Ben & Jerry’s Should Be More Cocoa for Cocoa Sustainability
Rising temperatures may support demand for Ben & Jerry’s ice cream, but climate change poses a serious threat to the company’s cocoa supply chain.
As an ice cream lover, I can see at least one benefit of climate change. Rising temperatures justify my nightly ritual: mint chocolate chip ice cream. At first glance, Ben & Jerry’s wins: warmer weather translates to increased ice cream demand. A Kepler Cheuvreux report suggests 1 degree Celsius corresponds to 5-10 percentage points of sales.[i]
Despite the potential sales lift, climate change should be a concern for Ben & Jerry’s and its cocoa supply chain. Many Ben & Jerry’s flavors require chocolate, and the changing environment poses a threat to cocoa suppliers’ production. Côte d’Ivoire and Ghana represent more than half of global production, but a 2013 study cited in Climatic Change suggests that 89.5% of land in the region will be less suitable for cocoa production by 2050.[ii]
In 2016, Ben & Jerry’s revealed the “Endangered Pints List,” highlighting flavors whose ingredients are affected by climate change. The first ingredient listed was cocoa with commentary about scientists predicting its production could drop 50% by 2050. [iii] While further diligence suggests this 50% decline may be a stretch, Ben & Jerry’s clearly knows climate change is hurting cocoa.[iv]
A cocoa shortage would likely correspond with higher prices. In this scenario, Ben & Jerry’s may choose to increase its pricing to account for the higher ingredient cost and maintain its margin structure; however, retailer and consumer demand could suffer because its ice cream is already considered expensive. Conversely, Ben & Jerry’s could maintain its pricing, but accepting lower margins would reduce free cash flow and likely disappoint its parent, Unilever.
Ben & Jerry’s Plans to Mitigate Climate Change…
Since its founding, Ben & Jerry’s has considered social mission equally important as product and economic missions. Not surprisingly, the company has long been fighting for “climate justice,” launching a carbon offsets program in 2002 and organizing an advocacy campaign in 2007.[v]
Over the short-term, Ben & Jerry’s has plans to continue pursuing climate change mitigation initiatives. On its website, consumers can sign a petition to “Join the Climate Movement” asking world leaders to transition to 100% clean energy by 2050. Ben & Jerry’s is expected to achieve 100% clean energy at its U.S. sites by 2020.[vi] Other initiatives for the next couple years include manure separation, reforestation and hydrocarbon refrigeration.[vii]
Ben & Jerry’s has not provided information on its medium-term plans. Given its social mission roots, Ben & Jerry’s could be expected to maintain its commitment to the environment.
… But Should Also Adapt to Realities…
While Ben & Jerry’s is admirable in its pursuit of mitigation, the company should simultaneously pursue an adaptation strategy. As Ben & Jerry’s is a single company, its initiatives are unlikely to materially reduce climate change’s impact on cocoa land suitability. Accordingly, the company should also institute policies that accommodate climate change.
In the near-term, Ben & Jerry’s should work with the farmers and governments of Côte d’Ivoire and Ghana. First, the company can partner with agricultural specialists to teach cocoa producers about sustainable practices. In Sustainability Science, François Ruf et al. claim “supply chain actors [e.g., Ben & Jerry’s] should help farmers in the technological and social adaptation process that is necessary for a stable, permanent farming economy.”[viii] With investment from Ben & Jerry’s, these specialists can demonstrate to the cocoa producers the benefits of pest control, less deciduous shade trades, and plant spacing.[ix][x] While Ben & Jerry’s would ideally have its distributors and retailers co-invest, they are unlikely to be incentivized because of cocoa pricing’s minimal impact on their more diversified product portfolios.
Additionally, Ben & Jerry’s has a history of being politically involved, evidenced by the aforementioned petition, and can take a similar strategy with local governments to encourage their support of cocoa production. While this government engagement should begin immediately, regulation may not occur until the medium-term; Ben & Jerry’s could lobby for tax credits for sustainable cocoa production investments.
Moreover, Ben & Jerry’s should explore product diversification over the coming decade. Ben & Jerry’s has many chocolate-less flavors, and the company could add more. Of course, other ingredients are going to face similar challenges, so the company should think about which ingredients are less susceptible to the perils of climate change.
Ben & Jerry’s plans to reduce its contributions to climate change, but should also pursue measures that accommodate the shifting environment. Both mitigation and adaptation could promote social responsibility, and such association would likely grow the brand and sales. Given the merits of both, how should the company determine the appropriate level of investment? Also, since rising temperatures can support ice cream demand, is there any point where such socially responsible initiatives should not be pursued?
[i] Erwan Créhalet, et al., “Demystifying Climate Effects,” Kepler Cheuvreux, 2013.
[ii] Peter Läderach et al., “Predicting the future climatic suitability for cocoa farming of the world’s leading producer countries, Ghana and Côte d’Ivoire,” Climatic Change, 119(3-4), 2013, p. 841-854.
[iii] Ben & Jerry’s Homemade, Inc., “Ben & Jerry’s Flavors We Could Lose to Climate Change,” http://www.benjerry.com/whats-new/2016/endangered-pints, accessed November 2017.
[iv] Martin Parry et al., Climate Change 2007: Impacts, Adaptation and Vulnerability, (New York: Cambridge University Press, 2007).
[v] Ben & Jerry’s Homemade, Inc., “B Corp | Ben & Jerry’s,” http://www.benjerry.com/about-us/b-corp, accessed November 2017.
[vi] Ben & Jerry’s Homemade, Inc., “Join the Climate Movement,” http://www.benjerry.com/values/issues-we-care-about/climate-justice, accessed November 2017.
[vii] Ben & Jerry’s Homemade, Inc., “Ben & Jerry’s is Fighting Climate Change,” http://www.benjerry.com/values/issues-we-care-about/climate-justice/fighting-global-warming, accessed November 2017.
[viii] François Ruf et al., “Climate change, cocoa migrations and deforestation in West Africa: What does the past tell us about the future?,” Sustainability Science, 10(1), 2014, p.101-111.
[ix] Marius Wessel and P.M. Foluke Quist-Wessel, “Cocoa production in West Africa, a review and analysis of recent developments,” NJAS – Wageningen Journal of Life Sciences, 74-75, 2014, p.1-7.
[x] Peter Läderach et al., “Predicting the future climatic suitability for cocoa farming of the world’s leading producer countries, Ghana and Côte d’Ivoire,” Climatic Change, 119(3-4), 2013, p. 841-854.
Student comments on Ben & Jerry’s Should Be More Cocoa for Cocoa Sustainability
Amazing opener – I laughed out loud. And a very interesting read, John Pettifred! I definitely think Ben & Jerry’s need to significantly invest in an adaptation strategy. I think there are two key ways in which they can look to adapt. First, I agree that they should look to further diversify their product portfolio. While Ben & Jerry’s has several classic flavors, others are more seasonal and are rotated in and out. If the company is thoughtful and strategic, they can work towards new flavors with ingredients less prone to similar risk, as the article mentions. Over time, the company can increase marketing efforts towards these flavors, making them staples and at the same time, rotate out some of the chocolate-heavy flavors. Which brings me to my second idea for adaptation. While I am an avid Ben & Jerry’s consumer, I sometimes find that there are too many chocolate chunks in a serving, overpowering the actual ice cream in the pint. As a result, although this is a stretch, perhaps Ben & Jerry’s can re-evaluate the amount of cocoa used in the cocoa-required flavors and consider revising these recipes. While this would initially lead to inefficiencies in the supply chain – having to revise recipes and production schedules, it allows the company to eliminate the amount of cocoa needed per pint. At the same time, the company could market these revised flavors as “healthier” options, potentially tapping into more of the health-conscious ice cream consumer market.
This is a great piece, and one very close to my heart!
I believe Ben & Jerry’s can simultaneously be deeply engaged in both mitigation and adaptation. Mitigation activity will primarily be driven by creating awareness among citizens (and more specifically, consumers), and lobbying with governments to drive policy in the right direction and not melt away past efforts. While this does involve committing a part of your marketing budget, costs relating to large-scale national campaigns rare often shared by competitors / concerned associations in order to not scoop away a large part of any single player’s budgets.
Adaptation, meanwhile, is a more time and money intensive exercise for Ben and Jerry’s. For starters, this is an action over which the ice-cream chain has complete control. Adaptation will involve developing new flavours whose ingredients are more immune to climate change, and identifying new suppliers, supply chains and production processes – all of which are expensive but potentially necessary given present trends.
When it comes to the upside for Ben & Jerry’s in a rapidly heating up world, I wouldn’t be licking my lips yet. Ice cream will not be the only commodity impacted by climate change, and most food items are expected to become more expensive in the process. Since ice-cream would fall into the indulgences waffle cone for a significant part of the population, ice cream tubs might find themselves to be the victims of a shrunken real wallet.
John- great article on one of my favorite food groups! I do think Ben & Jerry’s is an interesting pick in the context of climate change.
In response to your thoughts about mitigation vs adaptation, here are my two cents:
1. While it is very admirable that Ben & Jerry’s is investing in clean energy and raising awareness, the reality is that we are quite off track from the 2 degree goal of the Paris agreement. Even hitting the 2 degrees does not imply business as usual. In California, we are seeing rising agriculture costs, of which attribution to climate change may or may not be debatable. Thus, in terms of mitigation I don’t think Ben & Jerry’s can alone turn the tides. That being said, perhaps carbon sequestration and other technologies will become feasible in the future due to economic drivers related to increased costs from climate change. References: http://www.dw.com/en/climate-change-world-way-off-track-on-paris-accord-goals/a-41173220
2. I think the adaptation front is where Ben & Jerry’s has more hope. I am concerned to learn about the concentration of cocoa production. I think in the near term, Ben & Jerry’s can benefit from diversifying their supply chain to look at other locations that may be or become suitable for growing. Alternatively, they might be able to influence growers to try breeding for plants with more drought/ heat/ etc resistance. Of course, there is the option of offering less chocolate based options (which I am personally not in favor of given my fondness for chocolate).
The impact of climate change on global food supply is definitely concerning. Hopefully a combination of technology and re-risking the current supply chain will keep ice cream on the shelves!
Really interesting post, it is great to see a company being so socially active. Though I am now craving some ice-cream.
First off, I must disagree with you on liking mint chocolate chip ice-cream. I am a chocolate with peanut butter person, myself.
To address your first question, Ben & Jerry’s should continue to invest in mitigating climate change, not only because it will improve their brand and sales, but also because if climate change is not addressed, the impact to cocoa will likely increase the price to acquire the ingredient. Cocoa plays such a huge role in Ben & Jerry’s flavor offerings, and they should, therefore, be proactive in fighting climate change. However, I do agree with you that they should pursue an adaption strategy in parallel.
To address your second question, if less-used-ingredients like mint (used for mint chocolate chip ice-cream) were being impacted, then they may want to focus their social impact efforts elsewhere and benefit from the sales increases that are correlated with temperature increases.
Great article, Fred! Like you I really love ice cream and so hearing about this challenge and the future of chocolate-flavored ice creams makes me sad. However, challenge is just another word for opportunity and necessity is the mother of invention.
I agree with the action plans you have suggested in your article and others have elaborated on, such as teaching sustainable practices, diversifying portfolio of ice creams, and being politically active. These measures if executed successfully would be highly successful in addressing the chocolate problem. Nonetheless, I would like to add a different perspective on this issue.
You mentioned that 89.5% of “cocoa” land in Cote d’Ivoire and Ghana may be less suitable over time due to global warming. However, I am curious to know if this could also mean that land previously unsuitable for cocoa will, through global warming, become more suitable than it had been in the past. In other words, perhaps we see a world where cocoa is grown at a latitude more distant from the equator than we have previously?
Still, suppose this is not in fact the case. Suppose, we can’t slow down global warming and the impending shortage of chocolate becomes inevitable? What then?
In this case, I am thinking of perhaps a more outside of the box, controversial solution. That is, could Ben and Jerry’s make people start hating chocolate? As a socially responsible company, Ben and Jerry’s could slowly phase out chocolate and alert people to the associated health risks that its consumption can cause. This would, of course, disrupt their own business so they would have to generate an equally tasty and affordable alternative (maybe look into the Mocolate that Monica Geller was on the verge of developing in Friends). If they were able to somehow do this, they could not only spin it as corporate responsibility (making ice cream healthy for customers) but also enable themselves to control their destiny before global warming does.
Of course, I doubt making people hate chocolate is actually possible. So I would much, much rather live in a world where your solutions solve the issue and/or new locations for cocoa production emerge through global warming, as mentioned above.
By the end of the read, I was craving a pint of half baked. This was really interesting – I did not realize how much of an issue cocoa production was in the supply chain. I agree that the company needs to do a lot more. Most of the solutions that it has worked towards or that have been posed accommodate the impact of climate change v. reduce the impact of climate change. The one proposal that will likely do the latter is to diversify the product portfolio. However, you hit the nail on the head in indicating that there might be other ingredients that will face the same challenge. Another one that is probably less realistic is finding a cocoa substitute?
To address the question you posed – no, there is no point at which such initiatives should not be pursued. Increased ice cream demand will probably be offset by the decline in population because of the adverse effects of a 2 degree increase in global temperature. Moreover, there is an ethical question rooted in this. Should you do the right thing, even as a corporation? I say yes, especially given the existing focus of Ben and Jerry’s around advocacy. I personally am skeptical of all CSR initiatives because they are often a PR stunt. By not engaging in any, it would only reinforce my skepticism that the initiatives were not motivated by appropriate intentions to begin with.
Of all the issues firms are having to grapple with, climate change appears to me to be one of those issues where hope is hard to come by. I agree with you on the actions Ben and Jerry’s should take in mitigation and adaptation. As you rightly allude to, mitigation alone will not be enough in the context of Ben and Jerry’s as a single firm. However, there is hope that collectively, firms and governments will awaken to this very real threat and work in concert at a time (hopefully in the very near future) and agree on some strong, coordinated measures to reverse or at least slow the pace of climate change.
Ben and Jerry’s can definitely continue in its advocacy and education efforts. I also think one of Ben and Jerry’s easiest ways to contribute is to convince the Unilever group to pool its resources as a major global brand, and thereby have a more focused, more effective impact on stemming the tide.
When it comes to adaptation, I think Ben and Jerry’s can pursue one or a combination of the following:
– Assisting farmers in its major supplier countries with education of farming practices that are more suitable in a world of rising temperatures.
– Reevaluating its supply chain and possibly diversifying or consolidating its supply chain so it increases its own bargaining power in a world of rising prices.
– Vertical integration: Ben and Jerry’s may consider investing in farming land as part of a long term plan to control costs.
– Ben and Jerry’s could also co-invest with its suppliers to create more sustainable, more resilient supply chains.
Thank you for the eye-opening post. It has given me a lot to think about.
Tremendously interesting post. It was incredibly edifying to read about Ben and Jerry’s efforts to address the negative exigencies of climate change, despite their commercial incentives to operate in a warmer world. To your question, Ben and Jerry’s must perceive combating climate change to not only be motivated by altruism, but, also, to be a function of their realism in light of a changing global climate. Their sustainability efforts, therefore, should err on the side of realistically planning for a future impacted by climate change, rather than idealistically attempting to contribute to a future in which climate change doesn’t occur.