Ben and Jerry’s ‘Big Chunk’ USP Helped Them Sell For $326 Million
It is a wonder that food that’s bad for you exists at all. We know that sugar is bad. We know we’d be much better off chomping on some veggies over digging into a tub full of diary, chocolatey badness but alas we are human and in the famous words of Dan Ariely:
We are predictably irrational.
In other words, we do things that do not make ‘sense’ but we will do them with predictability anyway.
Ben and Jerry’s is president of the naughty food society. It is a freezer must-have in households across the planet. It’s creamy, it’s chocolatey, it’s full of bad things but yet it tastes so good.
Now if you know anything about Ben and Jerry’s ice cream, a big chunk was a big feature.
The Humble Beginnings of 1976: The Birth of Ben and Jerry’s
Ben Cohen and Jerry Greenfield happened to be childhood friends, they both seemed to like food, so in gym class, they’d end up at the back, together. After school, they went their separate ways.
They both left school for university and had differing luck. Ben found himself hopping from university to university but eventually dropped out to pursue a passion for pottery. Jerry managed to finish university, though he hadn’t managed to secure a place at medical school.
After two rounds of failed medical rejections, Jerry reached out to Ben and they decided to join forces.
At this point, the boys decided to put their fortunes together and open up a shop. They weren’t thinking they were going to make great sums of money and live happily ever after, much the opposite. They thought they’d do the shop thing for a few years and then do something else. They talked about becoming truck drivers after they did the ice cream thing.
The decision to sell ice cream
The ice cream idea came from both Ben and Jerry’s love of food. They always imagined they’d do something with food and they were set on living in a college town. At the time they had two options:
- Set up an ice cream shop.
- Set up a bagel shop.
Those were the two foods that were “up-and-coming” so that’s what they decided.
In order to pick, they were about pricing up the costs. They went to a used restaurant supply store to price up how much it would cost to buy all the bagel equipment they would need. It turns out it was too much. They didn’t have enough money to buy the bagel machines. So once the bagel idea was out the window, it just left ice cream.
Since they were now set on ice cream, the next thing to do was to learn how to make it. That led Ben and Jerry to research. They hit the books, reading about how to make ice cream and how to start a business. In 1977, they both attended a correspondence course on how to make ice cream. And that was the grounding for their education on ice cream making.
The goal when they opened was to make $20,000 per year each, which ended up taking them a while to achieve.
“We just took one step at a time and did whatever was in front of us. It was mostly common sense and a lot of work.” — Ben and Jerry
The first store
In 1978, the year after their crash course in ice cream making, in Burlington, Vermont, Ben and Jerry purchased a small renovated gas station. With their small investment of $4,000 each, they set up shop. The gas station was dilapidated and falling apart but that didn’t matter, this was the start of their venture, or more accurately, adventure.
Next up was to write a business plan to get the extra money needed from the bank. Of course, they didn’t know how to do that either. Jeff, their friend, ended up getting them a copy of the business plan from a pizza parlour. They rather simply and rather smartly replaced every time the business plan said “pizza slice” with the words “ice cream scoop.” And when the numbers didn’t add up, well, they just made them up.
In the early days, the ice cream flavours were basic — vanilla, strawberry, and chocolate.
That first summer the sales were brilliant, the first winter though, that was a problem. They were convinced that this was the end. One winter and that was the end of it all. They even came up with a concept of “free cone day”, which was mostly created because the duo didn’t think they would be in business the following year (they made it through by paying interest only on their loan).
The Most Obvious USP in the World? Big Chunks
The now-famous Ben and Jerry chunks were a contentious issue at the time. It turns out that big chunks are great for customers but not so great for ice cream machinery. The chunks would get stuck and jam up the machines, which is why, way back in 1978, no ice cream maker was selling ice cream with big chunks.
Ben and Jerry wanted to do things differently and after much discussion, they decided to go with big chunks over small, a decision which then became Ben and Jerry’s USP.
The Rather Extraordinary Growth of Ben and Jerry’s
“What you must understand at the outset, Ben and Jerry’s ice cream is the best ice cream in the world.”— Time Magazine
In the early days, Ben and Jerry got some good press which then meant demand increased, yet the boys still couldn’t make a profit. Their problem? Portion control.
Portion control: A Happy Customer Needs to Mean Happy Margins
In normal food businesses, the portion sizing is done in the back, somewhere out of the way of the customer. That means that the customer doesn’t see the portion measuring, which is a tricky business.
“If the scoop is too big you’re supposed to take a little off, the customer hates that.” — Ben and Jerry
When you take a scoop of ice cream and that scoop is a big, full scoop, people love that. They think they’re getting a great deal. When you watch the smile that fills people’s faces, well that’s a positive reinforcement to over-scoop. It was hard to avoid that guilt and watch people become annoyed when they were getting the allocated portion.
However, packaging ice cream took that issue away. Pint-size ice cream tubs are set sizes, you can’t overfill the pint, else the lid wouldn’t fit and that was the turning point when they decided to sell ice cream by the pint. Before that, the duo had put ice cream in bigger tubs and made it someone else’s problem to solve the portion control. The decision to sell in pints was a turning point for the business.
“A lot of our problems would be solved if we made our ice cream shittier.” — Ben and Jerry
Among other teething issues, in the beginning, were the issues of staffing, supervising, and competition.
In 1984, Haagen Dazs and parent company Pillsbury were trying to slow the distribution of Ben and Jerry’s. They threatened their current suppliers with not selling Haagen Dazs ice cream to them if they continued to sell Ben and Jerry’s as well. When the team at Ben and Jerry’s found out, they took matters into their own hands.
At the time the team was a $4 million business, nowhere near big enough to take on the giants at Pillsbury. They felt sure they had a case but they knew Pillsbury would drown them in legal fees. Instead, they took matters into their own hands and started the “What’s the Doughboy afraid of?” campaign.
A campaign that outed Pillsbury as a corporate bully trying to squeeze Ben and Jerry’s out of the market.
Cog in the Machine: Time to Change Business
By the mid-80s the pair thought about putting the business up for sale. They were starting to become frustrated with the way businesses took from the little guy to pay the bigger guy and they both wanted out.
It wasn’t until the pair bumped into an old friend and told him their thoughts about selling that they changed their minds. Their old friend told them that if they wanted to change the way people did business, they were in the best position to do that.
So they did. Ben and Jerry are changed the traditional way the world did business. That included things like policies that favoured employees, profit sharing, daycare for employees’ children, and making sure that the highest-paid person in the company earns no more than 5x the lowest.
More than that though, it meant using the business to address social issues. Ben and Jerry always took a prominent stand towards any social issues at the time. They wanted to prove that you could do good in the world and make a profit at the same time.
The Sell — Without Ben and Jerry’s Permission
‘’While I would have preferred for Ben and Jerry’s to remain independent, I’m excited about this next chapter.”- Ben Cohen
In 2000, the board took the decision to sell to Unilever. While it wasn’t with Ben and Jerry’s consent, the board felt they had no other option as this was the best thing to do for the shareholders.
They were concerned. They wanted to make sure the brand would maintain the social mission that they set out so hard to instil in the company. They knew if a big corporate took over, there would be little hope of that.
After the sale, they both mentally checked out. They had the option to be part of the move but they both decided against it.
Ben and Jerry were no longer part of Ben and Jerry’s.
The company sold in 2000 for $326 million, a process that took four months to agree upon.
Ben and Jerry’s USP from an SP
The thing that stands true in this story is one of friendship. From childhood school friends to more than two decades managing a global brand together, and now to where they still, at 69, remain great friends.
Today Ben and Jerry’s still operates under Unilever and is doing rather well. And for Ben and Jerry? Well, they still see each other very often, taking trips together.
A $326 million brand, a lifetime of friendship, and some pretty great ice cream with some pretty huge chunks. Not bad for two chaps who thought they’d do this ice cream thing for a little while and then become truck drivers.
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