Background

Ben and Jerry were founded in 1978 in Burlington Vermont by two school mates: Ben Cohen
and Jerry Greenfield. Registered the company in Securities and Exchange Commission (SEC)
as Ben & Jerry’s Homemade, Inc. and began nationwide trading of stocks as BJICA. The
company was well known for its Unique Flavours and chunky ingredients. In 1985, the
company bought its second production plant near Springfield, Vermont. By the late 1980's
Ben and Jerry became available in every state of the Union. By the mid 1990’s Ben and
Jerry’s had achieved 2nd place in terms of market size of the premium ice cream market in
the USA with sales of $197 million (34% market share). This compared to Haagen-Dazs who
held 44% of the market share. Unfortunately, starting in the 1990s, sales growth started to
fall off from Ben & Jerry’s all time high sales which exceeded $150 million and net revenue
as high as $7.2 million with over 600 employees, followed by declining sales until 1994 the
company experienced their first loss. Ben Cohen and Jerry Greenfield started their premium
ice cream company in 1978. By the mid 1990’s Ben and Jerry’s had achieved 2nd place in
terms of market size of the premium ice cream market in the USA with sales of $197 million
(34% market share). This compared to Haagen-Dazs who held 44% of the market share. Ben
and Jerry’s had 3 production plants in the USA, which were operating at half capacity. And
when you take into account that Ben and Jerry’s were already in every state in America, it is
apparent that future growth could come from new products or from new foreign markets.
Ben and Jerry’s were intentionally slow in seeking out foreign opportunities, and most of
their early efforts were clumsily arranged through friends and with very little, if any,
planning. Following several years of overseas sales, Ben and Jerry decided what its next
move should be, new products or from new, non-U.S., markets. In 1996, Ben and Jerry
began to develop multiple strategies to entering the Japanese market. By 1997, Haagen-
Dazs’ foreign sales amounted to $700 million, compared with $400 million domestically. In
contrast Ben and Jerry’s had foreign sales of just $6 million.
Ben and Jerry’s International Sales:

 Ben & Jerry was intentionally slow to embrace the foreign markets. The company’s
few adventures overseas were limited to opportunistic arrangements that came
along, primarily with friends of founders.
 By 1997, Haagen-Dazs non-US sales were about $700 million, compared to its $400
million of domestic sales.
 Ben & Jerry’s on the other hand had foreign sales of just $6 million with total sales of
$174 million.
 In super-premium ice cream category both Haagen Dazs and Ben & Jerry are still
leading the market.
Canada:

 1986 – Entry
 Licensing Agreement
 1/3rd of the product was exported from US.
 1992 – Repurchased Canadian license
 1997 – had only 4 scoop shops in Quebec.
 Canadian dairy market was highly protective.
Israel:

 1988 – Avi Zinger, Cohen’s friend was given the license.

 1997 – sales: $5 million but B&J got only licensing income which was negligible.
 1997 – 14 scoop shops in Israel which also sold gifts, baked items and beverages.
Russia:

 1990 – Joint venture by establishing firm Iceverk.

 Partnership
Ben & Jerry – 50%
Inter-center cooperation – 27%
Petro Bank – 20%
Pioneer Palace – 3%
 Hired James Flynn as Marketing rep in Moscow.
 1996 – terminated the contract.
 Reason – too demanding of managerial time.
United Kingdom:

 1994 – Cohen met Sainsbury executive at Social Venture Network.

 It tried out 1 distributor who agreed to donate 1% of its turnover to charity.
 As sales not materialized, tried another without charity restriction.
 Distinct market position – “If Haagen-Dazs is the ice cream you have after sex, B&J’s
is the ice cream you have instead of sex”
 1997 – UK sales: $4 million
France:

 1995 – Entered the market after CEO Holland insistence.

 Product sent to Auchan; a retailer Cohen met in Social Venture Networks.
 Global protests over French Nuclear testing.
 Hired a French Public relns firm noted for social mission work
 Hired a firm for sales and distribution but no one was there to coordinate French
effort.
 1997 –France Sales: $1 million
Benelux:
  1997 – 3 scoop shops opened in Holland by a wealthy individual who liked
company’s social mission.
 Sales: $287,000.
 Prospect of using product reputation of scoop shops to launch in supermarket and
convenience stores.

In short, Ben & Jerry’s fell into foreign markets opportunistically but without any kind of
comprehensive plan. It lacked managerial skill to put together a marketing campaign for
entering the foreign markets.
With declining profits and domestic market at Ben & Jerry’s, it was high time to give serious
attention to international market opportunities.

Pros and Cons analysis of entering the japan market

Pros:
• 2nd largest ice cream market in the world with annual sales of $4.5 billion in 1995
• One of the most affluent countries of the world, with customers demanding high
quality products with great varieties of styles and flavors (something that defined
Ben & Jerry’s)
• Japan market provides one of the highest margins (Ref – Haagen-Dazs, Price in Japan
: $6/pint Price in US : $2.89 to $3.15/pint)
• No apparent need for Ben & Jerry to teach the local market about super premium
ice-creams
• Imported ice-creams are welcomed in the market with Haagen-Dazs capturing
nearly 50% of the market share
• Fall in tariffs to 21% by 2000 from 23.3%.
Cons:
• Overly complex distribution system and distance to ship a frozen product would be
immense
• Ice cream was primarily consumed as a snack, since desserts were uncommon in
Japan
• Risk of negative exchange rate movements that could make exports to Japan no
longer feasible, since products would be exported from the Vermont plant
• Contraction in Japan’s economy
 Porter’s Five Forces Analysis of Japanese Super premium Ice Cream Market

Threat of Entry Degree of Rivalry

• Complex distribution system, but
multiple distribution options available
for consideration
• Imported ice-creams were welcomed
in Japan
• Ben & Jerry products were considered
unique to Japan, particularly its chunks
• Customer switching cost would be low
• 2nd largest ice cream market with
annual sales growing from $2.6 billion in
1990 to $4.5 billion in 1995
• At least six other manufacturer of super
premium ice cream other than Haagen-
Dazs which has been there since last 10
years
• Market preference for high quality and
varieties

Bargaining power of Buyers Bargaining Power of Suppliers

• Size of buyers in terms of convenience • Suppliers include dairy farmers, flavouring

stores, grocery stores, customers is high.
• 7-11 alone controls 40% sales of super
premium ice cream market, hence
bargaining power of buyer is high
• Higher no. of options to choose from for
buyers, so cost of switching is low
suppliers, container manufacturer
• Ice creams producers are their major
customers, therefore bargaining power is
low to moderate
• No. of suppliers are high in quantity

Threat of Substitutes

• Substitute products are pies, cookies,

cake etc

• Substitutes products do not pose much

threat since Japanese people were very
particular about their product
specifications and ice-cream was a
preferred product there
Alternative strategies for Ben & Jerry’s Entry into Japan:
On their market research tour in early 1996, Jerry Greenfield and Ben & Jerry’s marketing
department employee Valerie Brown met with several potential partners through which
they could enter the ice cream market in Japan.

 Dreyer’s: American company with partial ownership by the Swiss food giant Nestle.
Largest distributor of Ben & Jerry’ in the US. Licensed their trademark with a joint
venture in 1996 in Japan but sales fell since then as they couldn’t fulfill their biggest
customer’s 7-11 demands of just in time delivery.
 7-11 executives: Masahiko Iida, senior MD of 7-11 expressed interest in selling Ben &
Jerry’s ice cream and offered direct distribution without the overhead cost of multi-
layer distribution typical of Japan.
 Meiji Milk Products & Mitsubishi: Strong distribution resources with exclusive
supply contract for Tokyo Disneyland. But they already had a superpremium brand
‘Aya’ and the deforestation practices by Mitsubishi went against Ben & Jerry’s
corporate values.
 Other arrangements: Japan airlines’ in-flight entertainment ad agency and retail
establishment at Tokyo Disneyland
 Ken Yamada: Obtained Domino’s pizza franchise and demanded margin of all sales
of Ben & Jerry’s in Japan.

Pros and cons of Ken Yamada option:

Pros:

 Represented substantial strength with his Domino’s success

 Domino’s already offered ice cream cups as delivery service so Ben & Jerry could
leverage this distribution network
 Ken would be solely responsible for positioning the brand, initial launch, marketing
and distribution into the future
 Instant expertise in an unfamiliar market
 Relief from having to address all the issues attached to making a new entry strategy
& market management
 Yamada’s knowledge of frozen food, his entrepreneurial spirit and marketing
savviness
Cons:

 Ken’s insistence on exclusive rights to Japan market and full control of all branding
and marketing
 Giving up full control of a potential major market well into the future
 Going blind - No specific plan available for consideration as Yamada agreed to create
a plan only after finalizing the deal
  Yamada retains the right to make any changes in the strategy

Pros and cons of Seven-Eleven option:

Pros:

 Instant entry into the market

 Immediate placement in the freezer compartments of over 7,000 convenience stores
in the country
 Seven- Eleven has large size and had advantages of its state-of-the-art logistics
system by buying product directly from suppliers
 Avoidance of middlemen between suppliers and Japanese retailers led to cost saving
making product more affordable
 Seven-Eleven approach of Just-In-Time inventory would make delivery reliable and
reduce cost
Cons:

 Dilution of brand as Ben & Jerry would be one of just many brands in the
convenience store. Without brand capital, it would be difficult to distribute the
product beyond Seven-Eleven chain.
 Fallout between Ben & Jerry’s and Seven-Eleven could leave them with nothing in
Japan as the retailer has a history of terminating its supply agreement with French
ice-cream manufacturer Rolland due to inadequate sale
 No commitment for promotional efforts and no budget for marketing campaign
 Would not be able to develop other distribution channels in Japan
 Change in ice-cream packages to small cups
 Balance of power would be overwhelmingly in the retailer’s favor.
 Putting too many eggs in one basket

Conclusion
BEN & JERRY should enter Japan in alliance with Seven-Eleven because

 While there were a full plate of issues and many sticky points to be resolved, through
numerous communication and meetings, most of them were resolved.
 Ben & Jerry would ensure their survivability by expanding scale of operation in
foreign market
 While packaging was asked to be changed, it was because Japanese people ate ice-
cream as a snack item, however Ben & Jerry would retain independence in control of
marketing which it can use to build its brand
 Through Seven-Eleven, it would readily have available huge distribution and sales
network. It could also utilize its excess capacity.
 Ben and Jerry would get an assured product launch to capture summer season and
an increasing share of convenience stores in ice cream sales
 Company would also be able to realize its social mission in Japan once it’s sets its
strong foothold in Japanese market. Initially if they feel they could achieve this
through Seven-Eleven hand holding, the help of alliance should be taken.
 Ben & Jerry would still be able to get an acceptable profit considering the optimistic
and pessimistic scenario (i.e. yen going as high as 160 yen to the dollar) by price
variation