BEN & JERRY’S - JAPANSelecting the right partner

Presented by:Group 5

Mohit Jain 28NMP10Dipendra B. 28NMP12Avinash Sinha 28NMP07Manish T. 28NMP22Preeti Baronia 28NMP73

BEN & JERRY’S - COMPANY BACKGROUND• Vermont based Ice-cream (High Fat) company founded by Ben

Cohen and Jerry Greenfield in 1978.

• Anti-corporate Style, Philanthropic approach , Care for Locals.

• Supreme-Premium Category of Ice Cream products and majorly competes with Haagen-Dazs in the US Market.

• Opportunistic approach (not strategic) to new market opportunities.

• Steady expansion and widely available across the US Market

• In 1997, 3.6 % Market Share in Overall US Ice cream market and 34% Market Share in US Super-premium Ice cream market.

BEN & JERRY’S - CURRENT SCENARIO

• Ben & Jerry’s lacked effective management and focussed highly on publicity, press coverage and social causes. They avoided commercial advertising.

• Ben & Jerry’s net income started to decline beginning 1994 (suffered loss of $1.86 Million)

• Lost market share with steady decline in profits post the loss in 1994 despite maintaining 2nd largest market share.

• Hired Bob Holland (Ex- Mckinsey Consultant) as CEO in 1996 but resigned after eighteen months.

• Ben and Jerry’s plants operated at only half the capacity.

BEN & JERRY’S - THE FUTURE CALLS FOR?

• Declining market share and profits in the US Market calls for future growth and venturing into new markets (Non US).

• Ben & Jerry’s foreign sales of $6 Million (3% of total sales) was no match to Haagen-Dazs $700 Million.

• Adopt a Strategic and planned approach before entering into foreign markets and avoid an opportunistic approach.

• Lose Foreign Market Inhibitions and embrace Japanese Opportunity which is the 2nd largest Ice Cream market in the world ($4.5 Billion annually).

• Preferably avoid making philanthropy as a Sacrosanct.

JAPANESE MARKET - QUICK WINS• Japan was the most affluent country in the World and consumers demanded high

quality products with greater varieties of styles and flavours.

• No need for capacity addition for Ben & Jerry’s.

• Lower consumption of Dairy products, dramatic increase in incomes from 1950s to 1980s and Home based refrigerators availability to a larger set of people.

• Haagen-Dazs managed to capture nearly half the super-premium market in Japan with sales of $300 Million and highest margin.

• Market welcomed imported Ice Cream and there was no need for consumer education on the product.

• Falling tariff on dairy products suggested new opportunities for ice cream imports from abroad.

JAPANESE MARKET - CHALLENGES AND CONCERNS

• Highly Complex Distribution system driven by manufacturers and barrier to foreign products

• Shipping Frozen products to Japan (Long Distance).

• High competition for shelf space from Haagen-Dazs and other local players.

• Six of these local players were selling super-premium products.

• Size of Ben & Jerry’s and failure of Borden was a worry.

• Economic Slowdown in Japan coupled with Thai currency depreciation was a concern.

• Concepts of social mission and corporate charity were alien in Japan.

• Desserts were uncommon in Japan leaving Ice cream primarily for the Snack Market

PARTNER SELECTION – BACK TO THEORY

• DEVELOP CRITERIA

• IDENTIFY POTENTIAL PARTNERS

• IDENTIFY SHORTLIST

• CONDUCT DUE DILIGENCE (MOST IMPORTANT)

CRITERIA FOR SELECTION

• Assistance in tapping into the large distribution network in Japanese Market.

• Assistance in increased market share and combating competition.

• Reduced Financial Risk.

• Marketing of product to be handled by an experienced player.

• Tweaking and adjusting to local needs & reduce foreign product barriers.

• Mutual and Compatible goals.

POTENTIAL PARTNERS AND OPTIONS1) DREYERS

o Largest distributor for B&J in USo Not a direct competitor in Japano Failed to meet Sales expectations in Japan and exited

2) 7-ELEVENo Known partner (US Market)o Immediate placement in 7000 Convenience storeso Reduced Distribution Costso Such stores contributed to 40% Ice cream sales in Japan.

3) MEIJI MILK PRODUCTS AND MITSUBISHI COMPANYo Strong distribution resourceso Exclusive supply contract to Tokyo Disneyland.o Competing Super-premium brand Aya.o Long shot due to deforestation practices by Mitsubishi.

2)

POTENTIAL PARTNERS AND OPTIONS (CONTD.)4) AD AGENCY ARRANGEMENT

o Chance to open scoop shop in at a highly visible new retail development about to be built at Tokyo Disneyland.

5) KEN YAMADA, DOMINOS PIZZA FRANCHISEo Entrepreneurial Mind-set, frozen foods knowledge & marketing savvy.o Experience in offering ice-cream cups as part of delivery.o Overall Marketing and Distribution responsibility.

6) HOLDING OFF THE JAPAN ENTRYo Threat of Financial crisis in Japan coupled with Thai currency

depreciation leading to overall slowdown in Asian Markets.

2)

THE SHORTLIST AND DUE DILIGENCE

KEN YAMADA, DOMINOS PIZZA FRANCHISE

The +'ses The -'ses

Entrepreneurial Mind-set, frozen foods knowledge & marketing savvy.

Full control on marketing and sales of B&J in Japan was a risky option.

Experience in offering ice-cream cups as part of delivery.

Yamada did not disclose any information before agreement.

Complete responsibility to position, launch, market and distribute the product.

 

Assistance in market study by adding select flavours of B&J to Dominos Menu.

 

THE SHORTLIST AND DUE DILIGENCE (CONTD.)

7-ELEVEN

The +'ses The -'ses

Known partner (US Market)Risk of losing bargaining power due to presence of 7-11 in US and Japan

Immediate placement in 7000 Convenience store freezers.

Exclusive arrangement with one retailer considered risky appproach.

Reduced Distribution CostsCannot Help B&J to develop other distribution channels in Japan.

Such stores contributed to 40% Ice cream sales in Japan.

Reluctance by 7-11 in accepting B&J Packaging.

Control of Market Development it might want to pursue beyond supplying to 7-11

Risk for B&J for not being able to build its own Brand capital.

  Danger of Falling out

 No commitment for promotional efforts and no budget for marketing campaigns.

RECOMMENDATIONAn Alliance with 7-Eleven is recommended basis the below pointers:

• Working with a known partner is a better option for B&J and leverage 7-Eleven’s capabilities.

• B&J has control over the market development beyond 7-Eleven which can help them to reduce the risks associated with this alliance.

• Through the immediate launch of the product, B&J can leverage the current summer season in Japan.

• Tap a big market (40%) of Ice Cream through convenience stores.

• Low distribution network related costs.

• For 7-Eleven value is B&J’s unique chunks as 7-Eleven failed to co-pack a chunky premium Ice cream.

• Iida and Nakinash knew their market and were not going to give shelf space to a doubtful product.