Since Jul 28, 1999
The Evil Empire: The Scoop on Ben & Jerry's Crunchy Capitalism
by Hanna Rosin
Ben Cohen, the crankier half of Vermont's ice cream duo, opens his company's June shareholder meeting with some bad news: 'Nineteen-ninety-four, my friends, will forever live in ignominy as the year of our first loss.' As the gloom sinks in, a breeze blows through the tent, throwing open the flaps to reveal a stunning view of Vermont's Green Mountains. The tent walls are festooned with a collage of cheery posters, some uplifting (what we cannot do alone we can do together) and some just bubbly (smooth--no chunks!). Many of the 2,000 loyalists have driven here from as far away as Chicago, and they do not want Arcadia spoiled. Their needs are not lost on Ben. 'You know,' he picks up, 'people talk about how our social mission is affecting our profits negatively. But I want you to know that's a false dichotomy. Our social mission does not detract from our profits. Our social mission adds to our profits. This year is a test. But we will stay true to our roots, true to our soul, true to our dreams for the common good.'
The mood lifts; the crowd bursts into applause. Emboldened, Ben begins to holler, his chubby sunburned face turning a shade redder. 'I refuse to see another weapons system or space rocket launch and keep my mouth shut.... How do you look a hungry child in the face, coming home to a garbage-strewn neighborhood where gunshots are an everyday occurrence and say that you don't have the money to protect those streets? ... Our country, the last remaining superpower on earth, needs to learn to measure its strength not in terms of how many people it can kill but how many people it can feed, clothe and house.'
The crowd is on its feet. By the end of Ben's speech, anyone concerned about the fate of the sagging stock has forgotten all about it. A middle-aged woman runs up to the microphone, her giggling sons in tow: 'Ben,' she asks, 'my boys and I just wanted to know, when are you going to run for president?' Another woman, pregnant under her yellow sundress, is crying when her turn comes. 'Ben, Jerry, Ben,' she weeps. 'It's such a beautiful thing, what you're doing.' The man sitting next to me sees me taking notes and solemnly offers his story: 'I've been a shareholder since they made their first offering, and I want you to know that I have never, ever tasted even one spoon of Haagen-Dazs.'
Before their recent dip, Ben and Jerry's Homemade Ice Cream Inc. was considered nothing short of an economic miracle. In the annals of business history, they are recorded as the first company to turn a profit while behaving like a nonprofit. Their story is almost legendary: the two high-school friends, with a $4,000 loan, opened their first scoop shop in an abandoned Burlington gas station in 1978. As sales grew, the hippie capitalists were consumed with guilt. 'We worried we were becoming a cog in the economic machine, whose values we had detested all our lives,' Ben recalls in The Inside Scoop, a company biography published last year. Jerry Greenfield couldn't take it and, in 1982, moved to Arizona. But Ben stayed behind and invented The Third Way, a path he called 'Caring Capitalism.'
How does it work? 'Detached from values, money may indeed be the root of all evil,' Ben now explains in the inspirational speeches he gives to college students and businessmen. 'But linked effectively to social purpose, it can be the root of opportunity.' To ease his guilt, Ben repented. On the company's first anniversary he gave away free cones to the hippies who flocked to the Vermont shop. A few years later, he vowed to buy milk from Vermont's flagging dairy farms, above market prices. When he hit the $10 million mark, he founded the Ben and Jerry' s Foundation, through which the company gave away 7.5 percent of its pre-tax profits to charity, the highest of any American company (the average is 1 percent). But the lost cash also saved millions on advertising. 'inspirational ice cream,' gushed The New York Times, in one of hundreds of fawning articles. In fifteen years, the $140 million company with barely 500 employees built up the brand-name recognition of a company ten times its size.
With the publicity came the inevitable backlash: that Ben and Jerry are nothing more than New Age scam artists, feeding social consciousness to gullible yuppies and pocketing the cash. The scarier truth may be that they've scammed themselves. Like their fortysomething followers, they believe the most flattering image of themselves: that, despite their millions, they haven't sold out. 'It's really interesting what you can do with a business when you don't care about making a lot of money,' millionaire Ben mused to The New Age Journal in 1988, a quote earnestly reprinted in the Harvard Business School case study of the company. Profits to him are just an incidental bonus of social work: 'There is a spiritual aspect to business.... We are all interconnected. As we help others, we cannot help but to help ourselves.' For a generation of guilt-ridden followers, his insight is holy; to save the world, all they need to do is consult the popular buying guide and 'Shop for a Better World.'
This doesn't mean the company is built on scandalous lies--just little white lies, mutual delusions that keep everyone happy. For example, one tenet of caring capitalism is to be 'real,' to 'connect with the customer.' This spirit is what drove the company's offbeat search for a new CEO. Early last summer, Ben and Jerry held a press conference to announce that Ben would step down as CEO. Profits had plummeted, the superpremium ice cream market was shrinking; in short, the company had grown too complicated for a 'multi-college dropout and failed pottery teacher to run,' Ben announced. What pained him most was the company's decision to give up the salary cap that had limited the top executive's salary to seven times that of the lowest-paid employee, the $8 an hour scooper (a sacrifice that had always obscured Ben' s millions in stock shares).
But, before the mood at the press conference grew too sour, Jerry appeared holding a poster that showed him and Ben dressed like jolly Uncle Sams, with upside-down pints on their heads, announcing the 'Yo, I'm Your CEO' contest. Anyone could apply, and, in 100 words or less, explain why he or she would make the best CEO. The winner got the job, and the runner-up got ice cream for life. More than 20, 000 applications poured in, mostly from caged yuppies desperate to escape. 'Help!' began one letter, written in a child's crayon scrawl and prominently displayed at the Waterbury factory. 'I'm stuck with Mr. and Mrs. FastTrack in California. Mom is a Nestle Marketing Director and Dad is a Baxter Health Care Executive. They need new careers and I need a real backyard.'
On February 1, a press release announced the lucky winner: Bob Holland, whose poem was attached 'as per direction for Ben and Jerry's `Yo I'm Your CEO' contest.' What the release doesn't mention is that he wrote the poem after he was picked. A month after their press conference, Ben and Jerry's had hired Russell Reynolds Associates, a New York executive search firm to do the real work. The firm discovered Holland, a thirteen-year veteran at McKinsey & Company and consultant to several Fortune 100 companies. If asked, officials at Ben and Jerry's don' t lie about the search firm; they just don't mention it. No one at the shareholders' meeting I spoke to knew Holland had skipped the essay contest. But they didn't seem to care much, either. 'You must be related to Maya Angelou,' gushed one shareholder after Holland, who is black, read another poem at the meeting. 'No wonder they picked you.'
It's this kind of awestruck reverence, willfully ignorant of details, that fuels the Ben and Jerry's juggernaut. One of their most popular crusades is 'Save the Rainforest,' promoted on pints of Rainforest Crunch ice cream. The flavor was hatched in 1989, when Ben met anthropologist Jason Clay at a party after a Grateful Dead Rainforest Benefit concert. The two were hanging around the kitchen, and Ben mentioned he was looking for a nut brittle made from something more exotic than peanuts. Clay had the perfect solution: his pet project, Cultural Survival Enterprises, was harvesting nuts and fruits from the Amazon to make preserving the rainforest economically viable. A few days later, they mixed up a batch of vanilla ice cream and native nut brittle in Vermont, and Rainforest Crunch was born. Its label, printed in the company' s cutely lopsided font, read: 'Money from these nuts will help Brazilian forest peoples start a nut-shelling cooperative that they'll own and operate.'
At first it did. But, as nut orders poured in, the struggling Xapuri cooperative collapsed under the demand. Ben and Jerry's ended up buying more than 95 percent of the nuts from commercial suppliers, including one shipment from the Mutran family, a notorious agribusiness that was reported in the Brazilian press to have killed labor organizers. In any case, it was a stretch to call Xapuri 'forest peoples'; they were Portuguese rubber tappers, whose ancestors had arrived at the turn of the century to exploit the Amazon. As for the actual 'forest peoples,' many were none too happy with the project. Indigenous rights leaders complained their troops were being seduced by the lure of dollars, although the sums were paltry. After developing an appetite for Western goods, some of the forest people sold whatever land they owned to buy houses and cars. 'Its concrete help has been minimal, ' a report of the Alliance of Forest Peoples concluded about the mission, 'and the negative repercussions have been enormous.'
Last year, Ben and Jerry's removed 'forest peoples' from the label, though they swear it was not out of contrition but to make room for promotions of their new 'Smooth' line of flavors. Even their own internal social-performance audit, an independent review of their projects that gets published in the annual report, suggested the company's packaging was misleading. But B&J are unrepentant: 'It sounds like real hairsplitting to me,' says Alan Parker, director of social missions. 'Who's to say what's best for indigenous people? If you look at it, we had an intent, and our own objective was met. We never said we bought all our nuts from the cooperative.' Cultural Survival, which has abandoned the project, disagrees: 'It's really become a disingenuous marketing strategy to say if you spend $2.99 you'll help save the rainforest,' says Michelle McKinley, who has redirected the group to small-scale projects with indigenous peoples. 'It makes it seem quick and easy and contributes to a lot of misunderstanding.'
Their customers, of course, love quick and easy activism, a lesson Ben and Jerry learned early. In 1983, the company decided to expand into Boston, to see if they could compete in an urban market. The business expansion fast became a populist crusade. They plastered the city with posters announcing, 'two crazy vermont hippies invade boston with their ice cream.' Haagen-Dazs, which then held a monopoly on superpremium ice cream, threatened distributors who carried Ben and Jerry's that they would lose their business, a prospect no distributor could afford. So Ben and Jerry started a movement. They took out a classified ad in Rolling Stone asking readers to 'help two Vermont hippies fight the giant Pillsbury corporation.' Jerry doggedly picketed the Pillsbury headquarters in Minneapolis, handing out pamphlets asking, 'what's the doughboy afraid of?' The Doughboy hotline was flooded with outraged callers, expressing such sentiments as, 'Corporations like yours really make me sick!' and threatening to form gangs of Doughboy busters. The guerrilla warfare achieved its goal: Ben and Jerry's conquered the market and in a few years owned their own giant corporation.
That irony aside, the campaign was based on a kernel of untruth. Ben and Jerry's has always defined itself as the polar opposite of Haagen- Dazs: their competitor is 'worldly and elegant,' they are the underdog, 'funky and unpretentious.' 'Do you think the Doughboy is afraid of the The American Dream?' B&J's pamphlets taunted. But, as B&J know, no one embodies the American Dream better than Reuben Mattus, founder of Haagen-Dazs, a high-school dropout from Poland who started by hawking homemade ices in the Bronx from a horse-drawn cart. (He made up the name Haagen-Dazs because he thought it sounded Danish, and he put a map of Scandinavia on the lid.) B&J's scraggly hipness, by contrast, is only skin deep. Their first idea for a company, after all, was United Bagel Service, which would home-deliver bagels and lox with The New York Times on Sundays. And Ben only recently gave up his Saab for a pick-up truck, at the same time he went on a rice-and-beans diet in solidarity with the Third World.
Paeans to the oppressed seem to be Ben's forte. At the shareholders' meeting, he declared himself committed to a 'diverse organization in a diverse society,' after introducing the new CEO. This summer, he signed the fashionable petition to stay the execution of death- row prisoner Mumia Abu-Jamal. And, in the last year, Ben has been seen wearing baggy pants, high-tops and a baseball cap turned backward, blasting rap music from his office. His latest idea, hatched on a recent visit to Harlem, is to have one black and one Korean driver on every delivery truck, to encourage interracial harmony.
Still, peel off the gangsta-wear and Ben's politics are utterly conventional, if not Wall Street Republican: 'Business is the most powerful force in the world,' Ben preaches, echoing Andrew Mellon-era capitalists. The company's direct inner-city initiatives are all model Republican workfare programs, such as a Partnershop in Harlem, a franchise run by a local businessman where scoopers from a nearby drug rehab center follow strict work and dress codes. Another of the company's proudest projects is a partnership with the Greyston Bakery, where homeless people bake brownies to be used in Chocolate Fudge Brownie frozen yogurt and, as the annual report trumpets, 'transform their relationship to work.'
Then there are the inner-city initiatives that fail. If there are any doubts about B&J's bloodless business instincts, they can be dispelled by another holy man, the Reverend James Carter, who crossed the company's path in 1992. Back then, Carter ran a modest New Jersey bakery called LaSoul, where recovering addicts churned out pumpkin pies for the local groceries. A week after he saw Ben on ABC's '20/20,' Carter packed up a trunk full of pies and drove to the company headquarters. Ben loved both the pies and 'Reverend Carter's vision of building a sound business.' In three weeks, Carter had a letter of intent to do business with the company, which he showed to the bank to borrow money for equipment. Ben flew down to New Jersey to tape a TV show of himself helping ex-addicts mix batches of the new Apple Pie frozen yogurt.
After two years, however, sales of the flavor were flagging. In May 1994, Ben and Jerry's drastically decreased its orders, leaving Carter with freezers full of pies. Frantic, Carter laid off all but two employees and called Ben. The next day, Ben flew to New Jersey, 'sat down, looked them straight in the eye,' and, recalls Carter, said, 'Don't worry, we'll stick with you.' But orders never picked up, and, this June, Carter received a letter from the company, by fax, that congratulated him on his 'good works' and canceled all remaining orders. He was left half a million dollars in debt. 'It's pretty cute, this social mission,' Carter says bitterly. 'But the bottom line is, Ben and Jerry' s buried my company.'
Ask Ben about the incident, and he sounds more like Gordon Gecko than Robin Hood: 'We told Jim to find more customers. We gave him six months' notice.' When the normally upbeat Alan Parker is reminded of a spreadsheet dated November 11, 1994, that projected $500,000 worth of orders from LaSoul in 1995, he replies: 'That spreadsheet was given to him as a best-case scenario for volume expectations. Nothing about that memo could be construed as a firm commitment, and it's really disingenuous for him to cite it.' Do they feel at all responsible? 'Sure, we feel sad,' says Parker. 'But our sadness is tempered with `why are we being blamed?' We worked closely with him to make our demands on him easier, and that's not something many customers would do for their suppliers. In the end, LaSoul was just not a viable business enterprise.'
You can see Parker's point. Like many other socially responsible businesses that have followed in their wake, Ben and Jerry's risks making cynics' mouths water at the first hint of failure. In the gentlest of tones, barely audible above the Mozart concerto filling the room, CEO Bob Holland taught me a lesson on muckraking: 'If you go and say, `I'm going to be concerned about the environment, I care about the hungry, ' then people, particularly journalists, say something's wrong with you.... I had a conversation with this newscaster on TV this morning, and I was very mindful of what he was trying to do. Finally, I made the fatal flaw of saying we're going to move into Europe, and this guy saw this as his golden opportunity and said, `OK, what's Ben and Jerry's going to do about Bosnia?''
OK, so Bosnia is ridiculous. But not every critic is a cynic, and trying doesn't grant you automatic immunity. Like Ben and Jerry's, many of the socially responsible businesses publish their own social audits, in which they publicly flagellate themselves over minor failings. (In Ben and Jerry's 1994 report we learn, for example, that the number of employees who think often about quitting has doubled, from 19 percent to 38 percent.) But let a journalist criticize and they go berserk. The first scandal in the crunchy business world erupted last year, when journalist Jon Entine published an expose of The Body Shop in Business Ethics magazine detailing, among other things, how the company concocts stories about the exotic origins of its products and lies about natural ingredients and animal testing. Ben was furious, calling it a 'biased, poor piece of journalism' and quit the board of the magazine. Last year, a meeting was convened by the Social Venture Network, the exclusive club of the movement's icons, which is based in San Francisco. Twice yearly, CEOs of companies such as Aveda, Stonyfield Farm and Reebok gather to think up ways to 'create an equitable, fair and democratic society through our business practices,' as their brochure explains. At the last meeting, the question of The Body Shop arose. Journalists, of course, were not invited, but several participants described how the meeting went: the members came together in an auditorium where a maharishi sat on stage in a yoga position. The mystic forbade anyone to say anything critical to Anita Roddick, The Body Shop's founder. Then he led everyone in a chant, told them to embrace and declared the community ready to 'move on.' Roddick read his suggestion as a criticism and stormed out of the room.
Roddick and the cult of business visionaries live by Ben's universal dichotomy: money is the root of all evil or the font of all good. Entrepreneurs are saints or predators. Merely by declaring solidarity with their movement, a businessman's actions are beyond question: CEOs are admitted to the Social Venture Network by invitation only, and they are never asked to leave. 'The distance between our rhetoric and our actions is the field in which we labor,' is the group's motto, a foolproof shield from critics.
It would never occur to them to apply that motto to those outside the group. If Mobil launches a clean air campaign, it is assumed to be a cynical ploy. In fact, some of the most innovative environmental solutions have come from the worst polluters, responding purely to fear of punishment, as Entine points out in a recent paper. When the chemical company Monsanto discovered it was cheaper to recycle sludge than dispose of it, the innovation revolutionized toxic-waste disposal and had a far greater effect on the environment than a Save the Rainforest campaign. When GM signed the ceres principles to protect the environment, it paved the way for other corporate giants.
Caring capitalism is perhaps best left to larger enterprises. Ben and Jerry's ultimate contribution is a more conservative one: translating the spirit of the '60s into ad copy: 'You know it will sell, because Dead paraphernalia always sells,' wrote the two anonymous hippies who suggested calling a new flavor Cherry Garcia. And sell it did. Ben and Jerry printed up bumper stickers in psychedelic neon that read, 'what a long, strange dip it's been.' Aging baby-boomers bought it by the carton. But the story is not without its ironies. When Ben and Jerry sent a pint to Jerry Garcia, they got back a letter from his lawyer demanding royalties. Still, Ben forgives. 'Jerry Garcia inspired us and lifted our spirits,' Ben laments on the occasion of the legend's death. And, as always, there's a happy ending: as soon as his death was announced, sales of Cherry Garcia frozen yogurt shot through the roof.