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Ben & Jerry's Homemade, Inc.

 


Address:
P.O. Box 240
Waterbury, Vermont 05676
U.S.A.

Telephone: (802) 244-6957
Fax: (802) 244-5944


Statistics:
Public Company
Incorporated: 1978
Employees: 446
Sales: $132 million
Stock Exchanges: New York
SICs: 2024 Ice Cream & Frozen Desserts; 6794 Patent Owners & Lessors; 5812 Eating Places


Company History:

Ben & Jerry's Homemade, Inc. produces super premium ice cream, frozen yogurt, and ice cream novelties in rich and original flavors. The company sells its unique offerings in grocery stores, restaurants, and franchised ice cream shops, and it holds about one-third of the market for its products. Started by two friends who never intended to become big businessmen, Ben & Jerry's is distinguished by a corporate philosophy that stresses social action and liberal ideals in addition to profit making, and is known for innovative and creative marketing devices that express this unorthodox spirit.

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.

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, H&aumlèn-Dazs, took steps to protect its own share of the market. In 1984, Pillsbury, H&aumlèn-Dazs' 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 its 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.

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,' an altered 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, 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 unique 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.

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.

To aid in running their own company, Cohen and Greenfield with their employees 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-&shy 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 super premium 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' 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 lining up reliable sources of cream and importing equipment, 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.





Further Reading:


Alexander, Suzanne, 'Life's Just a Bowl of Cherry Garcia for Ben & Jerry's,' Wall Street Journal, July, 1992.
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.

Source: International Directory of Company Histories, Vol. 10. St. James Press, 1995.




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