Analysis of Ben & Jerry’s Ice Cream Company: Executive Summary, Company Background, and Environmen

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Instructions

Below is the industry Analysis done on the Ice Cream company Ben and Jerry. Read and Analyze this analysis then do research on the company and write an (Executive Summary, Company Background, and Environmental Analysis on this company based on all research and information gathered.

Industry Overview & Future of the Industry
The ice cream industry is a submarket of the food and beverage industry. There has also emerged a submarket of ice cream that is non-dairy ice cream, or dairy alternative ice cream. Ice cream is sold all over the world, with North America being the largest consumer of ice cream. The combination of flavors is nearly unlimited, but the delivery and consumption can be placed into five categories, sandwiches, cups, sticks, cones, or bars. 

Since North America is the largest consumer of ice cream, most of it is produced from March to July. In 2017, about 1.4 billion gallons of ice cream and related frozen desserts were produced in the U.S. (IDFA, 2018). Almost all the ice cream produced in the U.S. is not exported but instead consumed by Americans. In 2018, ice cream exports from the U.S. were 19.8 million gallons, which is up 10% from 2017 (IndexBox, 2019). Which left 1.38 billion gallons or 98.59% of the ice cream produced for the U.S. domestic market. 

The three largest markets by volume the U.S. exports to are Mexico, Australia, and Saudi Arabia. In value terms, Mexico ($52M), Australia ($26M), and Saudi Arabia ($23M) were the largest markets for ice cream exported from the U.S. worldwide. In 2018, the U.S. imported 7.7 million gallons of ice cream, which was up 13% from 2017. The top three importers of ice cream to the U.S. were from Mexico, Canada, and South Korea. Mexico’s import prices have risen the most, up 11.1% from 2008 to 2018 (IndexBox, 2019). Even with this price increase, they still have the lowest cost import price per gallon of ice cream. 

In 1984, President Ronald Reagan designated July as National Ice Cream Month and the third Sunday of the month as National Ice Cream Day. In the U.S. ice cream is an $11 billion industry that supports 26,000 direct jobs according to the International Dairy Foods Association. Most of these businesses are family-owned and have been in business for over 50 years and U.S. families are the main customer group, and advertising is mostly done on a local or regional level. The average American consumes more than 23 pounds of ice cream per year. (IDFA, 2018)

Instructions

According to a survey done in 2017 by the International Dairy Foods Association, America’s top 10 favorite ice cream flavors in order are Vanilla, Chocolate, Cookies N’ Cream, Mint Chocolate Chip, Chocolate Chip Cookie Dough, Buttered Pecan, Cookie Dough, Strawberry, Moose Tracks, and Neapolitan. The top 10 list does not change much even though the flavor combinations of ice cream have (IDFA, 2018). Vanilla will be number one into the future because it can be mixed into many different types of desserts - for example, pies and root beer floats to name two. The industry is still changing and the trends for the product are clean labeling, natural products, gourmet and indulgent, nostalgic and comforting, convenience or on-the-go, health, and wellness products (IDFA, 2018).

Competitive Analysis
Ben & Jerry’s is a brand that produces mainly ice cream, yogurt, and sorbet. The difference in Ben & Jerry’s ice cream compared to others in the market is not only the flavors that the customer has to choose from but the creativity that the brand has in producing its flavors. Ben & Jerry’s social mission is to operate the company that actively recognizes the central role that business plays in society by initiating innovative ways to improve the quality of life locally, nationally, and internationally. The company is promoting the brand to bring customers together while enjoying their products. What drives Ben & Jerry’s in the ice cream market is the presentation of the product and the variety of the flavors the company has to offer. This also includes the health-conscious customer that prefers healthy and organic options. The company specifically targets a type of customer that prefers the type of ice cream they offer. For example, Ben & Jerry’s has celebrities such as Jimmy Fallon endorse their product and the company’s dedication to charities as a part of their values-led sourcing. The endorsement results in higher dollar sales by 2.7% and until sales by 0.2% percentage change in 2019 (Canning, 2020).

Blue Bell is known for the traditional flavors of ice cream such as vanilla. Southern Living quoted it as “tastes just like the good ole’ days” (McDonald). The company prides itself on being a large brand from Texas for the last 100 years. Blue Bell is focused on making ice cream the old fashioned way and consumers are attracted to the idea of tradition. The same traditional consumers are brand loyal to Blue Bell because of the identifiable flavors they offer. When compared to Ben & Jerry’s, Blue Bell still emphasizes the flavor versus toppings in the ice cream. Depending on the consumer’s taste, Blue Bell is generally flavored ice cream and Ben & Jerry’s is more various mixes and toppings in a single flavor. The flavor preference is what separates Blue Bell and Ben & Jerry’s in the ice cream market and also is the reason why Ben & Jerry’s has a 0.5% dollar sales and 0.8% unit sales increase in 2019 over Blue Bell (Canning, 2020).

Blue Bunny is a brand that promotes the relationships that the ice cream creates with other consumers. Blue Bunny is iconic for its ice cream bars and large pails used for social gatherings. The ice cream sold is comparable to Ben & Jerry’s with the approach the company has with its product. The swirls of flavor and toppings are what makes Blue Bunny’s ice cream stand out from the others. The attraction of the flavor preferences is aimed at the adult ice cream buyers and create a fun nature of ice cream (Erica, 2019). The adult customers are more likely to buy it for themselves than for their children because of the sugar content and the types of flavors available. Blue Bunny has a lower percentage change of 3.6% dollar sales and 2.3% in unit sales for 2019 (Canning, 2020).

Nestlé’s ice cream is presented in a variety of brands such as Dreyer’s, Mövenpick, Häagen-Dazs, Nestlé, Edy’s, Frosty Paws, Skinny Cow, and Wonka. Nestlé owns these brands to give the company a variety of types of ice cream (Nestlé Dreyers). The variety of selections offered gives the company a larger stake in the ice cream market. The Dreyer’s and Edy’s brands of ice cream are texturized and produced differently than Ben & Jerry’s. For example, one of Dreyer’s and Edy’s options of ice cream is slow-churned that you have the options of light, snack size, and yogurt blends. The name recognition of Nestlé gives the company an advantage to the ice cream market even though they have other variety of products unlike Ben & Jerry’s, Blue Bell, and Blue Bunny. Most recently as of 2019, Nestlé sold its U.S. ice cream business to PAI Partners for $4 billion to become a stronger competitor to Unilever, the parent company to Ben & Jerry’s (The Irish Times, 2019). 

Market Segment Overview
Ben & Jerry’s is an American-based organization that operates in the food processing industry and is known for manufacturing products such as frozen yogurts, sorbet, and ice creams. The company was founded in 1978 and its headquarters is situated in South Burlington, Vermont. Effective marketing strategy is key to the success of the company (Fabry, 2018). The customers of the company include people of all ages; therefore, the company should create market segmentation to focus on a specific customer base. They are attracted to the products of Ben & Jerry’s due to its creamy taste involving secret ingredients and low overrun. This creates more room for butterfat and less air content, which leads towards denser and richer ice cream along with forging an emotional connection with customers worldwide (Fabry, 2018). Therefore, this attractive good taste of Ben & Jerry’s product makes it better than other ice cream companies. 

Competitive Analysis

Market segmentation is referred to a business practice that is used by an organization to categorize their target market into smaller groups so that they are managed properly and companies can optimize their sales, marketing, and advertising efforts accordingly (Rupp, Kern, & Helmig, 2014). There are four types of market segmentation, which include geographic, demographic, psychographic, and behavioral. Key market segmentation for Ben & Jerry’s can include customers between the age of 15 to 35 that prefer the light ice cream line. These customers prefer to eat ice cream desserts; however, they are more health-conscious, and they avoid sugar from their diet. This ice cream line is prepared with organic milk and cream and it is free of sugar (Weingus, 2017). This market segmentation is categorized based on the demographic of the company since the perception of customers is changing rapidly. 

There are various marketing strategies that Ben & Jerry’s can apply to reach out to this segment such as direct selling, word-of-mouth, cause marketing, internet marketing, and others. However, the most suitable strategy for Ben & Jerry’s will be internet marketing since the majority of these customers have access to the Internet and they get their product recommendations from social media and other websites. The company can apply its marketing process and its steps to ensure the effectiveness of its marketing campaign. It should create a plan, analyze its position in the industry, create marketing tactics, implement the process, and evaluate the result in order to monitor and determine whether customers are becoming aware of its products (Tyler, 2018). The company should advertise on popular social media sites such as Facebook, Instagram, YouTube, Twitter, and others to spread awareness among its customers to make them aware of the quality of its products. 

Conclusively, Ben & Jerry’s should create a market segmentation of young customers between the age of 15 to 35 that have access to the Internet to advertise the light ice cream line which is organic and sugar-free. The company can implement an internet marketing strategy and use marketing steps to successfully reach out to this segment to increase the sales of its product. 

Financial Standards
Annual growth for Ben & Jerry’s over the past 3 years is as follows: up 2.0% in 2019, down 5.1% in 2018, and up 1.9% in 2017 (Unilever, 2020). In 2018, the ice cream market as a whole saw a dip in demands, with the rise in popularity in diets, such as the elimination diet and keto. The ice cream market in 2014 averaged a 3-4% growth annually in the United States. Compared to international markets, the growth in the United States is less than the 7-8% growth annually seen in European and Asian markets, such as Russia and China (Dornblaser, 2015). This difference in growth can be attributed to market penetration, as many international markets are still diversifying offerings, with American favorites like ice cream. When it comes to changes in the United States market, “[t]he most prevalent percent change in claims from 2013 to 2014 include GMO-free (35% increase), hormone-free (nearly 25% increase), no additives/preservatives (20% increase), and low/no/reduced calorie (nearly 20% increase)” (Dornblaser, 2015). 

Market Segment Overview

As Ben & Jerry’s competes with other companies in the market, they must work to maintain and improve their competitive and comparative advantages. The most common retail purchase driver for ice cream/treats in the [United States] is flavor (nearly 70%) and based on recent consumer interests, smaller portion sizes and better ingredients are prioritized over other aspects of the product (Dornblaser, 2015). With this consumer emphasis, there is a focus on premium ingredients and a variety of flavors that come with Ben & Jerry’s pint-sized offerings at the grocery store. Ben & Jerry’s product offerings differ from competitors, with a wide variety of flavors to serve all ice cream fans. Their variety of flavors features unique names, such as Cherry Garcia, Chunky Monkey, and Coffee Coffee BuzzBuzzBuzz. Ben & Jerry’s also partners with sponsors like Netflix, where they can generate relevant new flavors for shows and movies in pop culture – featuring names like Boots on the Moooo’n in partnership with Netflix for the show Space Force (Ben & Jerry’s, 2020).

Process adoptions in the ice cream/novelty industry are often driven by shifts in consumer interests and improvements to efficiency. The most recent flavor developments are looking to serve a wide audience with diverse palates, combining sweet with salty, including salted caramel and salted vanilla flavor combinations (Dornblaser, 2015). These changes come as ice cream companies look to better serve adults consuming well-developed flavor options. An example of process improvement is how competitors in the Chinese markets are using less milk and more milk substitutes to keep up with consumer demand and increase profitability (Amann & Cantwell, 2014).

Since Ben & Jerry’s is an international brand with both physical stores and pre-packaged options in grocery stores, they compete with virtually all other ice cream brands. Focusing on the United States, in grocery stores, Ben & Jerry’s primarily competes with big-name brands, such as Blue Bell, Nestlé, and Wells. For physical storefronts, they compete both with other major national brands – such as Cold Stone, Baskin-Robbins, Braum’s, and Dairy Queen. Referencing Walmart’s grocery data, its stores and online offerings have 40-50 different ice cream and novelty brands available to customers (Walmart, 2020). With a large number of offerings, customers often look the flavor – which ultimately drives the purchase in most instances. 

Ben & Jerry’s was responsible for 13% of the parent company Unilever’s total revenue in the year 2019. Unilever’s total revenue was €51.98 billion – therefore approximately €6.76 billion of that revenue as a result of sales from the Ben & Jerry’s brand. Unilever does not disclose the detailed financial statements of each subsidiary to non-shareholders but does include the segment information. Unilever’s Foods and Refreshment’s total revenue was €19.29 billion, €6.76 billion of which is from Ben & Jerry’s, therefore 35% of Unilever’s Foods and Refreshment revenue was a result of Ben & Jerry’s. With the large share of total revenue, the segment information can provide a good depiction of Ben & Jerry’s profitability and financial performance. The Foods and Refreshment segment had a 2019 operating profit of €2.81 billion – so 35% would roughly estimate the operating profit of Ben & Jerry’s, which would be €983 million (Unilever, 2020). Using the provided Foods and Refreshment information from Ben & Jerry’s, a profit of €2.81 billion on €19.29 billion in total revenue results in a profit margin of 14.57% (Unilever, 2020). The most direct competitor on a market share and company size scale is Nestlé. Per Nestlé’s financial reports, their 2019 food and beverage sales totaled 92.57 billion Fr. (€78.94 billion) with a total profit of 12.90 billion Fr. (€ 11.00 billion) – for a profit margin of 13.94% (Nestlé, 2020). With fairly similar profit margins, the two companies do not have a notable comparative advantage over one another and compete against one another for the same profits derived from market penetration and share.

Consumer Information
Ben & Jerry’s ice cream brand is one that is not only visually creative but constantly improving while staying true to its core values. With their focus on producing unique ice cream flavors, advocating for different societal topics, and their use of social media to engage their audience, it is no surprise that their mark on the industry shows the popularity and brand loyalty this company has with their consumers.

When looking at the different demographic age segments, Ben & Jerry’s scores above the index average in age groups both under 24 and ages 25 to 34. For their consumer demographics regarding race and household income, they tend to come above average for Caucasian consumers, and those that make $100k and over in annual income. In areas that they are lacking, the most are in demographics for age groups over 65, Asian consumers, and those that make under $20k in annual income (Ben & Jerry’s Grassroots).

In order to understand why Ben & Jerry’s consumer insights are this way, one must look at how the company operates, their business model, and overall culture. The way Ben & Jerry’s manage their business can be broken down into three missions: profit, making delicious ice cream, and doing business in the nicest way possible. Although making a profit is the bottom-line for all companies, their take on delivering delicious ice cream comes from them having an independent board overseeing the company’s product formula; Unilever, their parent company owners, cannot change Ben & Jerry’s ice cream for a quick profit off of cheap substitute ingredients, leaving them with total autonomy over their products. The company’s third mission is described as “doing business in the nicest way possible.” They believe in a concept called “linked prosperity” which is the idea that the company should help others as much as it can with their profit – using their business as a tool for positive environmental and societal changes. Their commitment to using their brand and profit to help in progressive causes has been evident since the beginning of the company’s formation. In the late 1970s and early 1980s when Ben & Jerry’s was first forming, co-founders Ben Cohen and Jerry Greenfield almost sold their business because of how most business models at the time operated on only looking out for their own profit and exploiting the communities around them (llbonline). When they realized they could change the way their business operated, they began business with a philanthropic mindset. Since then, they have been involved with charitable organizations like “Vermont Campaign to End Childhood Hunger” which promoted federally funded school breakfast programs (Campaign), advocated for same-sex marriage, and even starting their own foundation called “Ben & Jerry’s Foundation” for creating positive changes in Vermont and around the US (Ben & Jerry’s Grassroots).

Focusing on the consumers that Ben & Jerry’s have the most success in, one would have to delve into what drives this demographic to this ice cream brand over others in the same market. Since their brand performs best in segments 34 years and younger, Caucasian, and those that make over $100k, these specific groups each have their own psychographics, or values and interests, that are unique to their buying behaviors. According to Pew Research, those born between 1981 and 1996 are considered Gen Y, or Millennials (Pew Research). “Currently at 73 million Americans, Millennials account for a quarter of the population of the United States, making them the largest living generation.” (Lexington Law) With approximately $200 billion in annual buying power and the command of the markets that Millennials have, where they spend their focus and money will undoubtedly become a success from their support. Millennials tend to prefer brands that have good customer service, brands that offer a unique experience and more value for their money. The psychographics of Millennial buying habits are summarized as such: 60% of Millennials remain loyal to brands they purchase (Lexington Law), 87% of Millennials use between two to three devices on a daily basis (Forbes), and because of this, 62% of Millennials said that if a brand engages with them on social media, they are more likely to become a loyal customer (Forbes). In matters of social awareness, with Millennials having lived through the 2008 Recession and an unstable economy, 75% of Millennials stated that it was fairly or very important for a company to give back to society instead of just making a profit – turning away from greedy corporations, they support brands that want to make a difference for others. The way in which Millennials have been connected to the Internet and able to access a plethora of knowledge, most Millennials are some of the most informed consumers (Forbes). 

Since Ben & Jerry’s take an outspoken and progressive stance on political and societal issues, this tends to do well with Millennials as they are more inclined to lean progressively on political issues. This is a very bold business strategy – it can alienate other demographics that tend to be more conservative. Although the correlation between political views and ice cream purchasing habits are more vague, the data does show that older age groups such as those ages 45 and above tend to purchase other ice cream brands such as Haagen-Dazs and Breyers (Ben & Jerry’s Grassroots). As for Ben & Jerry’s other consumer demographics, these are consistent with one another; they have a fairly even spread of consumers across various racial demographics, with Caucasians consuming at a higher rate. Consumers from different economic backgrounds in higher income brackets also made ice cream purchases at a higher rate. This can both be attributed to Ben & Jerry’s on average higher production and selling costs when compared to other ice cream brands like Breyer’s (Ben & Jerry’s Grassroots).

Industry Ranking
Since their initiation in 1978 to their acquisition by Unilever in 2000, Ben & Jerry’s has only exponentially grown in sales and market share. As of January 2020, Statista placed Ben & Jerry as the top-ranked ice cream brand in the United States. They had $681.5 billion worth of sales, outselling Haagen-Dazs in second place at $569.2 billion in sales and Blue Bell in third with $567.8 billion in sales (Statista). Although Ben & Jerry’s did outsell Haagen-Dazs and all other ice cream brands, consumer reports show that most ice cream consumers prefer Haagen-Dazs 15.3 times more and Breyers 5 times more than Ben & Jerry’s (Ben & Jerry’s Grassroots). Under their parent company Unilever, Ben & Jerry’s doesn’t sell their own independent stock; Unilever ranks #167 in a ranking of Global 500’s with revenues in the $60 Billion and thousands of employees, Ben & Jerry’s is well incorporated in a secure and stable parent company (Fortune).

Ben & Jerry’s started as a small ice cream shop in Vermont by Ben Cohen and Jerry Greenfield in 1978. Since then, they have grown to be one of the largest ice cream brands in the U.S and around the world. With sales in the billions of dollars as of 2020, Ben & Jerry’s have established themselves as a leader in the ice cream industry. Although competitors such as Blue Bell and Haagen Dazs have a considerable amount of the market share, Ben & Jerry’s progressive political stances and mastery of internet marketing, there will be no doubt that Ben & Jerry’s will continue to grow and evolve with the ever-changing landscape.