of restaurants in the Burlington area. Ben delivered the products to customers in an old Volkswagen squareback station wagon. On his delivery route, he passed many small grocery and convenience stores and decided that they would be a perfect outlet for their products. In 1980, the pair rented space in an old spool and bobbin factory in Burlington and began packaging their ice cream in pint-size cartons with pictures of themselves on the package. 'The image we wanted was grass roots,' Cohen later told People.
The popularity of Ben & Jerry's products brought the company growth, despite the laissez-faire attitude of its two proprietors. At one point, the two were forced to close the doors of their store for a day to devote themselves to sorting out paperwork. In 1981, Ben & Jerry's expanded its pint-packing operations to more spacious quarters behind a car dealership. Shortly thereafter, the company opened its second retail outlet, a franchise on Route 7 in Shelburne, Vermont.
Going National in 1982
Despite its exclusively local operations, Ben & Jerry's first gained national attention in 1981 when Time magazine hailed its products as 'the best ice cream in the world' in a cover story on ice cream. In the following year, Ben & Jerry's began to expand its distribution beyond the state of Vermont. First, an out-of-state store opened, selling Ben & Jerry's products in Portland, Maine. Then, the company began to sell its pints in the Boston area, distributing their goods to stores through independent channels. At the same time, Ben & Jerry's continued its policy of promoting itself through unique and whimsical activities. In 1983, for instance, the company took part in the construction of the world's largest ice cream sundae in St. Albans, Vermont.
With its continuing expansion, Ben & Jerry's developed a need for tighter financial controls on its operations, and the company's founders brought in a local nightclub owner with business experience to be chief operating officer. As sales grew sharply, Cohen and Greenfield slowly came to realize that their small-scale endeavor had exceeded their expectations. They were not entirely happy about this unexpected success. 'When Jerry and I realized we were no longer ice cream men, but businessmen, our first reaction was to sell,' Cohen told People magazine. 'We were afraid that business exploits its workers and the community.'
Ultimately, Cohen and Greenfield did decide to keep the company, but they vowed not to allow the growth of their enterprise to overwhelm their ideas of how a business could be a force for positive change in a community. 'We decided to adapt the company so we could feel proud to say we were the businessmen of Ben & Jerry's,' Cohen concluded. Among the stipulations they made to ensure that their company would be different from other parts of corporate America was a salary cap, limiting the best-paid people in the company to wages just five times higher than those of the lowest-paid employees. As Ben & Jerry's grew, this unusual limitation would complicate the company's high-level staffing.
To finance further growth, Greenfield and Cohen decided to raise capital to expand by selling stock to the public. However, in an effort to maintain a sense of local accountability in the company, they limited the stock offering to residents of Vermont, utilizing a little-known clause of the state law governing stocks and brokering. With the proceeds from this sale of stock, the company began construction of a new plant and corporate headquarters in Waterbury, Vermont, about half an hour away from Burlington.
As Ben & Jerry's products continued to garner attention, its prime competitor in the premium ice cream market, Häèn-Dazs, took steps to protect its own share of the market. In 1984, Pillsbury, Häèn-Dazs's corporate parent, threatened to withhold its products from distributors who also sold Ben & Jerry's ice cream. Ben & Jerry's retaliated by filing suit against Pillsbury, and also by launching a publicity campaign with the slogan 'What's the Doughboy Afraid Of?' Pillsbury took steps to restrict distribution again in 1987, when it threatened to stop selling its ice cream to retailers who also sold Ben & Jerry's products. In both cases, legal action brought the restrictive practices to an end. By the end of 1984, sales of Ben & Jerry's products had exceeded $4 million, a figure more than twice as large as the previous year's revenues.
In 1985, Ben & Jerry's expanded distribution of its products dramatically, starting up sales of its pints in New York, New Jersey, Pennsylvania, Virginia, Washington, D.C., Georgia, Florida, and Minnesota. To supply these new markets, the company completed work on a modern manufacturing plant. Among the new offerings that year was New York Super Fudge Chunk, created at the suggestion of a customer from New York City. Throughout 1985, sales of Ben & Jerry's products continued at a break-neck pace. By the end of the year, revenues had reached $9 million, an increase of 143 percent from 1984. As part of their program to remain true to their ideals, Cohen and Greenfield established the Ben & Jerry's Foundation to fund community-oriented projects. In addition to the Foundation's initial capitalization, the two pledged 7.5 percent of the company's annual pre-tax profits to the charity.
Farming Out in 1986
In 1986, facing demand for its products that its one Vermont plant was unable to meet, Ben & Jerry's contracted with Dreyer's Grand Ice Cream, an ice cream company located in the Midwest, to manufacture Ben & Jerry's ice cream in its plants and distribute its products in most markets outside the Northeast. In addition, the company introduced its newest pint flavor, Coffee Heath Bar Crunch.
To promote this and other flavors, as well as the corporate identity, Ben & Jerry's began conducting tours of its Waterbury, Vermont, plant in 1986. In addition, the company launched its 'Cowmobile,' a converted mobile home that Cohen and Greenfield set out to drive across the country, distributing free scoops of ice cream as they went. Four months into the trip, the Cowmobile burned to the ground outside Cleveland without causing any injuries, bringing the planned expedition to a premature end. These efforts had pushed company sales to $20 million by the end of 1986, as Ben & Jerry's continued to post a remarkable rate of growth.
Cohen and Greenfield's original plan for a cross country trip was brought to fruition in 1987, when 'Cow II' made its maiden voyage, also dispensing free scoops of ice cream along the way. After the October 1987 stock market crash, Cow II appeared on Wall Street to hand out scoops of 'That's Life' and 'Economic Crunch' ice cream to financial industry workers. Along with these highly topical creations, Ben & Jerry's introduced pints of 'Cherry Garcia,' named for the long-time lead guitarist of the rock group Grateful Dead. In addition, the company began to market its first ice cream novelty, the Brownie Bar. This product consisted of a square of French Vanilla ice cream, sandwiched between two brownies.
At their manufacturing plant in Vermont, Ben & Jerry's also took steps to keep the company in compliance with its ideal of being a socially responsible enterprise. To reduce its impact on the environment, Ben & Jerry's began using its ice cream waste to feed pigs being raised on a farm in Stowe, Vermont. In addition, to keep plant employees happy, the company instituted a variety of gestures, including Elvis day and Halloween costume celebrations, to break the monotony of life in a factory. By the end of 1987, company revenues had increased again, to reach $32 million.
International in 1988
In 1988, Ben & Jerry's opened its first outlets outside the United States when ice cream shops began operating in Montreal, Quebec, and in St. Maarten in the Caribbean. By the end of the year, more than 80 'scoop shops' were flying the Ben & Jerry's banner across 18 different states. At this time, the company decided to hold back on further franchising to make sure that product quality and service in its existing stores met its standards.
Also in 1988, Ben & Jerry's responded to continuing growth in demand for the company's products by opening its second manufacturing facility in Springfield, Vermont. This plant was used to make ice cream novelties, including the 'Peace Pop,' a chocolate covered ice cream bar on a stick. The name of this product referred to 'One Percent for Peace,' a nonprofit group founded in part by Cohen and Greenfield that was dedicated to redirecting national resources towards peace.
Together with their employees, Cohen and Greenfield formulated a three-part statement of mission that was designed to sum up the company's unique corporate philosophy. Relying on a theory of 'linked prosperity,' the mission statement asserted that Ben & Jerry's had a product mission, a social mission, and an economic mission. The company hoped to use this credo to enhance the lives of individuals and communities through its actions. As part of its philosophy of linked prosperity, Ben & Jerry's introduced several new flavors of ice cream that incorporated ingredients from special sources. Rainforest Crunch, marketed in 1989, used nuts produced by rain forest trees. Chocolate Fudge Brownie, brought out in February 1990, used brownies made at a bakery in New York where formerly unemployed and homeless people worked.
Beginning in the late 1980s, Ben & Jerry's joined the trend toward producing low-fat ice cream and yogurt. Ben & Jerry's Light, introduced in 1989, had reduced levels of fat and cholesterol compared to the regular Ben & Jerry's ice cream but no less fat than other 'regular' products then on the market. 'It was sort of an oxymoron,' the company's chief financial officer admitted to the Wall Street Journal. Sales of the products never exceeded about $9 million, and in December 1991 the line was declared a mistake and phased out.
Ben & Jerry's frozen yogurt proved far more successful. Boasting a butterfat content between one and five percent&mdash opposed to the 17 percent butterfat levels in the regular ice cream--Ben & Jerry's yogurt was selling in 13 cities around the United States in 1992. Within five months, yogurt sales were accounting for 15 to 18 percent of the company's revenues, and by the end of the year, it had become the leader in the superpremium yogurt market. In addition, Ben & Jerry's introduced a pint version of one of its most popular scoop shop offerings, chocolate chip cookie dough. The company had spent five years finding a way to get the chunks of dough into pints of ice cream without having them stick together and gum up the packaging machines. The product was an immediate hit, and soon became the company's best-selling flavor. Finally, the company began to market its ice cream novelties, Peace Pops and Brownie Bars, in 'multi-paks' in supermarkets.
In response to continuing demand for its new products, Ben & Jerry's moved to increase its output in Vermont. The company added a pint production line at its Springfield plant, and also borrowed space at the St. Alban's Cooperative Creamery to open another temporary production facility. To increase its capacity over the long term, Ben & Jerry's broke ground on a third ice cream factory in St. Alban's in late 1992. Financed through an additional stock offering, this plant was scheduled to be functional in 1994. In addition, the company completed a new distribution center in Bellows Falls, Vermont. Ben & Jerry's also renewed its co-packing agreement with Dreyer's Grand Ice Cream, Inc., its midwestern partner. By the end of 1992, Ben & Jerry's sales overall had reached $132 million, up from $77 million in 1989.
Further from home, Ben & Jerry's opened two ice cream shops in the Russian cities of Petrozavodsk and Kondopoga. With two Russian partners, the company had spent three years navigating the Soviet bureaucracy and finding supplies for the venture, which Cohen and Greenfield hoped would promote friendship between Russians and Americans. After importing equipment and lining up reliable sources for cream, the company was able to open a combination ice cream plant and parlor, which was blessed by a Russian Orthodox priest on its first day.
As Ben & Jerry's moved into the mid-1990s, it could look back on a streak of extraordinary growth. From one small shop in downtown Burlington, Vermont, it had grown to include a chain of nearly 100 franchised shops, and a line of products sold in stores across the country. Company leaders were aware that it was unlikely that this rate of expansion could continue forever, since Ben & Jerry's growth had come in a mature and stable market. With its idiosyncratic corporate culture and its strong track record of introducing innovative flavors that drove ever-stronger sales, however, it appeared that Ben & Jerry's was well positioned to continue its success.
Going Corporate in the 1990s
Unfortunately, sales of superpremium ice cream slipped in the mid-1990s, as increasingly health-conscious consumers cut back on calories. Ben & Jerry's posted its first quarterly loss ever at the end of 1994, it slowest season. In addition, software problems crippled the new plant at St. Albans, draining the company's resources.
Ben & Jerry's had just over 500 employees in late 1994 when Ben Cohen announced his retirement as CEO (he remained chairman). In order to attract the right caliber of management talent to lead the company, Ben & Jerry's controversially dropped the pay formula that had limited the top salary to just five times the lowest. It launched a 'Yo! I'm Your CEO' contest which received 20,000 entries from prospective candidates. However, the new CEO, Robert Holland, Jr., was actually chosen by a professional search firm.
Holland had previously become the first African-American partner at the esteemed management consulting firm McKinsey & Co. He applied his manufacturing expertise to developing a new line of sorbets and resolving the costly equipment problems at St. Albans. Developing new markets, however, was the company's top priority.
Ben & Jerry's continued to look abroad for growth. It had but an eight percent market share in Great Britain--a third that of Häèn-Dazs. The company tested the waters in France in late 1995. It soon afterwards began a kind of guerrilla marketing blitz, complete with Cowmobile, aimed at capturing the youngest of the country's ice cream connoisseurs. At home, Ben & Jerry's whipped up hip concoctions honoring the Doonesbury and Dilbert cartoons as well as the Vermont rock band Phish.
After a year and a half on the job, Holland decided that he was not the right person to develop these new markets and new products. Perry Odak was tapped to replace Holland. He had served briefly as COO of U.S. Repeating Arms Co., maker of Winchester rifles. This surprised some, given Ben & Jerry's philanthropic contributions to gun control groups. However, Odak had plenty of the desired consumer marketing experience with such companies as Armour-Dial, Jovan Inc., and Atari.
Ben & Jerry's enjoyed increased sales in the United States and United Kingdom in the late 1990s, when international sales accounted for about 11 percent of the total. The company signed a new Canadian distribution deal in 1998. The next year, it redesigned its U.S. distribution network to become less dependent on Dreyer's, signing on with the newly-created Nestle/Pillsbury joint venture, Ice Cream Partners. The company began using unbleached paperboard pint containers and planned to begin outsourcing its frozen novelties in 2000.
In April 2000, Unilever announced it was buying Ben & Jerry's for $326 million in cash. By coincidence, Unilever announced it was also buying diet food maker Slimfast on the same day. Unilever, which had $45 billion in annual sales, boasted such brands as Lipton Tea, Gordon's fish filets, Wisk detergent, and Dove soap--and Breyer's, Good Humor, and Sealtest ice cream. Although Unilever was in the process of cutting 1,200 of its total 1,600 brands worldwide, Unilever offered the power to take Ben & Jerry's, its only superpremium ice cream, to thousands of new consumers.
However, the purchase reminded at least one observer of the expensive, disastrous 1994 acquisition of Snapple Beverage by Quaker Oats. Snapple also had a quirky image and grass roots origins, but it withered under its new owner until finally Quaker Oats sold it at a huge loss.
The Anglo-Dutch corporation promised it would maintain Ben & Jerry's commitment to social causes. Cohen and Greenfield were to retain management roles. Unilever and Meadowbrook Lane Capital had originally planned to help take the company private, until they were outbid in that effort by Dreyer's Grand Ice Cream Co. Interestingly, the man who had persuaded Cohen and Greenfield to sell, Unilever's North American head Richard Goldstein, soon left to become CEO of International Flavors and Fragrances.
Principal Subsidiaries:Ben & Jerry's Homemade Holdings, Inc.
Principal Competitors:Ice Cream Partners; Dreyer's Grand Ice Cream, Inc.; Mars, Inc.; Nestle S.A.; Good Humor-Breyer's.
- Ackerman, Jerry, '$326 Million Sale Makes It Ben, Jerry & Unilever but World's Top Consumer Products Company Says Ice Cream Maker's Good Deeds Won't End,' Boston Globe, April 13, 2000, pp. C1f.
- Alexander, Suzanne, 'Life's Just a Bowl of Cherry Garcia for Ben & Jerry's,' Wall Street Journal, July, 1992.
- 'Ben & Jerry's Looks Toward Life after Holland,' Ice Cream Reporter, October 20, 1996, pp. 1ff.
- Finch, Julia, and Jane Martinson, 'Unilever Gorges on Ice Cream and Slimming Foods,' Guardian, April 13, 2000.
- Hays, Constance L., 'Ben & Jerry's Deal Takes on Slightly New Flavor,' New York Times, May 2, 2000, p. C1.
- Hubbard, Kim, 'For New Age Ice Cream Moguls Ben and Jerry, Making `Cherry Garcia' and `Chunky Monkey' Is a Labor of Love,' People, September 10, 1990.
- Kellaway, Lucy, 'New Age Rests in Peace, Man: The Socially Responsible Business Ethic Has Now Become a Self-Interested, Cynical PR Message,' Financial Times, Inside Track, April 17, 2000, pp. 16+.
- Larson, Jane, 'Founders of Ben & Jerry's Ice Cream Share Ingredients of Success,' Arizona Republic, December 9, 1998.
- McCormick, Jay, 'Ben & Jerry's a la Mode,' Business Week, May 20, 1996, pp. 22+.
- Pham, Alex, 'Gun Adviser Takes Post at Ben & Jerry's: For Fabled Firm, CEO Reflects Changing Times,' Boston Globe, January 3, 1997, pp. C1+.
- Shao, Maria, 'The New Emperor of Ice Cream,' Boston Globe, Economy Section, February 2, 1995, pp. 35+.
- ------, 'A Scoopful of Credentials: CEO Holland Brings an Activist's Blend to Ben & Jerry's,' Boston Globe, March 1, 1995, pp. 1+.
- Tomkins, Richard, 'Takeovers That Lose Their Cool,' Financial Times, Comment & Analysis, April 15, 2000, pp. 13+.
- 'Union Wins Decision over Ben & Jerry's,' Boston Globe, December 16, 1998, p. C5.
Source: International Directory of Company Histories, Vol. 35. St. James Press, 2001.