Some smaller grocery store chains in New York city — home to a large Jewish community — responded by saying they would reduce or remove Ben & Jerry's products from their shelves.
The decision by the Vermont-based company followed a campaign of pressure by pro-Palestinian activists. The company said that selling its products in the occupied territories was "inconsistent with its values."
Ben & Jerry's and politics
Unilever acquired Ben & Jerry's in 2000. Under the deal, the ice cream brand maintained a relatively high amount of autonomy in comparison to other subsidiaries.
The company has its own independent board and the freedom to pursue its own social corporate mission and brand integrity. It has previously supported social justice movements such as Black Lives Matter.
According to Monday's announcement, the company will not renew the agreement with its Israeli partner when it expires in 2022.
Nevertheless, the company will continue to sell ice cream in the rest of Israel "through a different arrangement."
Some 700,000 Israelis live in settlements built in the occupied territories. While most countries consider these illegal, Israel does not.