Ben & Jerry’s Homemade is the Vermont corporation specialized in production of low fat ice cream, low fat and no-fat frozen yogurt, market supper premium ice cream, sorbet and ice cream novelties. The products are distributed nation wide as well as in the number of the international markets through grocery stores, supermarkets, convenience stores, restaurants, scoop shops and other venues.
Ben & Jerry’s franchises scoop shops in both the U.S. and Canada. The company also has wholly-owned operations in France, Japan and the United Kingdom, and licensees in the Benelux countries, Israel, Canada, Peru and Lebanon. In 2000, Ben & Jerry’s employed 786 people worldwide. (Ben&Jerry’s –CERES Report)
Social and ecological approach
The company proclaims social welfare as one of its main objectives. Its dedication to the environmental protection is well known and is realized through the presence of the environmental managers among the top management of the company as well as at the production lines.
The company as well is trying to contribute to the social life and create new economic opportunities:
The Greyston Bakery, for example, which supplies brownies to Ben & Jerry’s for Chocolate Fudge Brownie ice cream, trains low-income people for self-sufficiency by teaching job and social skills. Ben & Jerry’s is providing technical and training advice for their expanding business.
Ben & Jerry’s PartnerShops are a form of social enterprise through which non-profit organizations leverage the power of business for community benefit. Partnershops, for which Ben & Jerry’s waives the standard franchise fee, are Scoop Shops developed and operated by non profit organizations to provide entry level job training opportunities to people who face barriers to employment, offering experience in small retail business, job-readiness skills and preparation for future employment (Ben&Jerry’s –CERES Report).
In a year 200 the company was acquired by the Anglo-Dutch customer product multinational – Unilever. However, being the subsidiary of the company the company managed not only to preserve the top manager’s team but also to remain independent to the large extend. It is also necessary to mention that the company is not involved in the distribution of its products.
Ben & Jerry’s Japan
Japanies market was of a major importance for the company. The main reason for that was the fact that the domestic market was already mature and couldn’t guarantee sustainable growth for the company that was needed badly. Japan, at the same time, presented the second largest single market after the U.S.
History of foreign operations
The history of foreign activity of Ben & Jerry’s was not impressive. By 1997 the company received only $6 million form its foreign operations while their competitors made some $700 of income from the trade abroad.
Ben Cohen was mostly conducting all the foreign operation on the basis of his bonds from the social activism. The first foreign entry took place in Canada in 1986 when the enterprise sold the license. However, due to the high tariffs the sales were problematic and by the year of 1997 the incomes were minimal. In 1988 the license was sold to Israel, however, the company wasn’t exporting any products to the country and was only getting the license payments that were minimal as well.
The joint venture called Iceverk was established in Russian republic of Karelia. Ben & Jerry’s contributed with the technology and know-how while the local partners established facilities for the future factory and two shops. In July 1992 the shops opened, however, in 1996 the company pulled out of the venture leaving the technology to the partners at no cost.
In 1994 Ben and Jerry’s shipped a container of product to Sainsbury, an upscale supermarket chain in the United Kingdom. Cohen had met a Sainsbury executive at a meeting of the Social Venture Network, and the executive had encouraged him to ship the product. This launch lacked planning on such basic issues as pricing and packaging, and the company’s 473 ml packages were problematic given the standard there of 500 ml. The company engaged a distributor, but by 1997 UK sales totaled $4 million, suggesting that the market penetration had not achieved much depth. (Hagen, 1999)
Opportunities in Japan
The company was inquiring about the Japan market in the mid 90th. Japanese market proved to be the largest foreign market of ice cream. With the ice cream more as a snack then as a desert its volume reached $4.5 billion. The customers were also already educated about the premium quality ice cream.
However, the entry barriers were rather high. Ben & Jerry’s was to become a late entry. Their main competitors Haagan-Dazs’ entered the market a decade ago and were controlling approximately half of the market. There were also at least 6 major domestic manufacturers.
Being interested in the market the company started the negotiations with several distributional chains like Amway Japan, department stores and major American pizza company.
Several other propositions were made by Mitsubishi Trading Company and Meiji Milk Products as well as Seven-Eleven. However, several factors prevented the company from making a decision. First of all, the lack of agreement between the directors. No clear decision was made on whether the company should enter the market in the first place.
In 1996 the negotiations were held with Ken Yamada, a third generation Japanese American from the US, had obtained and successfully started building the Japanese franchise for a major US pizza company. He proposed to take charge of the Japan market in exchange for a royalty on all Ben and Jerry’s products sold in the market. (Hagen, 1999) The company hesitated aiming to preserve the exclusive rights for all its products in Japanese market.
However, in 1997 new president of Ben & Jerry’s Perry Odak paid a visit to the president of Seven-Eleven Japan. At this meeting Mr. Iida asked: “Is there anyone at Ben and Jerry’s who can make a marketing decision? We’d like to sell your product but don’t know how to proceed or with whom.” (Hagen, 1999) Surprised by such a direct inquiry Odak answered that he could. As the result of negotiation the fallow up meeting was arranged to agree about many conditions of the entering to the Japanese market.
Seven-Eleven could offer a chain of 7,000 distributional stores that was one of the best possible opportunities. In a course of negotiation it was agreed that the products would be imported form the U.S. since the cost of production is low enough to overcome 23,3% berried and cover the transportation expanses. It was also important that Seven-Eleven arraigned to buy the product from the manufacturer directly and avoid any mediators that allowed keep the price law. It was also important that up to 40% of sales of ice cream in Japan were conducted through the convenience stores and Seven-Eleven had the largest chain in the country.
There were many arguments against Seven-Eleven strategy as well. First of all, there were fears that the sales from the Japanese market would become the greater part of the companies profits so the retailer would be able to control the smaller market as well. Second, if the product was introduced to the market through the chain of the convenience stores it could have lost its own unique identity becoming just one of the many products sold in those stores and the company would be unable to obtain the large share of the market as its competitors did. The product could also become a store brand and, as the result, it would be very difficult to market it beyond Seven-Eleven.
The brand also had to go through several modifications. The design was to be changed and the flavors also had to go through the insignificant change to match the market in the best way. The product would have to be packed in personal cups (120 ml), not the 473 ml (one pint) size that Ben and Jerry’s was currently packing. With about $2 million of new equipment, Ben and Jerry’s would be able to pack the smaller size cups and source the smaller sized ingredient chunks that the small cups would require. Production would have to carefully match demand in that Japan would require unique labeling that could not be changed after packing. Production planning would be especially important as it would take about three weeks shipping time from the plant in Vermont to the warehouse in Japan. (Hagen, 1999)
Ben and Jerry’s did not have an extra budget to market the product in the market, however, Seven-Eleven made the marketing possible through its own marketing channels. The company saw a potential in cooperation with the American ice cream company and despite many disagreements the final solution was reached and the company entered the market in summer 1998. As the result another $9.8 million were added to the company’s foreign trade from 1997 to 1998.
Ben and Jerry’s entrance to the market was the result of cooperation between two companies that managed to agree and compromise of the important issue and, as the result, feat each other in the best way for the achieving of goal of mutual benefit. Cooperation between food supplier and retailer can go beyond supply chain efficiencies and data sharing, to product launching in a new market. Ben and Jerry’s made a successful entry in the Japan market through an exclusive supply contract with a single retailer, Seven-Eleven. Examination of the cooperation that evolved between the two firms suggests increasing opportunities for cooperative efforts in foreign market entry. (Hagen, 1999)
Hagen, M. James, 1999 Supplier-Retailer Cooperation Strategies in a Global Market: Lessons from Ben and Jerry’s 1998 Entry into the Japan Market. Retrieved April 22 from www.ifama.org/conferences/9/1999/1999%20Congress/Forum%20Papers_PROCEEDINGS/Hagen_James.PDF
Ben&Jerry’s –CERES Report Retrieved April 22 from http://www.benjerry.com/our_company/about_us/environment/2000/page3.cfm http://www.benjerry.com/our_company/about_us/environment/2000/page4.cfm
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