Ben & Jerry’s in Japan |
Ben & Jerry’s is known to produce super premium ice cream. In the US the market of ice cream and specifically the premium market is huge and had a great development. This development (premium ice cream) has been lead by Haagen-Dazs and Ben & Jerry’s. But we can say that the realleader is Haagen-Dazs and Ben & Jerry’s is behind. The market share in 1997 was 34 percent that represent $74M in the US. But in the early 1990s they sales started to fall off and it was clear that they needed to enter international market.
To continue to grow and develop the activity, the international option seemed to be good but the owners intentionally slow the internationalization. WhenHaagen-Dazs don’t hesitate and records $700M of sales Ben & Jerry’s records only $6M. That is caused by the intention to be slow but also by the lack of strategy. In fact in some cases the just enter the market without strategy, but when they have a strategy, it is not the one which is adapted to the country. They made lots of errors by the past that conduct them to have only 3 percent ofinternational sale on the total amount.
They had to find a way to increase their international sales. So the company made inquiries about opportunities in Japan. In fact it is the second largest ice cream market in the world with annual sales $4.5 billion. When you see the evolution of the amount of sale and you are an ice cream maker, you must be interested by entering this market. Also, Japan isthe most affluent country in the world and that is a good aspect for a business specifically in the food industry. Japanese are known to be high-quality product lovers and the super premium Ben & Jerry’s positioning is totally adapted to it. In Japan we can observe two factors of the development of the animal-based food consumption: the school lunch programs with milk as a regular component andthe increasing of the population revenues that allowed them to buy this kind of food and equip the home with a refrigerator.
We know that Haagen-Dazs is the first competitor of Ben & Jerry’s on the US market and that they have a very powerful strategy of internationalization. The sales in Japan for Haagen-Dazs represent something like $150M and they are the most profitable sales (highestmargins). Even if Haagen-Dazs is a formidable competitor which will fight to keep and gain market share, Ben & Jerry’s studied the possibility to enter Japan market.
But even if this market seems to be an Eldorado, there are many challenges and problems to face. In order to enter this market without making strategic mistakes, the owner organized meetings with potential partners like :Dreyer’s, Meiji Milk, Domino’s Pizza and Seven Eleven. But the main options were Domino’s or Seven Eleven. Other options were not totally adapted and the arrangements offered to Ben & Jerry’s were not matching with the strategy and their philosophy.
What make the Japanese market challenging?
Ben & Jerry’s organization has changed. In fact they elected a new CEO that is going to changemany things in the company and more precisely in terms of international development. Odak (the new CEO) wants to increase the profits and that in non-US market which is a great key to grow. But how to enter this market? How to make the good choices? And how to convince partners when they say “Is there anyone at Ben & Jerry’s who can make marketing decision?”
For entering the Japan market,Odak has to solve several problems and overcome challenges. In fact, Ben & Jerry’s is doesn’t seem ready for an international experience. We can highlight the previous experiences that are not successful. In some countries they didn’t make the good choices and in other cases they forgot to establish any strategy. The reason is that they made pure opportunistic and not strategic decisions....