MLM Blog – Network Marketing Blog

Herbalife has been around a long time and the publicly traded company just announced growth of 23% in the 4th quarter of 2011. That's some big growth for such a large company.

So, why isn't this great news for distributors?

Because as a publicly traded company, Herbalife pays out a dividend to shareholders, 30 cents per share this quarter.

A quick search shows Herbalife's payout to it's distributors (you know the folks who actually drive all of the sales) at 32.9%, the lowest payout among public companies that I found.

Just so you know, I am a capitalist.  I like it when companies make money, it usually means that jobs are being created and value is being brought to the consumer.

But in the case of Herbalife, the company is paying out 15 to 40% less to it's distributors than other companies in the industry.

At the same time, Herbalife has people on the Internet saying things like:

Herbalife’s compensation plan is one of the most generous in the direct-selling industry. It pays up to 73% of product revenues to Distributors in the form of retail and wholesale profits, royalty and bonus income, and incentives.

So the actual payout according to Herbalife's own financials say 32.9% but you have (ill informed) Herbalife reps telling people they pay out 73%.

There are some other issues with Herbalife that we will be covering in the coming weeks...stay tuned.

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Ty Tribble
Founder, MLMBlog

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Herbalife has expanded it's brand presence in Russia - as reported a few weeks here on the MLM Blog with the Herbalife Sponsors Spartak Moscow post.

Now comes word that Herbalife has also expanded their brand presence in India.

Well-known Bollywood actress Mugdha Godse has been recruited to represent Herbalife's skin care line.

Herbalife has taken to calling their skin care line "Outer Nutrition".

Godse, perhaps best known for her role in "Fashion" is expected to help drive sales in her native country. As a winner of the Miss India Perfect 10 title in 2004 she's well known for her "Outer Nutrition."

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Herbalife has announced the establishment of a Herbalife Nutrition Institute. The goal of the new Herbalife Nutrition Institute is to serve as an educational resource on topics related to health and nutrition.

The Herbalife Nutrition Institute's mission is to support and encourage education and research into the relationship between health, nutrition and active lifestyles.

Additional information on the Herbalife Nutrition Institute is available at the Institute’s website (www.HerbalifeNutritionInstitute.com).

The Herbalife Nutrition Institute is headed up by a group of nutrition scientists with expertise in nutrition, sports medicine and public health.

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U.S. nutrition products company Herbalife, known for its protein shakes and energy supplements, will become the title sponsor of the Spartak Moscow football club, Vedomosti reported Wednesday.

By placing its logo on the T-shirts of the country’s most popular football club, the company hopes to improve its image in Russia after overly aggressive advertising campaigns during the 1990s, Vedomosti reported.

The company and the Premier League club confirmed the partnership, promising to announce details on Friday. Vedomosti reported, citing an unidentified club partner, that the contract would cost Herbalife about $10 million over 2 1/2 years.

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In a nationwide survey sponsored by Herbalife, 73 percent of parents said that their kids ate breakfast at home every day before going off to school, while only about 5 percent of parents reported that their kids never ate breakfast. So, the message that "breakfast is the most important meal of the day" seems to be getting heard, at least by parents of kids aged 6-12.

That's the good news. But what kids typically eat is another story. The survey of over 1100 parents in the U.S. conducted by Synovate eNation, found that kids' top three breakfast choices were refined grain products like cold cereal, waffles or pancakes, and bread products like toast and bagels. Fewer than half of those surveyed said that their kids typically ate eggs in the morning and less than half (41 percent) said that their kids ate fruit before leaving for school.

"Just as important as making sure that kids eat breakfast in the morning, is making sure that kids get a well-balanced meal before going to school," says Luigi Gratton, MD, vice president of nutrition education at Herbalife. "A breakfast high in refined grains and low in protein won't keep kids going until lunch, so energy can lag and academic performance can suffer," he adds.

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What's the old saying? Don't Trust Anyone Over 30? Herbalife is a company  that was founded by a guy selling diet pills out of the trunk of his car who then went on to market products made of Ephedrine that was linked to cardiac arrests, strokes and deaths by the Food and Drug Administration. They've never been a very trustworthy company - but that's just my opinion. I've never been a big fan. Happy Birthday Herbalife!

Los Angeles-based Herbalife International of America, which celebrates its 30th anniversary as one of the nation’s nutrition and weight management leaders, returns to Downtown LA to host its annual Extravaganza October 20-24. The five-day gathering, expected to generate nearly $6-million citywide, is the company’s biggest and most spectacular event with thousands of Herbalife distributors attending from across the U.S.

"The Los Angeles Convention Center is pleased to welcome Herbalife International, its executives, and worldwide distributors to our great city for its 30th Anniversary celebration extravaganza," said Pouria Abbassi, P.E., CEO & general manager of the Los Angeles Convention Center. "As one of the most health-conscious cities in America, Los Angeles provides the perfect setting to educate and exchange ideas for well-being."

The California Science Center at Exposition Park will be the site of the company’s 30th Anniversary Gala taking place on the evening of Saturday, October 23.

Source: Businesswire

Herbalife is opening a new extraction facility for botanical compounds in Hunan Province in China.

The new facility is expected to open in the second half of 2011. The facility is a joint venture with NatSource Chemicals and its principal Qun Zheng. The new extraction facility will purchase botanicals directly from farms in Hunan province and other regions, perform extraction and other conversion processes and then send these processed raw materials directly to Herbalife's manufacturing facilities in Suzhou, China and Lake Forest, California or to its third party manufacturers throughout the world, the company added.

The new extraction plant will produce botanical extracts including teas, guarana, chamomile, broccoli and bilberry. Herbalife is also in the process of entering into strategic supply agreements with farmers in Hunan and other provinces to provide traceability for its ingredients.

Herbalife's 80,000sqft facility in Changsha will be capable of processing approximately 8,000 metric tons of raw materials annually through extraction, purification and drying of powders and liquids. The new plant will create approximately 120 local jobs. The project received support from the Hunan provincial and Changsha City governments.

Source: COMTEX

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Herbalife, a global nutrition and direct-selling company, announced today that the company will serve as the primary sponsor for the No. 99 Sam Schmidt Motorsports/Chip Ganassi Racing entry in the 2010 edition of the Indianapolis 500-Mile Race driven by Herbalife-sponsored athlete Townsend Bell.

Bell, 34, of San Luis Obispo, Calif., comes back to the "Greatest Spectacle in Racing" in the bright green HERBALIFE SSM/CGR Dallara Honda open-wheel car after recording a sensational charge at the famed Indianapolis Motor Speedway in finishing fourth behind the wheel of the Herbalife machine in the 2009 running of the world's biggest auto race.

"Bringing Herbalife on board for this year's Indy 500 is very exciting for our effort in 2010," said Schmidt, a three-time Indy Lights champion team owner. "A worldwide nutrition company such as Herbalife gives our SSM/CGR program a strong foundation to prepare a winning machine for Townsend. Again partnering with Chip's operation puts us in a position to qualify well and race for the ultimate motorsports prize, the Indianapolis 500. We have an excellent team led by Chris Griffis and I am very proud to enter a solid effort for the Indy 500."

Source: Market Watch

Herbalife Ltd. (NYSE:HLF) today announced that Vasilios H. Frankos, M.S., Ph.D., will retire from the FDA in March and join the company as senior vice president, product compliance and safety, effective April 2010. Frankos is currently the director, division of dietary supplements programs, Center for Food Safety and Applied Nutrition (CFSAN), at the Food and Drug Administration. He will report to the company's General Counsel Brett Chapman.

Frankos, one of the country's foremost authorities on dietary supplements, has more than two decades experience in creating policies and standards for safe and effective dietary supplements and ingredients, and led efforts in developing good manufacturing practices (cGMPs) and Serious Adverse Events Reporting.

"Bill Frankos exemplifies Herbalife's commitment to providing science-based nutritional supplements of the highest quality available in the marketplace," said Michael O. Johnson, Herbalife chairman and CEO.

Source: Business Wire

Stair-step Breakaway Plan

Company examples: Amway, Arbonne, Nuskin, Avon, Pre-paid Legal, Herbalife.

History and definitions:

The stair-step breakaway is the oldest of the compensation plans and was created by Amway in the 50's. Most early Network Marketing companies copied the plan and based on the fact that these companies have been around for a very long time, the largest companies in the industry typically have a stair-step breakaway plan.

The stair-step breakaway allows for an unlimited number of people to be personally enrolled on your front line and pays in a volume based stair-step manner. For example if you enroll 3 people who do $100 of volume, those 3 people might qualify for a 3% bonus on the the $100, where you would have a total of $300 on your team, you would qualify for 6%. The company would pay you the difference between 6% and 3%. This % "stair-steps" up so as your volume grows your % gets higher and you make a larger % difference.

The breakaway part of the plan is that when a person gets to a certain level, they will "break away" from you, causing you to earn less money on the volume that person creates.

Commentary: Problems with the breakaway plan are numerous. Most of the time the issue starts with the company and what % they pay back to the distributors. Amway has averaged a payout of roughly 30% back to it's distributors which is about 40 to 50% less than the fastest growing companies in the industry today which pay 40 to 45%. In other words to get paid the same in Amway vs. many other companies today, you would have to create 150% more volume.

The other major issue with the breakaway plan is the actual breakaway. You could put your blood, sweat, tears, hundreds of hours and money into one of your teams and then if they match your level ( in other words you help them succeed), your income will drop significantly once they "breakaway".

Stair-step breakaway plans are also back end weighted but it usually takes some additional maneuvering to make a large income. You will hear about tools and training system income, distributor pools where distributors have multiple positions and share the revenues and other shenanigans that offer the appearance of large incomes even though the largest producers are making a fraction of what they portray.

The Bottom Line: Stair-step Breakaway plans are like a used car:  Folks can get attached to them but new cars outperform them in every category. The fundamentals of this plan were developed in the 1950's and there is a reason why you rarely see a new company using a breakaway.