December, 1999

From the Editor

Buying The "Schtick"

Ben & Jerry’s Homemade, Inc., the super-premium ice cream player, has received “indications of interest” from parties interested in acquiring the company. The word on the street (Wall Street that is) is that such giants as Unilever Group, Nestle SA, Diageo PLC and Dreyer’s Grand Ice Cream are all contemplating bids.

Each has good reason to want Ben & Jerry’s. Unilever is a giant international ice cream marketer, (it owns the Breyer’s brand, among others) but lacks any representation in the super-premium category. Diageo owns Haagen Dazs, Ben & Jerry’s biggest competitor, and is partnered with Nestle in a program to distribute ice cream through non-traditional outlets. Dreyer’s used to distribute Ben & Jerry’s but now has two super-premium brands of its own – Godiva and Dreamery.

The interesting question is whether the Ben & Jerry’s consumer appeal will survive a buyout. After all, Ben & Jerry’s is an interesting example of brand development. The company’s products are very high quality – but no more so than other super-premium lines (the super-premium designation basically refers to a higher percentage of butterfat in the ice cream). Instead Ben & Jerry’s has a “schtick” embodied in the personage of its namesake founders – two regular guys not at all like the “suits” presumed to run most big corporations. Add to this a “progressive” political tilt with a dash of agrarian populism and ‘60s Flower Power and you have a brand image unique in the country.

The company has, of course, cultivated this image with a variety of strategies: product names, such as the famous “Cherry Garcia,” affiliate the company with the pop heroes. Well publicized policies: Some product-centered, such as a refusal to buy milk from cows treated with bovine growth hormone; others corporate-structure centered, such as an attempt to keep a ratio between the lowest and the highest paid person in the company. Some policies are supply-chain centered, such as an insistence on buying cream from Vermont’s dairy farmers even though it is available less expensively elsewhere. Part of the strategy has been public interest-centered, such as a policy of donating 7.5% of the profits to charity.

Doubtless, upon acquisition, all parties will declare that the company’s values and corporate culture will remain unchanged and, initially, that may be the case. But long term it seems unlikely that any of these large corporate acquires could sustain this island within their midst with values so disconnected from the larger organization.

The nightmare scenario, of course, is that an acquirer buys the company and, at some point in the future, when say a non-compete or gag agreement expires, the two founders blast the new owners for “betraying the mission” and go off to start a new competitor. It’s a one-two punch: first destroy the franchise in the minds of its many fans, then offer those same fans a substitute.

The questions surrounding the buyout saga of Ben & Jerry’s are really the questions for the whole specialty food industry as it considers branding: What makes a brand strong, how is a brand built, what makes a brand die?

One lesson is product quality as a base for success. At the Fancy Food shows, I’m often struck by how awful some of the products are, even though the packaging and wrapping may be stunning. This may be fine for certain aspects of the gift market but in terms of building long term success as a specialty food, if you don’t have the product quality, it is an almost hopeless task.

Just as important, however, is that if the story of Ben and Jerry’s teaches us that product quality is a necessary condition for high-end food success, it also teaches us that it is not a sufficient condition. For there are a lot of great ice creams, Ben & Jerry’s offers something more.

Sometimes one hears about efforts marketers have made that have failed, whether it is through consumer and trade advertising programs or trade show-exhibiting programs that didn’t produce. Very often, when one gets into the cause of these failures, one finds that the marketer, reciting platitudes of “the best”, “the finest”, “the greatest”, etc., just didn’t have anything to say.

Ben & Jerry’s is none of these things. But it most decidedly is Ben & Jerry’s. Its success reminds us that it is more important to be distinctive, with clear positioning, than to be some kind of superlative that no one will believe anyway.

The Governor of Vermont sounded a little sad at the prospect of Ben & Jerry’s being sold. It’s not surprising; Ben & Jerry’s has so successfully tied itself to its home state that doubtless the state could only suffer by a buyout.

But the sadness is likely to be shared by many. Just as those who once loved particular cities now decry the “malling of America” as distinctive stores give way to Gap’s and Old Navy’s. So this sale would also symbolize the passing into history of something distinctive.

Perhaps the loss is enough to give a potential buyer pause.  FDM