Ben & Jerry's Japan

Ben & Jerry’s – Japan

Situation Analysis

In the fall of 1997 Ben & Jerry’s, a super-premium ice cream producer with approximately $174 million in sales and a socially conscious philosophy, was faced with a decision regarding whether to enter into the Japanese ice cream market. In the face of declining profits and market share in the United States, international expansion was seen as the best opportunity available to increase the company’s performance. International expansion had happened in an opportunistic, haphazard fashion previously, and had resulted in a limited presence (and mixed success) in such markets as Canada, Israel, and the United Kingdom. The decision regarding whether to enter the Japanese market needed to be made quickly in order for Ben & Jerry’s to have its products in place in time for the 1998 summer season.

Issues

The question of entry into the Japanese market was a complex one. There were a number of barriers that would need to be overcome, regardless of which entry strategy Ben & Jerry’s chose. Any entry would result in a significant refrigerated transportation expense being incurred, as it had been determined that all production would continue to take place in its existing facilities in Vermont. This would allow Ben & Jerry’s to take advantage of excess manufacturing capacity, as well as less expensive ingredient sourcing. This also meant that order lead-time would be substantial, as transportation time from Vermont to Japan would be roughly three weeks. There was also a tariff in place in Japan at 23.3% (with the potential to drop to 21% in 2000), in addition to concerns that currency fluctuations could result in a disadvantageous dollar-to-yen ratio. Further, there were indications that Japan’s economy, which had slowed in recent years, could continue to stagnate. Meanwhile Ben & Jerry’s largest US competitor, Haagen-Dazs, had a ten-year head start in the Japanese market, and there were at...