In purchasing two icons of America’s love-hate relationship with food, Unilever is continuing its effort to shed poorly performing products to concentrate on its 400 best-selling brands. With 45 percent of the $1.3 billion diet food market and $611 million in sales, the privately held, Florida-based Slim-Fast Foods Co. now becomes Unilever’s sixth-largest brand.
Purveyor of such household names as Ponds, Vaseline, Ragu and Lipton Tea, Unilever is also the world’s largest maker of ice cream, owning the Breyer’s and Good Humor premium brands. Ben & Jerry’s niche is superpremium, selling its Cherry Garcia and Chubby Hubby flavors in all the major grocery chains nationwide and through about 215 scoop shops. The company, which tempered capitalism with a spoonful of whimsy and a healthy dollop of social consciousness, had $237 million in sales last year.
Selling out to corporate “suits” is an ironic ending for the company founded in 1978 by two former hippies with $12,000--$4,000 of it borrowed. Cohen and Greenfield took the company public in 1985.
Although they had fended off takeover offers in the past, it had become clear to the founders that Ben & Jerry’s needed more resources and broader distribution channels. Last December, to the dismay of many Vermonters and some of its franchisees, the company let it be known it was considering other opportunities.
“Neither of us could have anticipated, 20 years ago, that a major multinational would someday sign on, enthusiastically, to pursue and expand the social mission that continues to be an essential part of Ben & Jerry’s,” Cohen and Greenfield said in a news release.
Social activism will continue under Unilever, the Ben & Jerry’s release pointed out, possibly in anticipation of critics of the move. Specifically, the company will stay headquartered in Vermont and will continue to buy growth-hormone-free milk from family farmers in the state. It also will still hand out 7.5 percent of pretax profits to the company’s charitable foundation.
Unilever’s commitment to these practices comes with something of an enforcement clause, according to the Vermont company’s spokesman, Lee Holden. The multinational, he said, has named two current Ben & Jerry’s board members to enforce the guarantees, granting them the right to sue if necessary.
Cohen had earlier tried to take the company private again, and he acknowledged yesterday he would have preferred independence for it. But, in a statement released to the press with a lead-in from a Grateful Dead song, he said he is excited about the future and will continue to work with the company, as will Greenfield.
Ben & Jerry’s shareholders may count themselves among the grateful living for the $43.60 a share offer, which was about a 25 percent premium over the company’s closing price of $34.93 3/4 on Tuesday.
“I’m feeling pretty confident that it’s going to be a good fit,” said Lori Johnston, who operates Ben & Jerry’s of Eastern Market on Capitol Hill and another scoop shop in Georgetown. “Ben and the board seem to have made a deal with Unilever that is going to continue our social mission and work in the community and all the things that we as franchisees were fighting for.” Johnston is chairman of the company’s Franchise Advisory Council.
Jeff Metzger, publisher of Food World, a trade newspaper that covers the grocery business in the mid-Atlantic, called Unilever and Ben & Jerry’s a good fit. He added that major international consumer goods companies such as Unilever and Procter & Gamble Co. are acquiring other brands in order to increase market share and to balance their strength against the growing clout of the multinational grocery companies that have been produced by industry consolidation.
“These manufacturers, as big as they may have been, are getting squeezed,” he said.
At the offer price, Cohen’s holdings in Ben & Jerry’s are worth $39.3 million, and Greenfield’s $9.6 million.
In the press release, Cohen seemed to be calling out for a blessing on the deal when he quoted from the Grateful Dead’s “Scarlet Begonias”:
Once in a while you get shown the light,
In the strangest of places if you look at it right.