Tutor’s Introduction
This case study is taken from the second edition of Business Strategy: an introduction published in 2001. It offers an engaging and informative account of how two entrepreneurs transformed a former petrol station into a renowned ice cream brand. Readers will discover how Ben and Jerry navigated their way through challenges posed by Pillsbury and Häagen-Dazs, created a unique brand that emphasized social responsibility, and employed effective PR strategies to emerge victorious in the ‘ice cream war’.
The case study concludes with a series of questions that aim to stimulate critical thinking about Ben & Jerry’s strategy, covering its beginnings and present condition. The study also encourages students to investigate recent developments by the brand, including their ice cream counters in cinemas and their assortment of Fair Trade ice creams. Furthermore, students are prompted to conduct research on any competitors currently challenging Ben & Jerry’s.
Students are advised to read chapter 20 on social responsibility and business ethics as it will be beneficial for them. Additionally, they can utilize this extended case study as a starting point for their work on the Strategic Planning Software (SPS), which they can access for free upon purchasing the textbook.
The beginning
Ben Cohen and Jerry Greenfield became friends at school in the late 1960s in Burlington, Vermont in the North Eastern United States. Their reputation as the two ‘odd’ eccentrics at school led them to form a strong friendship that would last for many decades.
After leaving school, both Ben and Jerry adopted a countercultural lifestyle as ‘hippies’, choosing to live unconventionally. They embraced their bohemian personas with long hair and beards, and became roommates alongside their dog named Malcolm. Among their shared interests, food captured their attention. After contemplating different career paths, they determined that bagels and ice cream were the most thrilling sectors in the fast food industry.
After determining that the necessary equipment for baking bagels would require a total of $40,000, both individuals decided to participate in a correspondence course for making ice cream. The course enrollment fee for each person was $5.
In 1978, Ben and Jerry opened a shop in a renovated petrol station in Burlington. They had developed basic ice cream recipes and invested $12,000 ($4,000 of which was borrowed). They aimed to make a premium product using “fresh Vermont milk and cream.” The shop was called “Ben & Jerry’s Homemade ice cream.” To create a special atmosphere, they hired a piano player to play blues music in the background.
Initially, the shop in Burlington was successful among locals who were familiar with the owners from their childhood. Ben and Jerry asked their employees to adopt the same unconventional approach to business, as they believed in making every day a fun experience. However, the shop’s major advantage came from its unique product. While most ice cream flavors were plain, Ben and Jerry introduced unusual flavors with added chunks for an interesting texture, such as fruit, chocolate, nuts, toffee, and other sweets. This “chunky” ice cream became a defining feature of the new organization’s brand.
Customer numbers grew during the summer of 1978, as the reputation of the shop and the ice cream increased. However, when winter arrived at the end of the year, the troubles started. Sales of ice cream over the counter decreased significantly, forcing Ben and Jerry to seek alternative outlets to avoid bankruptcy.
They convinced several Vermont grocers to carry their product in one pint tubs, but they quickly realized that they needed a larger customer base. After approaching various national supermarket chains, Ben Cohen discovered that the size of their business, as well as his personal appearance and attitude towards business, made the buyers hesitant to buy from them. He was advised to try selling their ice cream to large independent distributors in neighboring states, who would then sell the product to major retailers. This is where Ben and Jerry encountered an issue.
The Pillsbury confrontation
Ben approached the Dari-Farms corporation to have it distribute Ben & Jerry’s ice cream throughout the New England states. Dennis Silva, the company vice-president, agreed to take some Ben & Jerry’s stock despite Ben’s unconventional approach to business. To further increase distribution, Ben also approached Paul’s Distributors, where its chairman, Chuck Green, also agreed to act as a Ben & Jerry distributor.
The market leader in the super-premium ice cream segment was Häagen Dazs, owned by the Pillsbury Corporation, a large US-based company with food interests including Green Giant (vegetables) and Burger King, the fast food outlet, bringing in a yearly revenue of $4 billion.
Kevin Hurley, who was the president of the Häagen Dazs subsidiary of Pillsbury, had a family connection to the company’s founder, Reuben Matthus. Matthus established Häagen-Dazs in 1959 in New York and chose a Danish-sounding name to create an impression of an exotic European brand. By 1984, when the clash with Ben & Jerry’s occurred, Häagen-Dazs dominated 70% of the super-premium ice cream market.
Upon discovering that both Dari-Farms and Paul’s were distributing both Ben & Jerry’s and Häagen-Dazs, Hurley immediately called Dennis Silva and Chuck Green. Despite Ben & Jerry’s being significantly less popular in the market compared to Häagen-Dazs, Hurley was resolute in ensuring that the distributors he employed would not support a rival company.
“We didn’t prohibit the distributor from carrying Ben & Jerry’s; we simply asked them to choose,” explained Hurley. “However, we specifically informed Silva and Green that they couldn’t sell Ben & Jerry’s and Häagen-Dazs.” This unexpected ultimatum of ‘it’s us or them’ left the two distributors with a troubling decision to make.
“We were shocked by Häagen-Dazs’ comment, considering we sold a large amount of their ice cream compared to the small amount of Ben & Jerry’s,” stated Chuck Green from Paul’s Distribution. “They essentially forced us to choose sides.”
When Ben and Jerry learned about Hurley’s threat, they organized a meeting with the distributors to address the issue. Both distributors recognized the potential of Ben & Jerry’s and didn’t want to halt the distribution of their products. However, they were concerned about the potential repercussions if Häagen-Dazs decided to withdraw their supply. It was mutually agreed upon by all three parties that they would require legal representation to confront Pillsbury’s power. They selected Howie Fuguet, a business lawyer with extensive experience in defending large organizations throughout his career.
Similar to Ben and Jerry, Howie was also eccentric, often neglecting his appearance and even wearing shoes with holes. Howie believed that Pillsbury had acted strangely and decided to address this issue by sending them a letter explaining Ben & Jerry’s complaint. He protested against Hurley’s unfair behavior and directed his letter to Pillsbury’s Board.
Howie wrote that it is wishful thinking for Häagen-Dazs to believe it can intimidate Ben & Jerry’s, hinder its development, and force it to yield. Ben & Jerry’s is an exemplary entrepreneurial success story and its owners are assertive. Häagen-Dazs must understand how to compete based on its own strengths in the market. This is the essence of the American way and the true nature of competition.
Despite the seemingly justified stance of Ben & Jerry’s, they faced significant legal obstacles. If they were unable to overcome Häagen-Dazs’ aggressive actions through conventional legal means, they would require another strategy.
The focal point of the campaign was to shift the focus onto Pillsbury instead of Häagen-Dazs. Pillsbury, being larger and having more at stake, became the primary target. For years, Pillsbury had utilized the Pillsbury ‘dough boy’ as its symbol for advertising and other forms of communication. The dough boy held significant value as a representation of the company’s identity. To avoid the perception of an ‘ice cream war’ between two rival companies, Howie suggested directing the attack towards Pillsbury by specifically aiming at the dough boy.
Thus, the What’s the dough boy afraid of? campaign was initiated with the specific intention of presenting a ‘David versus Goliath’ scenario, wherein Pillsbury, a large corporation, was portrayed as a bully that had treated Ben & Jerry’s, a smaller company, unfairly.
Ben Cohen stated that they were unaware of PR strategies and were simply looking to survive. Their goal was to inform as many people as possible about the situation if their business failed. They wanted to communicate that the reason Ben and Jerry’s ice cream was unavailable on shelves was due to Pillsbury, a large corporation, intentionally depriving consumers of the choice to purchase their preferred ice cream flavor.
The campaign consisted of various media such as T-shirts, bumper stickers, bill posters, and others, all featuring the statement “What’s the dough boy afraid of?”. Jerry initiated a solo campaign outside the Pillsbury headquarters in Minneapolis, Minnesota. It didn’t take long for local television news programs to regularly cover the story. This generated sympathy from the public towards Ben & Jerry’s and also resulted in significant free publicity for both the company and its products.
From its 17-strong legal department, Pillsbury assigned Richard Wegener to handle the issue regarding Ben & Jerry. Wegener soon recognized the magnitude of the challenge Pillsbury was facing. According to Wegener, “The dispute itself became overshadowed by the media attention.” The reputation of Pillsbury was on the line, and Wegener aimed to resolve the controversy swiftly. Understanding that the public was largely supportive of Ben & Jerry’s due to their effective campaign, Wegener advised Hurley to concede.
Kevin Hurley agreed to sign an out-of-court settlement, which included a provision stating that he would not coerce any distributors. This settlement marked the end of the campaign and a victory for Ben & Jerry’s. Moreover, the controversy unintentionally served as significant publicity for the Ben & Jerry’s brand, ultimately contributing to Pillsbury’s defeat.
After the clash with Pillsbury, Ben & Jerry’s experienced a remarkable victory. They expanded their distribution channels to include supermarkets, grocery stores, convenience stores, and food service operations. Additionally, they began selling their ice cream in licensed ‘scoop shops’, franchised scoop shops, and company-owned scoop shops. By 1992, their sales surpassed $130 million and they were ready to expand internationally into the United Kingdom.
Several unique flavors were introduced in the super-premium ice cream category, such as ‘Milk chocolate ice cream and white fudge cows swirled with white chocolate ice cream and dark fudge cows,’ ‘Chocolate comfort low fat ice cream,’ ‘Mocha latte,’ and ‘Triple caramel chunk ice cream.’
Furthermore, various frozen desserts aside from ice cream were launched, including a variety of ice cream ‘novelties’, frozen yogurts, and sorbets like ‘Chunky Monkey frozen yogurt – banana frozen yogurt with fudge flakes and walnuts.’ The introduction of these new products swiftly gained market acceptance due to the well-known Ben & Jerry’s brand name and the company’s established reputation for excellence.
The personality of the founders played a significant role in shaping both the culture and mission of the company. Two key statements were issued to define the company’s business approach. In 1988, the company expressed its commitment to establishing a fresh corporate concept of connected prosperity through its Philanthropy Statement and its Mission Statement.
Ben & Jerry’s Philanthropy
Ben & Jerry’s donates 7.5 percent of its pre-tax earnings in three ways: the Ben & Jerry’s Foundation; employee Community action Teams at five Vermont sites; and through corporate grants made by the Director of Social Mission Development. We support projects that serve as examples of social change – projects that demonstrate creative problem solving and optimism. The Foundation is overseen by a nine-member employee board and reviews proposals related to children and families, disadvantaged groups, and the environment.
Mission Statement – Ben & Jerry’s
Ben & Jerry’s is dedicated to creating and showcasing a fresh corporate concept of interconnected prosperity. Our mission consists of three interconnected components: To produce, distribute, and market the highest quality all-natural ice cream and related products in a diverse range of innovative flavors, all made from dairy products sourced from Vermont. To guide the Company towards consistent financial growth, increasing value for our shareholders, and offering career opportunities and financial incentives for our employees. To operate the Company in a way that actively recognizes the crucial role that business plays in society by initiating groundbreaking methods to improve the quality of life for a broad community – both locally and internationally.
Ben & Jerry’s is dedicated to discovering inventive approaches to tackle all three aspects of their mission. They achieve this by upholding a deep appreciation for individuals both within and outside the company, as well as for their communities.
Questions to ask students:
The text inquires about the shared stakeholders between Ben & Jerry’s and Häagen-Dazs during a controversy, along with their respective perspectives on stakeholders at that time. It also calls for evidence from the case to substantiate these responses. Additionally, it seeks an evaluation of the ethical conduct displayed by both parties involved in the Pillsbury Dough Boy campaign and determines whether either side was justified.
