Cohen formed CPI, with Cultural Survival as the company's agent and broker for Brazil nuts and cashews harvested by native cooperatives in the Amazon rain forest. Cohen was chairman and president of the new company, which he set up down the road from Ben & Jerry's, in nearby Montpelier, Vt.
Given that he was starting from scratch, Cohen was lucky to have a first employee as industrious as Irv Deutsch, whom he hired as CPI's production manager. Deutsch, stocky and intense, is literal in his outlook on life and dogged in his work. Flattered to be handpicked by Cohen, Deutsch tore into his new job. He cooked up test batches of Rainforest Crunch in his kitchen at home and got CPI's building operational in just six weeks. That was no mean feat, given that CPI was housed in an abandoned drive-in movie theater, a down-at-the-heels cinder-block building that ran hot in summer and cold in winter.
But the hard work yielded an upside, too. Within 12 months, the company was producing revenues at a $3-million annual clip. CPI, a hot little start-up, was attracting not just reams of favorable press but academic interest as well, with Harvard Business School making it the subject of a case study that gushed about the "company that Ben Cohen founded in order to push the limits of socially responsible business."
Impasse Over Tainted Nuts
Despite the excitement it generated, CPI, like any new company, had start-up problems. Although they may have shared a similar agenda, CPI and Cultural Survival proved an ungainly fit. Cohen was looking, in some form, to run a business. Cultural Survival's core strengths lay twice removed from that, oriented toward nonprofit institutions and the developing world. In an August 1989 letter to Clay, just two months after the incorporation of CPI, Cohen wrote, "These [open market] prices were considerably lower than the prices that you charged us on our first shipment." CPI had already agreed to pay Cultural Survival a 5% "environmental premium" above market for sourcing the nuts, but Deutsch remembers that Cultural Survival routinely charged as much as 25% above spot market prices.
According to Dave Alexander, formerly of Cultural Survival, the world market for Brazil nuts had collapsed, rendering noncompetitive the fledgling, low-volume-producing, native cooperative from which CPI bought. "For the co-op to get off the ground it had to produce at a much higher price," Alexander recalls.
The high prices Cultural Survival charged bothered Deutsch, a tough negotiator always on the lookout for a better deal. But particularly galling was the quality of the nuts. Deutsch frequently received shipments of nuts with broken shells and laced with items like spent shell casings and cigarette butts. Many shipments were tainted by coliform bacteria, which forced Deutsch to reject them. He soon found himself in a bind: he had to reconcile Cohen's close ties to Cultural Survival and desire to make the cooperative work with his own resolve to run a tight ship at CPI.
To break the impasse, Cultural Survival lobbied to have the nuts used in a caramelized popcorn, because the candy industry, unlike the dairy industry, had no standards concerning coliform, simply because candy is not as hospitable a medium for bacterial growth as dairy products are. Deutsch resisted. As he wrote to Cohen in a memo, "We are knowingly providing a food product to the public that contains coliform."
Cohen scribbled back: "I believe that considerably higher coliform limits are acceptable and legal and healthy in nondairy products like popcorn... Therefore I believe we should use the (co-op) Brazil nuts in the popcorn."
In an interview in May at his South Burlington, Vt., office, Cohen defends his stance, saying that only two strains of coliform are actually dangerous--and that those pathogens are killed in the cooking process.
But Deutsch claims that one dangerous strain was detected in the nuts shipped to CPI via Cultural Survival. Moreover, the Brazil nuts were introduced at the tail end of the cooking process, after the flame was shut off, making it unclear if the microorganisms would actually be killed. "The source of the coliform was not really being cooked," says Deutsch. "I wanted to have a clean product at the source and not have to worry about decontaminating it."
Deutsch felt pressure from another quarter as well. Ben & Jerry's, owing to Cohen's influence, had been forced into a less-than-advantageous relationship with CPI. It bought half of CPI's Rainforest Crunch production at 20% above the prevailing wholesale price for nut brittle--and paid for it within 10 days. That roused resentment within Ben & Jerry's, already plagued by rancid nuts from CPI and inconvenienced by production snafus there. Jim Miller, Ben & Jerry's head of production, wrote to Deutsch in August 1990, "As you are aware, Ben and Jerry's has been receiving many foreign objects returned to us from customers of our Rainforest Crunch ice cream." Those included "small stones and downright rocks." Miller continued, "This time we got lucky. The person running the fruit feeder noticed the enclosed pieces of wood just as he was about to shovel them into the fruit feeder....The objects that we are both finding and having returned to us convince me that there is an extreme lack of quality within your process."
Ben & Jerry's started keeping a "Foreign Substances Complaint List" of items encountered by consumers in Rainforest Crunch ice cream. The list included glass, hair, rocks, and insects.
Although CPI bought a million pounds of nuts from Cultural Survival from 1991 to 1994, Cultural Survival couldn't hold its suppliers to a sufficiently high standard. Says Dave Alexander, "They never took seriously the idea that they had to deal with First World quality standards." As a result of quality problems with the nuts sourced through Cultural Survival, only 5% of the nuts CPI used from 1989 to 1994 came from native cooperatives. The rest came from commercial suppliers. That scuttled CPI's principal marketing claim--that it was buying nuts from local indigenous sources that helped preserve local economies and a traditional way of life.
