Ben and Jerry's Under Duress, Lays Off 124

Author: Megan O'Keefe

Ben & Jerry's Homemade Inc., the Vermont-based premium ice cream maker, announced plans to lay off 52 people at their company headquarters in South Burlington, the Associated Press reported on Oct. 24. Currently Ben & Jerry's employs 841 people, 199 of which work at the South Burlington office.
The job cuts, which will affect employees in sales, finance, marketing, information systems and human resources, are the latest development in a series of setbacks for Ben & Jerry's. This spring the company announced that it will close two plants in Vermont — one in Bellow Falls and another in Springfield.
Those closures resulted in the loss of 124 jobs. While Ben & Jerry's is currently involved in a $10 million expansion of its St. Albans plant that will create 35 new jobs, the project was originally intended to create 55 jobs through a $15 million expansion. The layoffs are the company's "reaction to changes in the industry," claims Heimert.
"The cost of doing business has gone up and our competition is fierce," she adds.
Ben & Jerry's is owned by Unilever Corporation, a $40 billion a year conglomerate. Profits from Ben & Jerry's account for a small fraction of Unilever's revenues, 17 percent of which come from the sale of ice cream and beverage products. Additionally, Ben & Jerry's is distributed by Dryer's Grand Ice Cream Inc., which also owns Godiva, Dreamery and Starbucks ice creams.
In June, Nestle announced that it would acquire a major stake in Dryer's. Because Nestle owns Haagen-Dazs, a major Ben & Jerry's competitor, the announcement has forced Ben & Jerry's to rethink its distribution system. While the Nestle deal is currently under review by the Federal Trade Commission, its approval would pose a major challenge for Ben & Jerry's.
Distribution of ice cream is critical because the product must be kept at minus 20 degrees, prohibiting shipment with other frozen foods. Dryer's, which delivers directly to stores, has been able to carefully manage the distribution of Ben & Jerry's. If Haagen-Dazs gains access to Dryer's distribution resources, Ben & Jerry's will face a severe market setback.
The structural changes in the ice cream market, along with a lagging economy, have left Ben & Jerry's with an uncertain future. Despite the cuts, the company maintains that this is not a sign that it will shut down its Vermont operations.
"There's been assurance that the brand continues to have commitment in the state of Vermont," Heimert affirms.