COOKIE DOUGH DYNAMOS

Ben Cohen and Jerry Greenfield are two old hippies who got very rich, and a little bit fat, making ice-cream. But can their right-on business survive in corporate America?

DAMN, it's cold. Four degrees below zero, to be precise. This is the Saturday before Christmas, but there are very few shoppers out walking on Main Street in Burlington, a small but funky college town by the shore of Lake Champlain, Vermont. What a time and place to be selling ice-cream.

From the outside, in this vicious cold, it seems unbelievable that there should be so many families inside the Ben & Jerry's scoop shop on the corner of Church Street. Open the door and you understand why they are there: a comforting blast of warm air, the aroma of cookies and coffee, candy-coloured cartoons on the wall and a lot of smiles, as pre-teen tastes are indulged by parents and toddlers are taught the joy of chunks.

Mine is a Chocolate-Chip Cookie-Dough Sundae, a mountainous confection in a cardboard tub, topped with whipped cream and hot chocolate sauce. The diet can wait. The black-and-white tiled floor is designed to mimic the monochrome hides of Vermont's plentiful cows, whose contribution to my sundae is celebrated in an enormous mural by the local artist Woody Jackson. At the cash desk is a man who has only come in to ask where the original shop was, the one converted from a petrol station when Ben & Jerry's started in business in 1978. The woman behind the counter, in a tie-dyed T-shirt bearing the label design for Cherry Garcia (a flavour named after the former leader of the Grateful Dead), tells him that it is just a block away, but it is a car park now. She does not register surprise at the inquiry. A lot of Ben & Jerry's fans come looking for the site.

Sitting by the window in one of the wooden booths are Peri and Greg, two students from UVM. That's Universitas Virdis Montis (the University of the Green Mountains), founded in 1791, whose 10,000 students make Burlington a youthful and vibrant place. For every muffled-up all-American out shopping today you can see two students in goatee beard or dreadlocks.

Several things are worth mentioning about the chocolate-covered lolly in Greg's hand, which purports to be "Vermont's finest - all natural!" The first is that it is out of date, which is slightly worrying. The second is that it is a Peace Pop, one of a range launched by Ben & Jerry's during the Cold War, whose wrappers publicised a campaign to persuade the United States government to spend 1 per cent of its defence budget on welfare. Peace Pops helped make Ben & Jerry's name as a company that had a unique social mission. By so conspicuously putting community before profits, the two old hippies Ben Cohen and Jerry Greenfield have seen their company attract enviable publicity and customer loyalty. The $5 ice-cream-making course they went on in 1977 has led to a company with annual sales of more than $167m and nearly 40 per cent of the American market for super-premium ice-cream. They have now got 700 employees, 13,000 stockholders, three factories (all in Vermont), 137 scoop shops in the US and Canada, 11 in Israel and three in the Netherlands, plus an export business to supermarkets throughout Europe. For the last four years their ice-cream has been available in British supermarkets and posh grocers (Harvey Nicks has a freezer-full).

Once they had shown that caring capitalism could pay, it became fashionable: now every great US institution, from Nike and Coca-Cola to American Express, has adopted at least a superficial commitment to social concern. Ben and Jerry, seen as blissed-out barmy hippies for so long, have become market leaders in corporate compassion; their group Business for Social Respon- sibility now has 800 member firms. The Peace Pop in Peri's mouth promotes on its wrapper "the nationwide effort to learn creative, non-violent responses to conflict" - consumers are asked to call up the Ben & Jerry's website, which is a very handy marriage of activism and advertising.

The third noticeable thing about the packaging is its demand for environmental responsibility. You might assume that meant the wrapper was bio-degradable, but no. Instead it insists that "source reduction is the best environmental commitment anyone can make", so Peace Pops are packaged in bags, rather than boxes "because it puts less trash in the landfill". Seems a bit of a compromise really but, as we will discover, compromise plays a big part in the true story of America's most socially responsible, and most cunningly marketed, ice-cream company.

WHEN Cohen and Greenfield were searching for a place to open their first shop, they wanted a college town with no rival ice-cream parlours. Burlington fitted the bill, thanks to its cruel winters. What they didn't know was that Vermont was ideal for them in another way: it is one of the drop- out states, a rural place to which Americans move when they are disenchanted with their national sport - the thrusting pursuit of success - and yearn for a quieter, more balanced lifestyle. "We all know that we're not living in Vermont for the money," admits the glossy magazine that bears the state's name. "Here, things are a bit more down-to-earth." At the height of Reaganomics, while the rest of the Union was going madly acquisitive, Burlington elected a socialist mayor - and Bernie Saunders is now Vermont's representative in Congress. Where better to start a company that challenged the assumptions fundamental to the American way of business?

Vermonters have certainly taken to Ben and Jerry. Peri is impressed at my spending a day in Ben Cohen's kitchen with the two of them, making up new flavours. "See, that never happens. You are so lucky." Her enthusiasm surprises me. Even if their merchandising does reinvent the pair as characters out of some Seventies cartoon like Scooby Doo, it's not as though they are rock stars, is it? A perplexed look crosses her face. Greg raises an eyebrow. In Vermont, it seems, Ben and Jerry are icons.

"OH, MAN," says Ben Cohen, bending over his kitchen work-surface. One hand cups his bearded face, the other flips through pages in a notebook full of scrawled recipes. "What am I doing?"

"Caramel," says Jerry Greenfield, his best friend and business partner, melting chocolate. "Okay, caramel," says Ben. Last night was a good one, with friends round and conversation lasting into the early hours. A piece of garlic bread is cold on the coffee table, next to a half-empty glass of wine. "We are having a little trouble getting started this morning," says Jerry, and the two of them giggle.

Both their homes are up in the mountains. Ben's is at the end of a long driveway through woods. It used to be an old farmhouse before he renovated the place to suit his character: big, sprawling, disorganised and natural. There is a Harley-Davidson in the garage, next to a four-wheel drive and a freezer full of ingredients for making ice-cream. The main room is circular, and spectacular, with floor-to-ceiling windows offering views across the valley to Lake Champlain. The open fire is dead, but the room is warmed by the honey light of winter sunshine reflecting off snow. Most surprising of all, the door to Ben's bedroom is at the top end of a long metal playground slide.

Ben and Jerry are at home for a change, instead of on the road promoting their company. Their job today is to work on recipes, which they still make by hand before asking their research department to find a way of reproducing them for the mass market. In 1996, their three factories produced around 15 million gallons of ice-cream, frozen yoghurt and sorbet, and just over a million "novelties" like the Peace Pops. To celebrate their 20th anniversary this May, they are putting together a "founders' reserve" range, assembled without the usual restrictions on the cost of ingredients. Surely after two decades they have produced all the flavours they could dream of?

"Quality is not a place, but a process," says Ben, whose deep voice, and resemblance to both Einstein and Grizzly Adams, matches his tendency to speak like a Californian guru. "You never have the ice-cream that you want. The ultimate is always just a little beyond your grasp."

Jerry is wearing one of his company's T-shirts, but he still looks more like a businessman than his partner. It is clear that the photograph of them both that appears on every tub and wrapper was taken a long time ago, before their bodies really started to suffer for their art. "Ben is a creative person," says Jerry. "He is essentially a cook. He makes all these sauces, but can't remember which one is which. Then again, the one we really liked, we pretty much ate last night."

Ben grunts. The stone work-surfaces in the kitchen are crowded with jam pots, ingredient cartons, recipe books, ice-cream-making machines, bags of chocolate and boxes of cheesecake, which will feature in one new flavour. Other ideas are sketched out on a wipe-clean board - including "Rainbow Warrior", proceeds from which will go to Greenpeace, and some indecipherable notes about Pete Seeger and Ray Davies. Frank Zappa is on the stereo.

Despite all this dippy hippiness Ben and Jerry were not born on the West Coast but in Brooklyn, in 1951, four days apart. They met at school in Long Island, and were united in loathing for the athletic. "We were both nerdy kind of guys," says Jerry. "We were not cool, we were not popular: we were fat, smart kids."

Ben remembers watching his father eat half a gallon of ice-cream from the carton with a soup spoon at the dinner table, which may have something to do with his theory about tasting: "You've got to eat through the pint [the size of a Ben & Jerry's tub] to experience how the chunks and swirls combine. I get really concerned when we have all these people in research and development who are really skinny."

Ben and Jerry stayed friends throughout school, and college. They went on double-dates together and took a flat in New York, where Jerry worked as a lab technician after being rejected for medical school. Ben trained in art therapy, and eventually got a job as a craft teacher at a residential school for emotionally disturbed adolescents in the Adirondack Mountains, just across the lake from Vermont. In 1977 the pair decided to indulge their shared passion for eating by going into the food business together. Bagel deliveries seemed like a good idea, but the equipment they needed cost $40,000. All they needed to make ice-cream was an old freezer and $5 for the correspondence course, so that was that.

They chose Burlington and set about converting the old gas station into an ice-cream parlour. "Talk about living hand-to-mouth," they recall in a new book, Double Dip: Lead With Your Values And Make Money Too (Simon & Schuster), that combines biography with business theory. "We were eating saltine crackers and sardines from Wool-worths. There was no heat in the gas station, so it was as cold at work as it was at home. When we took the place over, there was a three-inch sheet of ice on the floor because the roof had failed."

They opened with a five-gallon freezer and a friend playing ragtime tunes on an old piano. Unable to afford advertising, they gave away ice-cream instead: to everyone on opening day, to mothers on Mother's Day, then at random to people waiting in the queue. To promote winter sales they gave money off for every degree the temperature fell below zero. In the autumn they organised the first of many annual free festivals for their customers. Using skills he had picked up on a college course in carnival techniques, Ben posed as an Indian mystic and had a breeze block smashed on his stomach.

It was all good fun, but very hard work. Success turned them from ice- cream makers into businessmen, and "for us, having grown up in the Sixties, the idea of becoming real business people had very negative connotations," they recall in Double Dip. So Jerry went off to Arizona with his girlfriend (and future wife) Elizabeth, and Ben put the company up for sale.

Every great mythical story has its turning point, and the legend of Ben & Jerry's, as it is recorded in their (not very) good book, found its epiphany in a visit by Ben to his friend Maurice, an eccentric 80-year- old artist and restaurateur. "I said, 'Maurice, you know what business does; it exploits the community, it exploits the employees, it exploits the environment.' Maurice said, 'Ben, you own the company. If there's something you don't like about the way business is done, why don't you just do it different?' That had never occurred to me before." Cue a blinding light, and the invention of "business as a force for progressive social change".

THE FIRST PART of the Ben & Jerry's mission statement says they will make and sell all-natural ice-creams made from Vermont dairy products. That identification with the state has been crucial in their development of a core group of loyal customers. In 1983 their company was growing fast, but so were its debts. They decided on a share issue - but only made stocks available to people living in Vermont. Ben and Jerry toured the state in a bus to publicise the flotation, and one in every hundred Vermont households bought stock, most at the minimum price.

All the company's milk and cream is bought from a cooperative of 500 of the local family dairy farmers. In 1991 the price of milk dropped suddenly throughout America and it became clear that these small farms, which traditionally form the backbone of the Vermont economy, were being forced out of business by larger corporations overproducing elsewhere in the States. Ben and Jerry believed in decentralised economics, rather than the concentration of wealth in the hands of a few huge businesses. Farmers who worked on a smaller scale gave their land more respect, and their cows pasture and exercise rather than drugs. So the board of directors decided to ignore the falling prices and pay what they had the previous year. It cost the company $500,000 - but it bought customer loyalty and advertising through positive press coverage worth far more than that.

The second part of Ben & Jerry's mission statement vows to "operate the company in a way that actively recognises the central role that business plays in the structure of society by initiating innovative ways to improve the quality of life of a broad community - local, national and international".

When shares in Ben & Jerry's were sold to those outside the state in 1984, a charitable foundation was established with the aim of giving away 10 per cent of pre-tax profits to good causes. The stock underwriters were unhappy, argued for 5 per cent and settled for 7.5. The foundation is now managed by a committee of Ben & Jerry's employees, and concentrates on small, grassroots organisations. Among the grants made in 1996 were $10,000 to the Bus Riders Union of Los Angeles, "to confront a corrupt and racially discriminatory mass transit system" through campaigning and legal action, and $7,500 to help schemes improving communication between the police and the Latino community in Philadelphia.

Each of the company's five sites in Vermont has a community action team of elected employees charged with allocating grants to small projects in their area. Employees are also given paid time off to do community work. Other grants are made directly at the discretion of those in head office.

Those in charge of scoop shops are offered the choice between spending a percentage of their profits on advertising or on supporting community projects. Most choose the latter. Others are run as PartnerShops, where organisations working with the homeless, people with learning disabilities or other disadvantaged groups run a store and use the profits for their own work. Ben & Jerry's has spent time and money encouraging similar groups to make ingredients - although some of these "alternative suppliers" have felt let down by the company and taken legal action.

The problem with being so open about your goals is that people will remind you when you don't meet them. Ben and Jerry would like to use only organic ingredients, but they don't. They would like to use unbleached paper for the packaging, but they don't. They would like to have more minority representation in their workforce and franchises, but that has not proved possible. They wanted to put a message protesting against nuclear testing in the South Pacific on pints sold in France, but their own staff argued it down. When they launched a product called "Rainforest Crunch" they were accused of misrepresentation (the packaging suggested that buying the ice-cream would support people indigenous to the Brazilian rainforest, but only a small percentage of the nuts it contained was actually farmed by them), and their green credentials were called into question. "People made the assumption that we were an incredibly environmentally progressive company," says Jerry, "because we were involved in this one, cutting-edge product."

FOLKSY little dialogues between the pair punctuate their book. Discussing what "values-led business" means, these two Jewish boys agree their values are like those of the Bible. "Do unto others as you would have them do unto you," says Jerry. "As you give, you receive. Or, to put it in a more 'businesslike' way: one hand washes the other."

"When you're values-led, you're trying to help the community," says Ben. "And when you're trying to help the community, people want to buy from you. They want to work for you. They feel invested in your success."

Not all of them. The book contains criticisms from their own staff. "Before I came here I'd heard the company did a lot for the community," says Daisy Sweet, a worker at the plant in St Albans, Vermont. "But I didn't know how much they went outside the community. They do give money to good causes. But I think they should concentrate on their own people first. For one thing, the pay stinks. Here we are fighting to get decent wages and the higher-ups are giving all this money away. I think they could do more for their employees before they look outside."

From 1985 onwards, the company had a strict policy that its highest earners could only receive five times as much as the lowest. Loved by the workers, this five-to-one ratio became, says Jerry, "a touchstone of our culture", a symbol of how different the company was. It was changed to 7-1, then abandoned in 1995, when the company needed to recruit a chief executive to replace Ben Cohen, who stood down because he felt he lack-ed the expertise to run a multi-million-dollar organisation. "It was a very controversial decision within the company," says Jerry, who admits that many staff felt a sense of loss. The first replacement left within 18 months, receiving a pay-off that put him among the highest-paid people in Vermont. The second, Perry Odak, began a year ago, with Ben as chairman of the board and Jerry as vice-chair. The wage ratio is now 15-1: the chief executive got $353,600 in 1996, while the lowest-paid worker received $22,934, well above the average minimum wage but not enough to support a family. Ben and Jerry received $150,000, but their shares make them millionaires.

Every year a social audit is carried out on the company, examining how well it is meeting its targets and caring for its staff. The latest results were alarming: only one in three workers thought management cared about their well-being, while less than half thought Ben & Jerry's practised what it preached. Despite wacky initiatives like a "joy gang" of Elvis Presleys being sent to the factory floor to cheer people up, only 52 per cent felt the company made work joyful and pleasant. Half felt it did not respect their home and family responsibilities. One of Jerry's slogans - "If it's not fun, why do it?" - was satirised in graffiti at a company building. "If it's not fun," the sign said, "you do it."

THE THIRD element in the company mission statement is the determination to combine its philanthropy with profitable growth. This was not a problem in the beginning, when the annual growth rate was around 40 per cent. Profits have been falling for the last few years, however, as the market for premium ice-cream has become full. Shares in Ben & Jerry's are worth just over half what they were in 1991. Perry Odak, who used to sell soap, has brought a sharper economic edge to the company. The founders have taken a back seat, occasionally reminding the new man that "there is a spiritual aspect to business".

They never meant their own company to get so big, and you get the sense that now it has, they don't quite know what to do with it. Maybe they're happier in the kitchen. Watching them bicker over pecans, I ask if they ever fall out. There follows an exchange so sickly sweet it would make you believe a) that they were living in San Francisco with flowers in their hair, and b) that you had eaten too much of their ice-cream.

"No," says Jerry.

"Only after doing too many drugs."

"That's a different kind of fall-out, Ben. We have a great appreciation of each other's talents. He's the guy that makes all the ice-creams, makes all the flavours."

"I write the songs." They giggle again.

"The way he goes about it can be a little frustrating for other people. An essential part of Ben is that he's never satisfied. So even when he's got the flavour right, Ben will have to make it wrong before he can go back to what was right."

"It's that hairy line. You don't know if you're on it until you run over it. Ha ha ha."

"That's the essence of Ben, right there." What's the essence of Jerry, Ben? "Love. It's pure love." Aaah. As they wrote on the lid of a pint of Cherry Garcia; what a long, strange dip it's been. !