How Culture of Ben and Jerry's Trumped Size

In April 2000, when Unilever, the then-$45 billion Dutch-English consumer products giant, announced its acquisition of Ben & Jerry’s, the socially conscious, touchy-feely, Vermont-based ice cream maker, the general response was predictable.

“Ben & Jerry’s Sells Out” was a typical business section headline in the morning papers and on the Internet. “Everyone, it turns out, has a price,” lamented Wired magazine, while pointing out that Ben Cohen and Jerry Greenfield, the “hippies” who founded the popular brand in 1978, really didn’t want to make the deal. As the new millennium approached, giant corporate vultures were hovering above the publicly traded, under-performing Vermont institution with hungry eyes and a takeover seemed inevitable. Inside there was turmoil as some wanted to sell and others did not. Cohen and Greenfield tried to orchestrate their own buyout but could not generate an offer high enough to prevent Unilever from prevailing.

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Cohen released a statement trying to put a positive spin on the deal. “While I would have preferred for Ben & Jerry’s to remain independent, I’m excited about the next chapter,” he said and then quoted the above Grateful Dead lyrics.

The consensus seemed to be that the deal would signal the end of Ben & Jerry’s well-established and respected triple bottom line: “Make Great Products, Deliver Solid Profitability, and Work Towards Progressive Social Change.” This was a company that donated 7.5 percent of its profits to charity, paid living wages and offered better benefits, supported local farmers and growers in Third World countries who produced some of its ingredients, and believed that its progressive social mission was as important as its profits.

Surely a conglomerate as big as Unilever had other ideas and it would undoubtedly swallow the brand, remake the culture and transform Ben & Jerry’s into a profit-driven marketing engine that would eventually become unrecognizable to its legions of fans.

But a funny thing happened on the way to the inevitable makeover. A dozen years after Unilever plunked down $326 million for the Ben & Jerry’s brand, the progressive, activist, socially responsible culture that was Ben & Jerry’s is alive, well and spreading its version of caring capitalism all over the world. And rather than crush the spirit out Ben & Jerry’s, Unilever, a $58 billion global powerhouse with more than 400 brands and 165,000 employees, has remade its own corporate mission to reflect the socially conscious ideas that Ben & Jerry’s was built upon. The very profitable tail, in this case, is wagging the extremely satisfied dog.

The Price for Sustainability 

In a departure from what happens in most acquisitions, Ben & Jerry’s was able to negotiate an agreement with Unilever that included the retention of the smaller company’s board of directors. The board’s mandate was to preserve and protect Ben & Jerry’s triple bottom line while Unilever tended to the business end of things. Granting such independence in perpetuity to an acquired company is not simply unusual, it is nearly unheard of. Even with that, the acquisition was hardly smooth, and the first eight or nine years were fraught with the usual trauma — customer dismay, layoffs, culture clashes — that wreaks havoc on most such acquisitions. Despite the pain, and with Jostein Solheim, a Unilever veteran and now Ben & Jerry’s third CEO in 10 years firmly in place, the two organizations survived most of the distress of these often-daunting couplings. Both have benefitted from the marriage.

 

“It definitely took time for the two companies to get used to each other,” said Kevin Havelock, president of Unilever’s Refreshment division, “For Ben & Jerry’s, a small company making great ice cream in Vermont, to suddenly be part of a very big company with different processes and business systems and results, it was uncomfortable at first. For Unilever, acquiring an organization that was more intuitive, more gut-feel to the way it approached things and with very strong positions on values, it wasn’t always easy. It was an up-and-down relationship, but it has held together because the social mission provided a glue, and there was good success rolling out new products and new innovations. But it’s been a real two-way learning.”

In fact, Ben and Jerry’s is not the only socially responsible player acquired by a giant company. As the global marketplace, over the past decade, has come to value companies with sustainable, green, organic, socially proactive bona fides, a long list of acquisitions have been completed with varying degrees of success. Among those acquired: Stonyfield Farm by Groupe Danone in France, Honest Tea by Coca-Cola, Tom’s of Maine by Colgate-Palmolive, Zappos by Amazon, The Body Shop by L’Oreal, cereal maker Kashi by Kellogg, Iams pet food by Procter & Gamble, Cascadian Farms by General Mills and more each year.

And what has become clear as these deals have multiplied is that success — as measured in enhanced financial results and marketplace perception — is generally based on how clearly and thoughtfully the acquiring company has considered why it is making the deal. Though this is the case in any successful merger or acquisition, it is particularly pertinent in the realm of caring capitalism.

“You have to understand what you are buying,” said Philip H. Mirvis, senior fellow at the Social Innovation Lab at Babson College and an expert on mergers and acquisitions in the CSR (corporate social responsibility) space. “You are not only buying a brand, but an organizational way of making the brand authentic. You are delivering not only a socially responsible product but one that is really good. If you don’t understand those pieces and manage that as part of the integration, you risk losing and ultimately undermining the brand.”

If a corporate giant is simply seeking a shortcut to a halo of social responsibility, these deals will inevitably be troubled. “There are plenty of companies presenting themselves as caring capitalists,” Mirvis said. “But if it is not rooted in how they make and source the product and how they really do business, then it is just a phony advertising campaign.”

Acquisitions happen for lots of reasons: quick access to new geographical markets, extensions to product lines, new technologies, scalability, enhanced revenue streams, added girth. Companies that make these kinds of CSR acquisitions are clearly looking for the profitable bump they hope to generate from consumers who are more and more often making buying decisions related to socially conscious considerations. Numerous surveys over the past decade have confirmed that a brand’s social content makes a significant difference in consumers’ purchasing decisions and that if aligned, those attributes can lead to powerful brand loyalty and increased sales. According to the Natural Marketing Institute, the LOHAS (Lifestyles of Health and Sustainability) market was nearly $300 billion in 2008, and as the global economy continues to stir back to life, that number can only grow.

“Identifying trends and brands of the future is an amalgamation of science, art and serendipity,” said Deryck Van Rensburg, president and general manager of Venturing and Emerging Brands (VEB) at Coca-Cola. “It starts with a research-based understanding of what the consumer is looking for, as well as a point of view about where consumers are likely to be in the future. We recognize through these trends that many of our consumers’ identities are no longer defined by gender, age or geography, but by lifestyles and values. Consumers are demanding that brands go beyond benefits. They want to know how it will impact their life, community and environment.”

For many corporate giants, the lure of a fast-growing, widely admired smaller entity is too good to pass up. “There are good businesses with strong market niches and in some cases, a huge number of brand fans,” Mirvis said, “So it’s logical for companies to use these to expand their product lines and maybe even do some R&D in the socially responsible consumer space. And there is the potential that such an acquisition will somehow teach the larger company about socially responsible business and add to its reputational cachet.”

Not surprising, such corporate marriages are fraught with perils well beyond the usual M&A concerns. Most of these “do well by doing good” players prefer to remain independent and step to the beat of their own drummer. Socially responsible entrepreneurs build companies with passionate employees and a serious commitment to the triple-bottom line philosophy, and the best performers generally reflect the most committed of entrepreneurial teams. Selling the company is generally a last option in the quest for growth, scalability, broader distribution and the cash to keep building the dream.

“These are not people just looking for money,” said Gary Hirshberg, founder and chairman of Stonyfield Farm, who sold an 85 percent stake in the organic yogurt company in 2001 to giant Groupe Danone in France. “These are entrepreneurs looking to make a difference, and an acquirer has to show respect and that it understands that.” The article contiues at kornferryinstitute.com. Thank you. 

Jim Woods is about helping companies and people engage innovate and grow in all the areas important to them. Jim is a professional speaker, author, coach, and strategy consultant based in Colorado Springs, Co. Follow Jim on Twitter @innothinkgroup, Facebook https://www.facebook.com/InnoThink Group or check out his company website http://innothinkgroup.com for more tips and strategies effective leadership, engaged employees, increase growth, and customer effectiveness through innovation. To arrange for Jim to consult or speak at your event email Jim.