14 October, 2011

The curious case of Ben & Jerry's

Do you like Ben & Jerry's ice cream? Most probably a resounding yes.  But this post is not about its ice cream. Its about what it has done on Tuesday.

What it did on Tuesday was to go to New York's Zuccotti Park where the Occupy Wall Street protesters are camped and dole out free ice cream to all of them. Nothing spectacular about that, except that it went on to publicly declare its support for the protesters. It also published a statement from its Board of Directors that the company has the deepest admiration for the protesters and is standing with them. You can read what the Board said here.

Ben & Jerry's has long been a left leaning company promoting a variety of causes. Its founders Ben Cohen and Jerry Greenfield started the company with a clear social and sometimes political agenda. So should this latest action be surprising. Yes, because, Ben & Jerry's is no longer an independent company. It's a subsidiary of Unilever, a global multinational company, perhaps the very sort that the Occupy Wall Street protesters are agitated against (that is, if somebody can decipher what exactly they are protesting about).

Was Unilever ambushed by the act of Ben & Jerry's ? Tough to believe so - for the Board of Ben & Jerry's has Unilever representatives, including an ex Director of Unilever itself. Unilever has issued a statement that it is neutral to social campaigns and has no comment to make, but that is a blithe remark considering that  its subsidiary is indeed making a very loud statement.

How far do you let your subsidiary act on its own ? Usually subsidairies are simply legal shells and the parent runs them as one corporate whole, unless there are external shareholders. But Ben & Jerry's is different. Perhaps because of its historical brand image. Perhaps because of covenants agreed with the founders at the time of acquisition to allow the company to have a social agenda. But still, the latest action seems a step too far. I won't be surprised if the upstart is reined in.

What of the protestors ? They are objecting to evil corporations; right ? Do they want the support of one ? Some of them expressed mixed feelings. They said they were uneasy about corporations muscling in on their patch. But they also said, they could not turn down a free ice cream !

Very curious.


Appu said...

Just need a Ben and Jerry Icecream.Can i get a ticket to WallStreet please ;)

Hopfrog said...

Their new flavor, Red Velvet Cake, is out of this world.

I think the protestors are being falsely labeled in a lot of ways. I'm sure quite a few have no idea what they stand for and some probably just have nothing better to do, but a lot of them represent the frustrations that a lot of us are feeling in this country with an unfair tax structure and executive pay ratios that come more from hijacking the working class and monetary manipulation, than rewarding 'the exceptional' in the free market. Things are so twisted that the free market is not rewarding the exceptional, it's rewarding the unethical.

I don't have the time or space hear to lay out a full case, but CEO pay ratios are getting ridiculous. Job creators? I've personally witnessed a CEO cut hundreds of jobs and benefits while his bonus continued to skyrocket upward. His cuts are devastating the company and customers are fleeing because there is not enough staffing to provide good service. He is not being rewarded for running a better company, he is being rewarded for gutting it. Something Romney made a career out of. The board is basically a hedgefund management group comprised of his cronies that have no stake in the well being of the company for the long term. This guy makes over 1,000 times more than his lowest paid employees and I saw him once in the 3 years I worked for him. Oh, and I worked where his main office was.

Personally I'd like to see CEO pay pegged to a ratio like 30x more than your lowest paid worker. You could still make as much money as you wanted, as long as those at the bottom also rose with you. Right now they are left in the dust. Also, a lot of us don't want to see the wealthy taxed more than us, but we sure as heck don't want to see them taxed at a lower effective rate either! The protestors aren't screaming for the disbanding of corporations and business (well most aren't), they are screaming for fairness.

And retorts for Warren Buffett to voluntarily pay more taxes if he thinks he is not paying his fair share are childishly ridiculous. I certainly don't want to see the good guys, guys like Warren, at a competitive disadvantage to the leeches.

As an ardent supporter of capitalism and economic theory, I want to see this country get back to a land of opportunity and I am so happy to see this movement in action. I just hope it can bring about effective change, something I am skeptical about.

Adam Smith's guiding hand isn't at work here anymore.

Sandhya Sriram said...

Very interesting. I kinda agree with u that it may be delicate. Colloborative acquisitions give faster business results but always come with covenants. Maybe predatory acquisition is better. Shed some blood but leave the history behind.

J said...

Wow! I am impressed they did it. I know that companies want their division to toe the line but that it so not Ben & Jerry's. And in some machiavellian way they probably think that it is good for business. I am totally with Hopfrog in terms of how I view this movement because I do think that capitalism in the US has got distorted. I dont think it is just a greedy corporation/ CEO problem and that pay limits will solve anything. My own pet peeve is lobbying which I think just corrupts people. But in any case, I think it is a good idea for a movement like this to draw attention to widespread dissatisfaction here and force everyone to take a hard look at the situation to come up with solutions.

Ramesh said...

@zeno - Oh yes. Hopfrog recommends Red Velvet Cake !

@Sandhya - This is a curious case not related to the manner of the acquisition. I would love to hear the inside story.

@J - I am just surprised that B&J have the freedom to do this

Ramesh said...

@Hopfrog and J - Thanks for your very erudite comments on the Occupy Wall Street movement. There is no doubt at all that is a major phenomenon and certainly not that of a lunatic fringe. It reflects the angst of a lot of people all across the world - witness it spreading to Europe.

I can understand what is driving this protest. For capitalism to succeed there is an implicit social agreement that while it may benefit some disproportionately, it will benefit all. America , being the meritocracy it is, was perfectly willing to let the most successful make a lot of money provided everybody had a fair chance of doing it through sweat, toil and luck. That contract seems to have broken down and the 99% feel there is no chance of them succeeding and that they are encountering a stacked deck. There is a widespread feeling that the insane money made by bankers is more akin to looting. Bankers were certainly tone deaf when they awarded themselves the usual bonuses so soon after creating mayhem requiring public bailouts.

I am also intrigued by Ed Milliband's (the Labour opposition leader in the UK) speech wherein he hinted at "good money" and "bad money". I have been toying with the thought that not all ways of earning money will be deemed as acceptable by society. Thinking of musing on this in future blog posts.

Hopfrog - As ever, thanks for an illuminating and thought provoking comment.

Tarun said...

This is really interesting - a capitalist supporting anti-capitalist movement is not seen very often. I've been following this 'Occupy Wall Street' protests; it seems to be spreading into an American version of
Arab Spring, especially when more and more young Americans recently
passing out of school join the movement venting out their frustration with huge education loans and no jobs available. But I guess they holding banks responsible for their plight isn't justified; they claim that Americans were deceived into taking cheap credit beyond their
means, but as a matter of fact, almost everybody jumped on to the
cheap credit bandwagon because of their greed for more money rather
than their need. However, unlike irresponsible bankers in other countries like Iceland and Ireland where they were brought to book for their excessive behavior, bankers in the US took away millions of dollars even after bringing the house down - that seems to be the root cause of protests and rising inequality. I see things getting worse as unemployment rises to unprecedented levels...let's see where it ends!!

Hopfrog said...

@Ramesh, My thanks is to you for bringing important topics and enlightened conversation to the discussion table. I think good money vs bad money is an interesting concept and why I am for regulation.

In a perfect world, all humans act ethically and do the right things. In the world we live in, since the dawn of time, there will always be a percentage of the populous that will do unscrupulous things to make money at the expense of their fellow man. Without regulation, the unscrupulous are at an advantage to those that play by the rules. It rewards the unethical and played a big part in this global collapse. If there was no such thing as unethical human behavior, then yes, by all means deregulation makes for a purer free market. Humans are far from pure and many fiscal conservative need to stop looking at economic theory as if it works in a pristine vacuum.

The protest is certainly a mixed bag which makes we worry about its chance for success. If Fox wants to go down and interview some burnouts who cannot string together a few sentences, they can easily do that and portray the movement in a certain way. If MSNBC wants to seek out only college grads who can elegantly discuss the current economic problems, they can also easily do that and portray it any way they want. It's a hodgepodge.

I must say though, I've seen a lot of interviews with the protestors and I was thoroughly impressed that A) so many young people are getting active and B) so many of them have an incredible depth of knowledge on the issues that is missing from so many in my generation. It is truly encouraging.

@Tauren, It is fascinating to watch. The Arab spring seemed to open so many eyes to what is truly possible when people stand together to stand up to injustice. No doubt in my mind, this movement would not be happening if not for the Arab spring.

Reflections said...

I hope it doesnt sound like a spam comment when I say the post & comments were really interesting and thanks for sharing;-).

Vishal said...

Oh Ben & Jerry's ... can't forget my tryst with Good Humor Breyers in Greenbay. That was wonderful. :)

Great knowledge sharing, Ramesh and great comments on top of that!

essentialassociate said...

Imagine what would have happened if a someone spread a rumor that strike at Maruti's Manesar plant is sponsored by the manufacturer of latest small car offering in India :-)

Ramesh said...

@Tarun - Yes bankers can't be blamed for everything, but as a category they have truly been tone deaf in carrying public opinion with them. How could such bright people be so dumb is a mystery.

@Hopfrog - You hit upon an extremely important point. Ethics in making money. Not just doing it ethically, but be seen to be doing it ethically. We have to live in a society and nobody can sustain anything if the rest of the society sees it as unethical.

@Reflections - Even spam from the cheeriest and warmest hearted blogger would be treat to read indeed :):)

@Vishal - Oh yes, Green Bay, although they were kept at a little distance by B&J.

@essential associate - I first thought this was spam, but seeing you are a serious blogger, welcome. I can't however figure out the connection between the Maruti strike and this post ?

Deepa said...

A thought provoking post and an insightful comment from Hopfrog. I thought about the rights and wrongs in B&J's stand for a long time in my head coming to no conclusion, until I thought, it didn't even matter to the protestors. I guess, in mass movements like these, people only care about the cause and not the means. Take the Anna Hazare episode in India. Millions came on the street, not even knowing what the bill was about. The media mocked the hysterical crowd, but at the end of the day, it was not about the bill or Anna, the bigger picture was people frustrated with a system and wanting a change. I guess you were looking at the more 'businessy' aspect of a subsidiary falling out of line, but what a great discussion this turned out to be.

Appu said...

Hope the musings will turn out in to blog posts. One more post where the comments are as englightening as the post. wow wow wow :) Again i insist you have to think on a serious note of being a columnist as it will enlighten way too many :)

Ramesh said...

@Deepa - Yes, its a reflection of the widespread anger against inequality and the rest doesn't matter.

@zeno - I am indebted to all the commenters who make this forum far livelier than the dry post is. Much honoured.