Ben & Jerry's confronts identity crisis

Ben & Jerry's confronts identity crisis

In 1985, for example, Ben & Jerry's settled out of court a dispute with giant Pillsbury Co. over the distribution of its Haagen-Dazs ice cream in retail stores.After taking a $5 ice cream correspondence course and borrowing $8,000, the two men opened a company in a converted gas station in Burlington, Vt.The pints are distributed in supermarkets throughout 35 states and through Ben & Jerry's 35 franchised and company-owned stores."There will be greater pressure by investors to examine this as the company continues to grow,' said Ziegler, "and as it becomes a meaningful amount of money.'In addition, a five-to-one salary ratio is in effect, whereby the top earners make $60,000 a year, and those at the lower end of the pay scale make $12,000.Dipping shops contribute only $2 million of the company's annual sales of $20 million. But Ben & Jerry's expects to have more than 100 dipping shops by the end of 1988. Stores are expected to open this year in Virginia; Pennsylvania; New Jersey; Washington, D.C.; Atlanta; Chicago; and Los Angeles.The terms of the settlement included an end to that campaign and a promise by Haagen-Dazs not to prevent its distributors from carrying Ben & Jerry's ice cream."We don't make much money on the franchised units, but they provide a good marketing angle--they're good for testing product,' said Mark Belcher, assistant director of retail operations. Units average $300,000 in annual sales.Company plans to sell its gourmet-style ice cream in 100 dipping units by 1988 to help supplement its healthy sales of pint-sized containers in supermarketsAt Ben & Jerry's, Fred ("Chico') Lager, general manager, is responsible for day-to-day management; Ben Cohen is president; and Greenfield heads up marketing and promotions, keeping the Ben & Jerry's mystique alive.Four years later they put the business up for sale because it was growing too fast. They took it off the market after deciding to run a socially responsible business. Linked prosperity is an integral part of their corporate philosophy.Cows graze peacefully in the pasture bordering the new facilities of Ben & Jerry's Homemade Inc. here, giving little indication that this maker of superpremium ice cream is in turmoil.Photo: Visitors to the Ben & Jerry's factory in Waterbury, Vt., line up for ice cream after touring the plant. The ice cream plant is Vermont's second largest tourist attraction.So far, they have been able to keep that part of its modus operandi,' Ziegler said.Nevertheless, signs of introspection abound: A huge sign on an employee door at headquarters here says "GROW' in huge, red letters. "We're talking about personal growth, focusing internally,' said David Barash, director of community development for Ben & Jerry's. With annual sales doubling each year for the past three years, management speaks in hushed tones about Ben & Jerry's losing its soul."Franchised stores are still only an adjunct to their supermarket pint business,' said Barry Ziegler, an analyst who follows the company for Tucker Anthony and R.L. Day brokerage in Boston.In fact, many analysts think that the way people perceive the company has been a factor in its success."We can stand up to the big guys,' and "What's the Dough Boy afraid of?' were two of the Ben & Jerry's battlecries in the highly publicized fight.As part of that thinking, the Ben & Jerry's Foundation donates 7 1/2 percent of all pretax profits as well as large quantities of ice cream to public causes.A common stumbling block for companies like Ben & Jerry's is that as they grow, they lose the creativity that made them successful in the first place, according to Harry Levinson, a corporate psychologist and professor at Harvard Medical School. "One way to circumvent the problem is to hire a professional manager. This leaves the creative person free,' he said.The Ben & Jerry's story is a legend in the highly competitive ice cream business. Friends since boyhood, Cohen and Greenfield decided to start a food-related business after they graduated from college.Ice cream is perceived as a fun product. "Running the company and having fun at it is important to them.Photo: The original Ben & Jerry's dipping store in Burlington, Vt.In 1985 Cohen and Greenfield took the company public, offering shares to Vermont residents. One in every 10 families in Vermont owns a portion of the company, giving substance to the its grassroots image.After discovering that start-up costs for a bagel operation would be prohibitively high, they decided to open an ice cream business.Ben & Jerry's makes and distributes gourmet-style ice cream notable for its oversized pieces of chocolate, Oreo cookies, and various other ingredients.For, despite appearances, Ben & Jerry's--an upstart company known for its unconventional business methods and flamboyant promotional tactics--is struggling to keep its identity intact.The ratio guarantees that as the salaries at the top of the pay scale rise, those at the lower end go up proportionately.

Photo: Visitors to the Ben & Jerry's factory in Waterbury, Vt., line up for ice cream after touring the plant. The ice cream plant is Vermont's second largest tourist attraction.

Author: Karen Bruno