Wednesday, June 22, 2011

Book Report: Ben & Jerry’s: The Inside Scoop (Part 2)

Published in 1994, this book was written by Fred “Chico” Lager, the man who became the company’s first general manager in 1982. More than just a dry history lesson, this is an entertaining read written from someone on the inside. Anecdote after quirky anecdote makes this account of the company’s path to success worthy of a Coen brothers movie. Continuing where I left off in Part 1, here’s Part 2 of my book report.

By 1983, Ben & Jerry’s had already outgrown their manufacturing plant, which had seemed far too large when they moved in during 1981. But their wholesale business was taking off, much due to their unique product. Though superpremium ice cream was first introduced to grocery stores by Häagen-Dazs in 1960, Ben & Jerry’s (funky, unpretentious and full of chunks) had perfectly carved out a unique niche that helped them get placement. Supermarkets would only stock three superpremium ice creams, which generally included Häagen-Dazs (the market leader) and, before the entrance of Ben & Jerry's, two Häagen-Dazs copycat brands jumping on the band wagon with elegance and faux-foreign branding. As they grew, Ben & Jerry’s expanded into new markets with innovative approaches, such as storming office buildings in Boston to give away free ice cream.

In all of this expansion, the company strived to stick to its community focus and its investment in their employees. When the company needed to raise money for a new factory, Ben defied the input of all in his decision to sell stock exclusive to Vermont residents. It worked, meaning 1 in every 100 Vermont residents held stock in the company, thereby making those who made the business successful part of the profits. They made it their goal to use milk from Vermont farms and ingredients from local sources. The company increased their donations to the Ben & Jerry’s Foundation from 5% to 7.5% of pretax profits. At this time, they also had a rule of 5-to-1 pay scale ratio, where the highest paid could only get a max of 5x the lowest salary. 5% of the pretax profits were distributed to employees, giving them a stake. And there was also the 3 pints/day benefit for all workers. More people were hired when they opened the Waterbury factory; a larger staff meant workers had a greater distance from the product. To keep them engaged, meetings featured “small group” sessions where groups pitched their ideas to cut costs or suggestions to improve conditions. They also had annual recognition, ensuring an employee’s efforts were acknowledged at least once a year. And to keep things fun, the Fred Award (named after the book's author) was given out to those who nominated themselves for frugally finding ways to cut costs.

More ice cream meant they were generating more waste. To offset this, they bought a local farmer $10,000 worth of pigs to consume the edible portion of the waste, provided one pig was named Ben and another Jerry. This wasn’t the only crazy idea floating around the offices at the time: Ben wanted to start Zippy, a company that sold a carbonated milk beverage. But the craziest idea, which thankfully never became a reality, was from a short-lived marketing director who suggested opening scoop shops for breakfast to “serve scrambled eggs in waffle cones, an item he wanted to call ‘Cone Egg, the Breakfast Barbarian.’” (159)

Around this time in 1987, a flavor was launched whose name was suggested by two Deadheads in Portland, Maine: Cherry Garcia. The reaction from Jerry Garcia was “‘As long as they don’t name a motor oil after me, it’s fine with me.’” (157) Following the flavor’s success, other customers suggested witty(?) flavor names—Donny Almond, Milly Vanilla and Scoop O’ Jesus—that never moved past the suggestion phase. Which isn’t to say that Ben & Jerry’s didn’t create some duds all on its own. Some career lows for Peter Lind, hired as head of Research and Development around this time, were Fred & Ginger (ginger ice cream with chocolate bow ties) and Sugar Plum (plum ice cream with a caramel swirl). Their policy at the time was to discontinue one flavor as another was added, rotating a total of 12 flavors. People wrote in when their favorite went away; Sugar Plum was not missed. In 1991, customer suggestions once again struck gold when Chocolate Chip Cookie Dough became the best selling flavor in just 2 months, surpassing Heath Bar Crunch.

As the company’s success continued to grow, they looked for even more ways to be community-focused. Ben wanted the company to be socially-minded in how it chose the suppliers of ingredients. In one example, they hired Greyston Bakery (an organization that employed the homeless and put money into programs that served the homeless) to make the brownies for their ice cream. They also launched Partnershops, where Ben & Jerry’s waived the franchise fee and provided management assistance to the get business running. Local service organizations could open a Partnershop to provide job experience and business training to populations that needed it. The profits made the programs self-funding.

During 1992, sales were up 36% to $132 million, profits up 79% to $6.7 million and Ben & Jerry's was named by Forbes Magazine one of the 200 Best Small Companies in America for the third straight year. After that, well, I’ll need to write my own book.

(I do not take credit for the information in this blog entry. All credit is due to Fred “Chico” Lager, author of Ben & Jerry’s: The Inside Scoop.)


Dawn said...

Wow, I didn't realize that Ben and Jerry's was such a socially-conscious company. I wonder if they've continued to keep to that ethos now that they're even larger?

Brad said...

For a while, it seemed a number of their flavors were connected in some way to a foundation. Lately, it seems the flavors are tied to celebrities (or this year's batch of new flavors, Bonnaroo). I knows portions of the proceeds from Phish Food and Dave Matthews' Band Magic Brownies go to charities, but not sure if that is the case with Jimmy Fallon's flavor is.

Regardless, they have quite the elaborate section of their website dedicated to the social mission:

One of things highlighted is their growing interest in using Fair Trade ingredients and, something new I learned, cage free eggs.