Cookies, Cream 'N' Controversy

It was a classic David vs. Goliath tale. Nine years ago, after starting an ice-cream shop in a renovated gas station in Vermont, two young hippies named Ben and Jerry were confronted by a formidable foe. The giant Pillsbury-owned Haaagen-Dazs Co. refused to allow its distributors to carry Ben & Jerry's ice cream. "What's the Doughboy afraid of?" the Vermont duo asked in a challenge to their competitor. They sued Pillsbury and settled out of court. The rest is ice-cream-making history.

These days it's Ben and Jerry who are dodging the slingshot fire. Last weekend, as the company held its annual meeting, the industry giant was drawing criticism for allegedly straying from its politically correct principles. Two independent distributors say Ben & Jerry's and its chief distributor, Dreyer's, have squeezed them out of the business; at least three others say they have lost access to the brand after building it for years. Meanwhile, a recent independent "social audit" of the company concludes that a "widespread sentiment amongst employees is that the company does not walk its talk."

Some of Ben & Jerry's harshest critics are the folks who have tried to follow in its footsteps. Just ask Amy Miller, founder of Amy's Pints, an upstart superpremium ice-cream maker from Austin, Texas. Miller, 32, says she can't get Ben & Jerry's distributor to take her products across the state because it fears retaliation. Doris Mattus-Hurley, who, ironically, is a member of the Haagen-Dazs brand's founding family, says Ben & Jerry's won't allow Dreyer's to distribute her new low-fat ice cream. Company founder Jerry Greenfield says he does not bend over backward to help competitors. But he denies the company tells independent distributors which brands they can or cannot carry. "We are not perfect," he says. "[But] we try to be open about what we don't do perfectly."

Indeed, the social audit, conducted by Smith & Hawken cofounder Paul Hawken, is published in Ben & Jerry's annual report. The audit hints that Ben & Jerry's asks customers to swallow a lot more than butterfat. Among its findings: while Ben and Jerry have become millionaires, the rank and file hold less than a half a percent of the company stock. Ben & Jerry's has also modified an earlier policy that no executive in the company would make more than five times what the lowest-paid employee receives. And it had to relabel its so-called lowfat Heath Baryogurt, which is not low in fat. The company's Securities and Exchange Commission filing reveals that 42 percent of its "homemade"--in--Vermont ice cream is actually made by Dreyer's in Ft. Wayne, Ind.--using Vermont milk. "People have it ingrained in their heads that if they buy Ben & Jerry's all the monkeys in the rain forest will have trees," says Chuck Schiffer, a retailer who says he sued after the company cut off his supply of ice cream. "Corporately, they're absolutely vicious."

Is Ben & Jerry's on its way to becoming just another unfeeling corporation? Hawken says an overwhelming number of employees are happy with the company and their work. Greenfield, too, insists Ben & Jerry's remains committed to its mission to improve the quality of life in the local and global community. "I sleep very well at night," he says. But after hearing such charges of hypocrisy, will his loyal customers rest easy, too?