Rus Articles Journal

Herbalife: the rethought and updated company

On the 25th anniversary of existence of Herbalife becomes an example of self-updating, gradually recovering after the disasters which fell upon it.

Created in 1980 by Mark Hughes, having literally descended from wheels of his privately owned vehicle, the Herbalife company showed very rapid growth, having introduced the well-known slogan worldwide:“ lose weight now, ask me how“. By 1982 the company reached $2 000 000 of sales, extending products for weight loss and dietary supplements to food. Operating according to the classical scheme of direct sales through independent distributors, in 1986 Herbalife becomes the public company at the NASDAQ exchange. In 1996 on sales level the company passed for a milliard boundary.

Double blow

It is unexpected in 1997, the Committee on control over foodstuff and medicines of the USA began the investigation concerning safety of the use of a key component of products of Herbalife - extract of the Chinese plant Ma Huang, or an efedra. Being very effective remedy helping to lose weight, Ma Huang possesses a number of side effects: from the complicated breath before lowering of blood pressure. Without waiting for an official ban on use of this component by committee, Herbalife was forced to reconsider all prescription base of the key products, having finally excluded the maintenance of an efedra by 2002.

When events around efedrosoderzhashchy products were developed, the company was comprehended by one more misfortune which threw it in shock: in 2000 at the age of 44 years the founder of the company Mark Hughes died. With Hughes`s leaving the company was left without inspirer, many years of the development specifying the right direction. Moreover, Mark`s death exerted negative impact on a morale of all who are involved in business of Herbalife: in the sphere of direct sales one of key factors of success is the high motivation of the independent distributor.

In view of the high cost of the Herbalife brand, in 2001 the group of private investors acquires a controlling stake of the company. New owners made reorganization of the main business - processes of the company. The new program for control over purchases of raw materials is developed, production is optimized that led to improvement of quality of production and decrease in costs. Owners of the company bring into Herbalife team of highly skilled and skilled managers led by Michael Johnson who joined the company in 2003 after 17 years of work in World Disney Company. The remained key positions are taken the finance director Richard Gaudis who came from the international company on production of food Royal Numico and vice-the president Henry Byordik, the founder of Pharmavite conducting the producer of biological additives in the USA.

of Other Herbalife

In December, 2004 the company becomes public again, having started with the offer of 14 500 000 actions on $14 apiece. The changes which happened in the company bore fruit, and in 2004 the sum of pure sales made $1,3 billion against $1,1 billion in previous year. The planned figure of direct sales for 2005 makes $1,5 billion, and in the first two quarters of Herbalife also 18,7% in the second report the record sum of the pure sales which increased by 14,8% in the first quarter. Shares holders also were very satisfied: the cost of one action increased up to $29,60 as of August 31, 2005. Sales are carried out by forces of 1,1 million independent distributors and 253 thousand supervisors from 60 countries of the world, including again opened market of Hungary.

New products and the markets

Being long time known thanks to the products for correction of weight, Herbalife and today offers low-carbohydrate substitutes of food with the high content of protein - Formula I Nutritional Shake Mix cocktails. Cocktails, along with a big variety of protein having a snack, multivitamins and dietary supplements, can variably make the individual program of food offered by the ShapeWorks system. The product line on personal face care and a body extends.

of Herbalife in Russia

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the Russian office of the company is headed Today by Vlad Hagi in the past directing the international relations in the Imageland company and entering into board of directors of the leading exporter of software products of Lyuksoft. Under its management the advanced system of logistics thanks to which in Surgut the Advance orders section is open takes root into the companies.

In view of the certain difficulties created at the company on an entrance to the national market in the early nineties the management of Herbalife strengthens control over activity of independent distributors. Together with the Russian Association of Direct Sales Herbalife provides education among the consumers who are often intimidated by doubtful publications in the press and stories of neighbors in a landing. Thanks to this activity today many accurately understand a difference between legal network business and pyramids.

the Company actively sponsors significant social events and declares firm intention to stand further on a platform of social responsibility of large business. “We well understand that the long way on return of partially lost consumer confidence is necessary, but today on it the company has also forces and means“, - Vlad Hagi says.