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BEN & JERRYS - JAPAN

Selecting the right partner


Presented by:
Group 5

Mohit Jain
Dipendra B.
Avinash Sinha
Manish T.
Preeti Baronia

28NMP10
28NMP12
28NMP07
28NMP22
28NMP73

BEN & JERRYS - 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 & JERRYS - CURRENT SCENARIO


Ben & Jerrys lacked effective management and focussed
highly on publicity, press coverage and social causes. They
avoided commercial advertising.
Ben & Jerrys 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 Jerrys plants operated at only half the capacity.

BEN & JERRYS - 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 & Jerrys 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 & Jerrys.
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 & Jerrys 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 OPTIONS


1) DREYERS
o) Largest distributor for B&J in US
o) Not a direct competitor in Japan
o) Failed to meet Sales expectations in Japan and exited
2) 7-ELEVEN
o) Known partner (US Market)
o) Immediate placement in 7000 Convenience stores
o) Reduced Distribution Costs
o) Such stores contributed to 40% Ice cream sales in Japan.
3) MEIJI MILK PRODUCTS AND MITSUBISHI COMPANY
o) Strong distribution resources
o) Exclusive supply contract to Tokyo Disneyland.
o) Competing Super-premium brand Aya.
o) Long shot due to deforestation practices by Mitsubishi.

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 FRANCHISE
o) 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 ENTRY
o) Threat of Financial crisis in Japan coupled with Thai currency
depreciation leading to overall slowdown in Asian Markets.

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
Risk of losing bargaining power due to
Known partner (US Market)
presence of 7-11 in US and Japan
Immediate placement in 7000 Convenience Exclusive arrangement with one retailer
store freezers.
considered risky appproach.
Cannot Help B&J to develop other
Reduced Distribution Costs
distribution channels in Japan.
Such stores contributed to 40% Ice cream
Reluctance by 7-11 in accepting B&J
sales in Japan.
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.

RECOMMENDATION
An 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-Elevens
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&Js 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.