👨⚖️ Unilever, Social Issues and a Courtroom Drama
Unilever recently won a courtroom battle against Ben & Jerry's. But this wasn't just their victory. It was the victory of capitalism over brand values. Here's why.
"You can't eat ice-cream and be angry at the same time," goes the old saying.
And we can whole-heartedly vouch for this.
But what happens when an ice-cream maker themselves gets angry?
Yes, one of the world's most popular ice-cream makers Ben and Jerry's was so angry recently, it sued its own parent company, Unilever.
Wondering why? ReadOn!
🍨 Socially Responsible Ice Cream
Now, we Indians might associate Ben & Jerry's with delicious ice-cream. But there is one more thing the company is famous for: standing up for social issues. It even launches ice-cream flavours related to social justice issues like gay marriage, racism, and world peace.
This peace-loving company did not support the violence that was going on in Palestine's West Bank and to protest this it decided to stop selling its delicious ice-cream there.
But you can't just stop selling the world's fourth-ranking ice-cream brand without a lot of people getting angry.
🤔 A Little Context Please?
So, before we proceed with the story, let us give you a little context about the Israel-Palestine conflict.
The story begins during World War II.
Thanks to Hitler's anti-Jew campaign in Germany and neighbouring countries, the world now had a lot of displaced Jews.
Britain was given the task to set up these Jews with a permanent place and it chose the Middle East, and more specifically Palestine (which the Jews consider their ancestral home according to the Bible).
The region already had a Jew minority and an Arab majority.
But as more Jews started entering the region, tensions between the Arabs and Jews began growing.
The Arabs thought this is our land and so did the Jews.
Now, the UN stepped in and decided to split Palestine, setting up a separate country for the Jews. That's how Israel was born for the Jews.
But Palestine obviously didn't like its land going to Israel, so it began waging wars against the country
In one of these wars, Israel occupied the West Bank and Giza, areas that were Palestine's territory.
And there have been reports about human rights abuse by the Israelis in this area.
This is what Ben & Jerry's is against.
So, no more ice-cream for Israel.
But this led to a whole new issue.
🚫 Israel Screams for Ice-Cream
Israel claimed that Ben & Jerry's decision to not sell them ice cream was basically discrimination.
And when Israel gets mad, so does the US, because the two countries are basically BFFs.
That's because Israel has a lot of resources and helps the US develop world-class weapons.
Israel is also one of the major startup hubs of the world, with the highest number of tech startups per capita.
The country is making major breakthroughs in EV, neuroscience and longevity tech. So, maintaining good ties with it is super important for the US. And for a lot of other countries
That's why the US government officials and some international investors threatened to put Unilever on an investment blacklist (basically saying it would no longer get major investments), if it went through with the ban.
Now, this was a major conundrum for Unilever.
🤝 The Unilever-Ben & Jerry Pact
When Unilever acquired Ben & Jerry's almost 20 years back, it had promised the company that the acquisition would not compromise with the company's strong social stance.
This was not an empty promise. An independent board of advisors was appointed to make sure that Unilever would keep its word.
For 20 years things were fine. But when the Israel issue came, Unilever had to break its promise.
It couldn't afford to anger investors.
However, it didn't go against Ben & Jerry's directly.
It just transferred the local Israeli ice-cream business to a licensee.
This means that Ben & Jerry's ice-cream will still be sold in Israel, but it will no longer bear the same English branding. The names will be changed to Arabic and Hebrew.
Now, Unilever thought this was the best way out of the situation.
But Ben & Jerry's sued the company for going back on its word.
The ice-cream maker believes that selling ice-cream in Israel goes against its ideologies and the statement it made to its users. This would cause it reputational harm.
However, the court did not think so.
It has given Unilever and Israel a victory and Ben & Jerry's will still be available in the region.
Now, why are we talking about all this?
Because this whole issue raises two important points.
One, that no matter how huge a brand you are, after you have been acquired you may have to compromise on your brand values.
And two, no matter how much companies talk about the importance of social issues, investors are going to be given first priority.
Now, we don't want to give our opinion on the whole Israel-Palestine conflict, but this whole saga has been a major defeat for stakeholder capitalism, once again proving the supremacy of shareholder capitalism and the belief that what ultimately matters to a company is money.
But things could be changing soon. With consumers becoming more and more conscious about the kind of brands they want to associate with, soon this investor supremacy may die down. Because ultimately, the customer is the king.
Companies will have to stop listening just to institutional investors and will have to pay attention to consumers and retail investors if they want to survive in the long run.
But the Ben & Jerry's case proves that day is still far away.
⚡ In a line: Ben & Jerry's sued its parent company because it was compromising on its brand values but Unilever had the last laugh because social issues simply aren't given that much weightage in court.
💡Quick question: Do you think major investors will always hold a sway over companies or will customer opinion become the deciding factor for them?
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