Herbalife

Herbalife logo

Herbalife logo

Founded in 1980, Herbalife International NYSE: HLF is a company that sells weight-loss and health products by multi-level marketing methods through distributorships. Distributors make money from retailing, and a residual income from their downlines' retail sales volume. The company was founded by Mark R. Hughes, who died in 2000, at the age of 44 of a prescription drug overdose.

Company history

In February 1980, Mark Hughes began selling the original Herbalife weight loss product from the trunk of his car. By 1982, Herbalife had reached $2,000,000 in sales and opened a distributorship in Canada, its first outside of the United States. In 1986 Herbalife became a publicly traded company via NASDAQ. Independent distributors' personal vehicles could be seen on the street, decorated by decals bearing the mysterious slogan "Lose weight now, ask me how!" In 1996 Herbalife reached $1,000,000,000 in annual sales. In 2000, Hughes died at the age of 44 from an adverse reaction to an accidental mix of alcohol and prescription sleeping pills. The company has continued to grow after his death.

In 2003, Michael O. Johnson joined Herbalife as CEO following a 17-year career with The Walt Disney Company, most recently as president of Walt Disney International. He is the company's third CEO since the fatal overdose of its founder, Mark Hughes. On December 16 2004 the company had an initial public offering on the NYSE of 14,500,000 common shares at $14/share. 2004 net sales were reported as $1.3 billion. In April 2005, the company celebrated its 25th anniversary with a four-day event attended by 35,000 Herbalife Independent Distributors from around the world. In August 2005, Dr. Steve Henig joined the company as Chief Scientific Officer, responsible for product research and development.

Herbalife's Scientific Advisory Board is chaired by David Heber, M.D. Ph.D, F.A.C.P., F.A.C.N., who is professor of medicine and public health and the founding director of the Center for Human Nutrition in the Department of Medicine at UCLA. According to a 2004 Forbes article, Dr. Heber joined the board at roughly the same time Herbalife made a $3 million donation to the Center for Human Nutrition.

The company operates in 61 countries and has 2,500 employees and claims to have more than one million independent distributors.

Product overview

Formula 1

Formula 1

As of 2005, it is not immediately clear what method Herbalife's weight loss products employ, although the nutritional ingredients are listed on the product. Recent advertisements indicate that the current philosophy is one of meal replacement via diet shakes, which is to all appearances not unlike the Slim Fast diet, except with more ingredients.

Proponents claim that the Herbalife strategy is aligned with health industry recommendations for safe weight control, eating a balanced diet, low in calories and taking regular exercise, and that their nutritional and weight management line of products facilitate this through macronutrient and micronutrient food formulas. Herbalife provides testimonials from health professionals as part of their marketing campaign.

Some of the original Herbalife weight loss products contained the active ingredient Ma Huang, an herb containing ephedrine. Herbalife stopped using ephedrine in its products after 1998 when the FDA linked one of their products (Original Green) to the cardiac arrest of a 28 year old woman.

Controversy over business methods

Supporters and merchants involved with Herbalife contend that it is a genuine and profitable multi-level marketing business opportunity. Critics of Herbalife contend that it operates much like a Ponzi scheme and that the company does not make enough effort to curb abuses by individual distributors.

External links

• Official site
• Company profile by MarketWatch
• Herbalife International, Inc. stock information and news
• Herbalife category in the Open Directory Project
• Criticism
  • Work at Home special report by Rob Cockerham, an investigation on "work from home" signs in Sacramento, California, all leading to Herbalife.
  • The Dubious Promotion of Herbalife's Niteworks by Stephen Barrett, M.D., founder of Quackwatch and vice-president of the NCAHF.
  • Information about Herbalife gathered by The Rick A. Ross Institute.
  • Index to Information about Herbalife International on MLM Watch (history, lawsuits and consumer complaints).