Unilever champions purpose in its brands, arguing that it drives growth. This philosophy backfired when Ben & Jerry’s, the US$116 billion subsidiary of the consumer giant, suspended sales in the occupied Palestinian territories on the grounds that operating there was incompatible with its values. Boss Alan Jope has fixed the mess by selling the Israeli branch of Ben & Jerry’s to the holder of its domestic production license. But the autonomy of the maker of Phish Food and Cookie Dough means tensions could very well flare up again. The controversy surrounding Ben & Jerry’s stems from Unilever’s $326 million acquisition in 2000, which gave the brand’s board of directors hipster more independence than a normal subsidiary. By telling its Israeli licensee that it would not renew its agreements last year, the subsidiary’s ideal result would presumably have been to mobilize customers to pressure Jerusalem for a policy change. Instead, Jope faced backlash from US shareholders, including activist and new board member Nelson Peltz. Pension funds in states like Colorado and New York have considered leaving Unilever because their own policies prohibit boycotting Israel. Avi Zinger, whose manufacturer has now bought the business, has also sued Ben & Jerry’s, claiming the breakup of their 34-year relationship was illegal.
The sale was the only practical way for Jope to get out of a hopeless situation. It allows him to appease the Israeli government and its angry shareholders, as well as earn an undisclosed sum from the sale. Meanwhile, Ben & Jerry’s shareholders who thought the brand was right to sanction Jerusalem shouldn’t boycott their ice cream. The deal will see Ben & Jerry’s appear on shelves in Israeli-occupied lands with names in Hebrew and Arabic instead of English. But the underlying problem of a structure in which Unilever retains primary responsibility for financial and operating decisions, while outsourcing social decisions to Ben & Jerry’s, remains. There is no guarantee that these types of damaging internal disputes will not arise again.
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