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Ben & Jerry’s Homemade Ice Cream

GROUP-2

ALKA ANSHUL YADNISARG PATELABHINAY LAKSAURABH TIWSHILPI KUMA

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Overview

Started in 1963 in an old gas station in Burlington, Vermont

In 1981, expanded manufacturing into a second building

On an average 60% annual growth rate

Reputed for the unconventional ‘mix-in’ flavours 

Leading distributor of superpremium ice-cream

Focus on product quality, flavour selection & shelf space

Present in most supermarket chains

In 1994 company announced its first quarterly loss

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Timeline

 1963: Ben Cohen & Jerry Greenfield met at Long Island

 1977: Incorporation of the company at Burlington, Vermont

 1980: Started packaging of ice cream pint containers

 1984: Company went public with issue of 73,500 shares

 1990: Expansion to major markets in US

 1994 : FDA introduced new food labelling standard1994: Launched its first advertising campaign

 June, 1994: Ben Cohen resigned as CEO

 Dec, 1994: Announced its first quarterly loss

 Feb, 1995: Holland assumed the position of CEO

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Mission Statement

Ben & Jerry’s gave equal importance to the three elements- product, and social

Analysis

Product:

Flavor differentiation was essential factor in product developme

Different product segments- super-premium ice-creams, smooth

segment, lower fat content segment, super-premium frozen yogsegment

Economic:

Initial public shareholders- Vermont residents

B & J controlled over 40% of the shareholders’ voting rights 

Never issued dividends

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Mission Statement (Contd.

Social: B & J’s Foundation established to fund community projects 

Ingredient sourcing pursued with a social purpose

Thus, it can be said that B&J succeeded in meeting its social and produmission statement but compromised on its economic front.

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Core Values

To engage employees in philanthropy and social change workTo create equal opportunity for everyone

Minimize negative impact on the environment

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SWOT Analysis

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Haagen-Dazs

• Oldest and largest brand (market share just below 50%)

• Market leader of smooth ice-creams

• Formidable presence in overseas markets

Dreyer’s Grand 

• Success in premium segment - extensive distribution network

• Manufactures other firms products

• Launched 5 yr strategic and marketing plan

Breyer’s 

• Presence in Premium segment

• Major competitor of Nestle in global ice-cream market

• Direct threat to superpremium segment

Competitors

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Financial Position

•Gross Margin: Financial health of the company and its ability to paoperating and other expenses.

• Net Income Margin: Shows cost control of a firm and its ability to csales into profit

1992 1993 1994

Gross Margin=Gross Profit/Net Sales

0.284 0.286 0.262

1992 1993 1994

Net Income Margin=Net Income/Net Sales

0.051 0.051 -0.013

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• Return on Equity: Earning of firm on its owners investment

• Debt to Equity Ratio: Proportion of equity and debt used by firm to finance

1992 1993 1994

ROE=Net Income/ Shareholdersequity

0.099 0.969 -0.026

1992 1993 1994

Debt/Equity 0.039 0.242 0.447

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Looking Ahead

 Shift from super premium to less expensive premium segment Stiff competition from Haagen-Dazs in ‚smooth‛ sub-segment

 Less investment in marketing and promotion

 Loss associated with opening of third plant because of automated handl

 Company’s social initiatives under scrutiny 

 Competitive difficulties owing to changing market dynamics

 lack of any organisational chart

 Salary structure and ratio

 Uneven demand forecasting

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Recommendations

Bob Holland should focus on premium market segment as this segment had 42% market shasuperpremium had only 14% in 1994, Market was saturated in superpremium

Bob should think about market expansion in other countries like New Zealand & Australia production was at 38 and 33 US pints after US

They need to work on SCM because of their inefficiency in production planning, purchasingmanagement and forecasting demand

Customers are more brand and flavour loyal. So moving from mix-in to smooth icecream inmarket segment may cause a problem for Ben & Jerry in capturing market share

Bob Holland should also take into account investment made for the new plant in loss analyscontribution for loss in 1994

Selling price of mix-in & smooth icecream was same even though cost of production for mixof smooth so Bob Holland should think to increase the price of mix-in icecream

Introduction of products with new ingredients may cannibalize the market share of pre-exis

Organization should follow proper structure because there was ineffective HR policy in sala

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Thank You