Ben and Jerrys Homeland Ice

cream Inc.
- A period of transition

Key Issues
1. Over Reliance on Dreyers for manufacturing and distribution which is a potential
threat now that Nestle owns 22% of Dreyers.
2. Their operating profit has fallen from 11848k to 2789K in 1994.
3. Over-reliance on super premium category
4. Change in consumer preferences (like health and value conscious) has led to shift in
market from super premium category to premium and regular category.
5. Increased competition in super premium segment from more established players like
Haagen Dazs, Dreyers etc.
6. Difficulty in forecasting demand and maintaining production efficiency as a result
leading to shortage and overstock of some flavours.
7. Substitutes such as water-ice, sherbets and frozen yogurts taking over the marketshare.

Information and Analysis relevant to the key Issues

Issue 1. Since Nestle owns around 22% of Dreyers, it is a potential threat now that Nestle
might stop the production for Ben and Jerry which might hurt 40% of their production
capacity.
Issue 2. Huge drop in their operating profit due to decreased sales in super premium market
which got escalated due to a $6.8mn asset write down.
Issue 3. 43% of market share in super premium category is catered by Ben and Jerry.
Issue 4. The premium category grew from 29% market share to 42% market share from 1985
to 1994, while in the same period market share of super-premium category only grew by a
marginal 6%
Issue 5. Big players like Grand metropolitan PLC, Unilever and Nestle has entered the
market by 1995 which has increased the competition. Nestle has increased their Profit before
taxes from 4.644mn to 5.067mn in just one year.
Issues 6. Due to increased complexity of business and poor forecasting capabilities of the
company which has resulted in an increase of Selling, general and admin cost from $65450k
to $126945k due to increased wastage of raw materials.
Issues 7. Demand for frozen yogurt increased from 17% to 21% from 1992 to 1993.

Strategies
1. Mergers and Acquisitions: M&A activity can be done by Ben and Jerrys in US as well as
in Asia especially in China and India where there is very low Ice-cream penetration and a
huge market opportunity exists there.
2. Forward integration: Instead of relying on Dreyers and Suts (who are also its
competitors) for distribution it can directly collaborate with retail stores and wholesalers like
Walmart, Tesco which would reduce risk and costs.

3. Expansion into South East Asia- We recommend acquiring / collaborating end to end
dairy companies like China Modern Dairy Holdings Ltd , Panda dairy in China and Amul in
India which would give it a substantial footprint and also supply low cost raw products for
international production.
4. Social goals- Continue and Expand the Social Initiatives it is involved in. Also start new
social initiatives in SE Asia as it would lead to a lot of publicity and good word of mouth.
5. Collaboration with big ticket Ice-cream consuming Institutions: Indian railways
(IRCTC) and Air India are constant buyers of quality ice creams, yogurts etc. which Ben and
Jerrys can supply to gain a foothold in the country.
6. Introduction of low fat health conscious products Diversification into more milk
related products like paneer (cottage cheese), Tofu, Milk Shakes to strengthen its market
position to cater to increasingly health conscious consumers.
7. Change of structure Hire a operations guy- A COO can be introduced for overseeing
day to day operations to assist the CEO Mr Holland, so that he can concentrate on Global
Expansion.
8. National level competition for newer tastes This would help in generating a lot of
positive publicity and can generate a lot of ideas and lead to creation of new exotic flavours.
9. Mission and vision statement- Mission can be modified to suit market and consumer
needs at an international level.
10. Franchise Offering new Franchisee licenses at an affordable cost and training them to
maintain high quality and brand image.

Most Plausible Alternative

Mergers and Acquisition and expansion into Asian economies
In 1990s there is a shift in consumers preferences from super premium to premium products
as people have become more health and cost conscious. So, expanding into new markets like
the Asian countries where there is a huge demand is a possible solution. Ben and Jerry should
go into these markets with more regular products
Suggested Procedures
a) Increase debt to equity level to generate additional cash for expansion into new markets
b) Recruiting strategic HR managers to facilitate cross cultural synergies to aid in
international expansion.
c) Increase the number of franchises in risky markets (China) to limit risk exposure.
Through the franchises, collaborate with big public companies like Railways, Airlines.
d) Increase social initiatives in Asian countries where people could easily connect to this
brand.