HERBALIFE Nutrition: What is it and how does it work?
What is Herbalife Nutrition and how does it work? Learn about the MLM and wellness company, its history, products, compensation plan, and benefits.
Herbalife Nutrition is a key company in the network marketing industry and the wellness market. Here is a summary of the company.
If you are looking for a strong network marketing or MLM company that has been in business longer than most, Herbalife should be at the top of your list.
- What is Herbalife Nutrition?
- A brand we all recognize
- Herbalife history
- Current status of Herbalife
- Failed bets against Herbalife
- Bill Ackman's bet against Herbalife
- Herbalife Settlement with the SEC
- Herbalife products
- Herbalife Benefits
- Herbalife compensation plan
- Herbalife FAQs
- Recent controversies
- Herbalife in the media
- Benefits of working with Herbalife
- Social responsibility programs
- Herbalife Sports Sponsorships
- Conclusions about Herbalife
What is Herbalife Nutrition?
Herbalife may be one of the most well-known MLM opportunities. Without a doubt, one of the largest and most controversial.
The company’s independent associates market health, wellness, and skincare products directly to consumers; They can also develop their own marketing teams and build their own businesses, earning commissions based on their team member’s deliveries.
A brand we all recognize
Many of us have come across a person on the street who has a big button that has a phrase like:
“Work from home, ask me how” or “Do you want to lose weight, ask me how?”.
A button identifying a brand
Well, for all those who didn’t know, this technique of putting on an advertising button has been used for many years by Herbalife.
The same Mark Hughes, founder of the company wore buttons of this type.
Mark Hughes, founder of Herbalife
Herbalife was founded in February 1980 in Los Angeles, California.
Its founder, Mark Hughes, lost his mother to an overdose of weight-loss drugs, from that moment on, Mark took on the task of creating a company that would help people healthily lose weight.
The company is registered in the Cayman Islands and is headquartered in Los Angeles, has a presence in 94 countries, and has approximately 3.2 million distributors.
Mark had previously been a distributor for a natural products company and had a strong ability to grow organizations.
However, he took on the task of looking for people with the ability to create natural weight loss products, they would make the product and he would take care of the distribution channel, so in 1980 Herbalife was born with a few people in his network.
Mark Hughes is a beloved and highly respected character in the company.
Entry to the New York Stock Exchange
After founding Herbalife, Mark built a network of distributors in the United States, achieving rapid growth. By 1982, Herbalife had reached sales of US$2,000,000, thus opening a distributor in Canada, the first outside the US In 1986 the company was listed on the New York Stock Exchange.
The company has its shares listed on the NYSE (New York Stock Exchange), the largest in the world by volume.
The brand trades under the ticker HLF and has a value per share of $39.28.
This represents impressive growth since 2004 when the company’s shares were trading at an average of $3.
The company has a market capitalization of $5.194 billion, according to records from the last quarter of 2019.
Herbalife’s first charitable foundation
In 1994, Hughes created the Herbalife Family Foundation, a foundation dedicated to charity and helping children. This organization receives donations both from the Herbalife company and from individuals, inside and outside the company.
Mark Hughes with some early Herbalife products
Growth in times of crisis
Herbalife continued to increase its turnover, reaching annual amounts of US$1 billion in 1996.
The company continued to grow internationally with impressive strength despite three successive global economic crises:
The Asian crisis of 1997, the crisis of the dotcom bubbles, and the financial crisis that followed the attacks of September 11, 2001.
All these events negatively impacted companies internationally, but Herbalife showed much stronger growth than most companies amid the crisis.
In 2003, Michael O. Johnson joined Herbalife as Chief Executive Officer, drawing on his business development experience. Johnson, who worked for 17 years at the Walt Disney Corporation, and in recent years was President of Disney International, has been in charge of managing the company’s projects in recent years.
In April 2005, the company celebrated its 25th Anniversary at a 4-day event attended by 35,000 independent distributors from around the world.
Michael O. Johnson
Current status of Herbalife
By March 2007, the company was earning more than $3.5 billion in profits.
Herbalife has a Medical-Scientific Advisory Board chaired by Dr. David Heber, Professor of Medicine and Public Health at the University of California. Dr. Louis Ignarro, Nobel Laureate, is also a member of the Advisory Board.
The company’s strategy is aligned with the wellness industry, recommending balanced low-calorie diets. This is facilitated by the product offering provided through the macronutrients and micronutrients contained in their products.
Already in 2017, the company had revenues of 4,430 million dollars and a value of assets of 2,890 million dollars, as well as 8,000 direct employees.
In the last report of sales operations, the year 2018, the company registered 4,900 million dollars of sales income, and 8,900 direct employees according to Direct Selling News, it was the third largest company in the world in the direct sales market.
The company logo represents its orientation toward natural products.
Failed bets against Herbalife
In November 2011, the Commercial Court of Brussels, Belgium determined that Herbalife was an illegal pyramid business scheme. The company filed an appeal on March 8, 2012. On December 3, 2013, a Belgian appeals court ruled in Herbalife’s favor, reversing the Commercial Court ruling.
In 2013 it was revealed that a well-known short seller, David Einhorn, had taken advantage of market positions against the company, selling shares of the company short and citing doubts about the company’s business model, as well as its earnings during the first quarter of 2012. Finally, Einhorn claimed that he had closed his betting positions against the company before the end of 2012.
Bill Ackman’s bet against Herbalife
On December 20, 2012, Bill Ackman, a director of hedge funds (Pershing Square Capital) presented a series of arguments against the company, implying that its market value would reach zero, also stating that the company was inflating distributors’ sales records and that the chance of making money as an Herbalife distributor was one in 5,000.
According to financial commentators, Bill Ackman took a short position against the Herbalife company with a bet of more than 1,000 million dollars.
Carl Icahn is one of the main investors in Herbalife.
Response from Carl Icahn
A few months after Ackman’s comments, billionaire Carl Icahn publicly refuted Ackman’s initial comments and announced in a television commercial that he would buy Herbalife stock. At the end of March 2013, Icahn owned 16.5% of the company and the company’s market value had strengthened considerably.
Following a slump in the company’s market value in 2014, Ackman predicted that Herbalife was about to implode in 2015 or 2016, citing scrutiny from federal authorities and company debts.
In March 2015, the FBI revealed that it was investigating whether individuals paid by Ackman had made false statements to regulatory authorities about Herbalife’s business model to drive the company’s shares down.
In November 2017, Ackman closed his short position against Herbalife, after the company’s shares appreciated by more than 51% during that year.
Ackman’s bet against Herbalife reportedly cost his mutual fund hundreds of millions of dollars and severely affected investor confidence in his fund.
Today, with 26% of the shares, Carl Icahn is the majority investor in Herbalife, also having a billion dollars in profits from his purchase positions in the company.
How much money did Bill Ackman lose on his bet against Herbalife?
The Investopedia website reports that Ackman’s losses on his market bet against Herbalife cost him nearly $1 billion.
Herbalife Settlement with the SEC
Herbalife settled in September 2018 with SEC securities regulators over allegations that it misled investors about its business practices in China.
The company has agreed to pay $20 million to the Securities and Exchange Commission to settle claims that it misled investors for six years and claimed that its business practices in China were different from its operations in other countries.
The deal comes a little over a year after hedge fund manager William A. Ackman raised the white flag and ended a major bet that Herbalife shares would crash because he believed he was running a pyramid scheme. untenable.
After the agreement, it is expected that the company will improve its business practices and be able to present a much more sustainable business plan by the standards of Corporate Social Responsibility demanded by investors.
Herbalife products are divided into six groups in the United States, in the rest of the world, the number of products depends on the regulations of each country and according to the company, it has been considered convenient to introduce one or another product.
Herbalife shake mixes and bars are offered in a variety of flavors. Some products are a version free of gluten, dairy, or soy. The catalog highlights specific products and combinations to achieve healthy living goals, including weight loss, maintenance or gain, and athletic performance. Some products are distributed in individual packages for use on the go.
Herbalife Nutrition products are primarily focused on wellness.
This group includes products that complement each other in the task of losing weight, we find shakes, multivitamins, green tea, proteins, and instant drinks, all of them focused on weight control.
This is the group of products with which the company began and has been in permanent evolution.
This group of products is focused on promoting adequate nutrition for each person. All of these products are designed to optimize all digestive processes and include shakes, vitamin supplements, and natural blends.
Personal care products include a series of creams, shampoos, and toners for skin, face, and hair care.
Herbalife has more than 40 products in this section and it is one of its most recent launches.
This group of products is focused on all those people who practice sports or who require high physical demands, including shakes to increase muscle mass, energy drinks, products to improve concentration, and moisturizers.
It includes products that improve the immune system in a general way.
This group of products includes everything necessary to prevent and help with cardiac issues. Within this group, we have milkshakes and aloe products.
Formula 1, Herbalife’s most popular product
Do Herbalife products work?
The Herbalife diet is designed to help people lose weight by reducing calorie intake with meal replacement shakes and increasing metabolism with supplements.
There have been no studies on Herbalife’s complete weight loss program, but meal replacement shakes seem to help with weight loss.
On the Consumer Affairs website, we can see verified user reviews of Herbalife products. This is what some people who have been consumers of this brand say:
Nikky from Paterson, NJ, Verified the Reviewer
Herbalife is a useful way to lose weight or maintain weight. People think that losing weight only happens by trying this product and not exercising or eating healthy food. The results start to show after a few weeks or even a few months, Herbalife should be taken for a good period, not just for a moment. People should stop thinking that this product will work miracles in less than a week. I used to have back pain for months and tried Xtra-calcium to help my joints and it made my back feel better and made me a more active person.
Kristie of Oakland, MD Verified Reviewer
I have lost 40 pounds with Herbalife products with no side effects. As with any diet or lifestyle change, you must continue to see results! Follow the routine: smoothie, snack, smoothie, snack, healthy food. Snacks must be healthy! Distributors can be a bit pushy, but my distributor was a great support system and cheerleader for me! I was with her in Baltimore, MD. The community and group are fun, supportive, and motivating. My experience has been great!
In addition to helping you lose weight, the Herbalife program has some other benefits
It’s easy and convenient
Meal replacement shakes like those used in the Herbalife diet may appeal to busy people or those who don’t have the time or interest to cook.
To make the shake, all you have to do is mix two tablespoons of powder with 8 ounces (240 ml) of skim milk and enjoy. The powder can also be mixed with ice or fruit for a smoothie-style drink.
Drinking smoothies instead of cooking can dramatically reduce the time spent planning, shopping, and preparing meals. The Herbalife program is also very easy to follow.
Soy-based smoothies may be good for your heart
The main ingredient in most Herbalife meal replacement shakes is isolated soy protein, a type of protein powder that comes from soybeans.
Some research suggests that eating soy protein can lower cholesterol levels and reduce the risk of heart disease.
However, it takes almost 50 grams of soy protein per day to see these effects.
Two servings of Herbalife meal replacement shakes contain only 18 grams, so additional soy foods would need to be included in your diet.
A soy-free and the dairy-free formula is available
For those with allergies or sensitivities to soy or cow’s milk, Herbalife offers an alternative meal replacement shake made with pea, rice, and sesame proteins.
This product is also made from non-GMO ingredients, for those who want to avoid GMOs.
Herbalife compensation plan
Herbalife’s approximately 3.2 million independent members are the only distribution channel for the company. New members have a choice of two Herbalife Member Packs to get started: $94.10 for the basic kit or $124.10 for the super starter kit.
Associates may purchase products at wholesale instead of retail cost, for personal use, or resale.
Independent Herbalife members can earn money in two ways: on products that are distributed directly to consumers and/or by developing a multi-level marketing team and earning commissions on downline marketing. According to materials on the company’s website, approximately 20% of members develop multilevel marketing teams; no commission is earned for sponsoring new members.
Members who decide to develop their own business network are supported by monthly meetings and workshops. Online resources for them include product information, online training resources, marketing, and merchandising materials, lead generation tools, email marketing, and billing, methods for managing sponsorship activity and online delivery descending, as well as the ability to order products. It is not clear if there is an associated fee or cost for any of these services or techniques.
Dr. John Agwunobi is the current CEO of Herbalife Nutrition.
What does Herbalife market?
Herbalife distributes nutritional supplements, weight control, sports nutrition, and personal care products.
What are the most popular Herbalife products?
The company recommends starting with Formula 1 Nutritional Shake Mix, Formula 2 Multivitamin Complex, and Formula 3 Cell Activator to help you reach your health and wellness goals.
How much does it cost to join Herbalife?
Herbalife makes it easy to join. There are no minimum purchases required other than the initial distribution kit. For that, you have two options: the International Business Package, which costs $94.10, or the International Business Package Super Starter, which is $124.10. There is a fully refundable 12-month money-back guarantee on the cost of the International Business Package if the distribution is canceled for any reason, including the cost of shipping.
Is Herbalife a scam?
No, Herbalife has overcome all legal claims that they are not a legitimate business, including restructuring the company to eliminate any confusion and ensure distributors are treated fairly. They are a public company with investors. And their products are available for purchase on their website, even though the order will be shipped through a reseller.
Who runs Herbalife?
As of January 2019, Michael O Johnson is the company’s president and interim CEO. Since May 2018 Des Walsh of the University of London, and former Herbalife President, has served as Vice President of the company. And since May 2019 Dr. John O Agwunobi is the CEO of Herbalife.
How much does an Herbalife share cost?
Herbalife’s share is currently trading at $48.
How long has Herbalife been in business?
What is Herbalife’s income?
More than US$ 4 billion annually.
How many Herbalife distributors are there?
An estimated 3.2 million people worldwide.
What lawsuits have been filed?
In 2014, the company paid $15 million, plus up to $2.5 million for product returns, to settle a class action lawsuit that alleged Herbalife was running an alleged pyramid scheme. Under this agreement, the company began paying shipping costs for returned products and clarified its membership agreement to make it less confusing.
In 2015, an Herbalife investor alleged that the company was a pyramid scheme, but the case was dismissed.
In 2016, the FTC charged Herbalife with misleading earnings claims and required the company to pay a $200 million settlement to nearly 350,000 people who lost money running a company business.
A fundamental restructuring was also required of them, so the success of the distributor depends on whether they sell the company’s products, not whether they buy them.
In 2017, Jeff Rodgers accused Herbalife of extortion, which the company filed a motion to dismiss.
In 2018, a new class action lawsuit was filed for misrepresenting the amount of income potential distributors could earn by registering and hosting events.
Comparable Companies: Amway, Isagenix, Nu Skin.
In 2019, the US Department of Justice charged Yanliang Li, Herbalife’s former head of China operations, and Hongwei Yang, who headed the company’s external affairs department, with conspiring to bribe Chinese government officials in Violation of the U.S. Foreign Corrupt Practices Act (FCPA).
The US Securities and Exchange Commission also filed civil FCPA charges against Li. According to the indictment, Li and Yang paid bribes to Chinese officials at the Ministry of Commerce and the State Administration for Industry and Commerce to obtain sales permits and influence government investigations into Herbalife’s compliance with Chinese laws, and also paid bribes to a government-controlled media company, The China Economic Net, to mitigate negative media coverage.
The company has a strong presence in China.
Herbalife in the media
In April 2016, a documentary directed by Ted Braun premiered at the Tribeca Film Festival. The documentary was titled Betting on Zero. It explored Bill Ackman’s accusation that Herbalife was a pyramid scheme and the personal stories of his distributors who lost their life savings.
Herbalife declined an interview request for an article in the British newspaper The Guardian on the subject of the film, but issued a brief statement: “As commentators have stated, Betting On Zero lacks credibility because it was financed and developed by people who have more $1 billion attempting to portray the direct selling industry as well as Herbalife Nutrition as frauds.” (See: The Guardian Note on Betting On Zero )
Hilary Rosen, a Democratic lobbyist, criticized the credibility of the Tribeca film festival after claiming that the film was “bought and paid for” by Ackman “to make good on his bet.”
In 2016, the Last Week Tonight with John Oliver segment on multilevel marketing focused on Herbalife, strongly condemning the company for its structure that resembles a pyramid scheme and citing the FTC report that implied the company has been operating illegitimately.
Oliver criticized Herbalife for its exploitation of Latino communities and for exaggerating the health benefits of its products.
One reviewer writes that Oliver appears to draw heavily from Betting On Zero and that the show did not cause any immediate change in Herbalife’s share prices.
The 2018 book When Wolves Bite: Two Millionaires, One Company, and an Epic Battle on Wall Street by Scott Wapner discuss the shortcomings of Bill Ackman’s company and his battle with Icahn. In the book, Wapner characterizes Ackman’s decision to bet against Herbalife as dangerous. (See: Wapner’s criticism of Bill Ackman- It was a dangerous bet ).
Company world headquarters in Los Angeles
Benefits of working with Herbalife
Herbalife provides a detailed overview of compensation and potential earnings online, including general statistics on member percentages and their corresponding bonus levels. Various support tools are available for associates who want to build a business. Members are not subject to minimum inventory and a certain number of deliveries is not required.
There is a 90-day money-back guarantee on your enrollment package. Designers may return non-traded and unused products for a refund for a limited period.
Throughout website copy and associate application materials, the importance of ethics and realistic compensation expectations are stressed.
Herbalife currently has several social responsibility programs to which it dedicates significant resources, seeking the well-being of people in a state of vulnerability, its employees, and care for the environment. These programs are:
Herbalife Nutrition Foundation
It is a program that provides funding for charitable programs that care for children at risk around the world.
The Herbalife Nutrition Foundation provides support for emergencies and disasters around the world, including raising funds to rebuild areas damaged by environmental emergencies and assisting in the evacuation of survivors.
Campaign with Feed The Children
The company hosted a food drive from November 1-15, 2019, supporting both Feed the Children and A Place Called Home (APCH) and also donated proceeds from its co-branded t-shirt sales to help families. struggling to make ends meet during the US holiday season.
“The holidays are a great time to think about everyone in our community and the different ways we can give back,” said Alan Hoffman, executive vice president of Corporate Affairs and president of the Herbalife Nutrition Foundation. “We hope to bring as much awareness as possible to important issues like food insecurity and malnutrition, as education is imperative to ensure children are prepared with the resources they need to succeed.”
The company’s food drive raised donations from its offices and manufacturing facilities and approximately 2,600 employees across the United States to help Feed the Children reach its goal of bringing food and essential items to thousands of American families during the holidays.
Food donations supported both Feed the Children and the Herbalife Nutrition Foundation’s (HNF) long-time Casa Herbalife Program partner, APCH (A Place Called Home), located in Los Angeles.
Herbalife has been recognized by Men’s Fitness magazine as one of the 15 Healthiest Companies to Work For in the United States of America.
This recognition comes due to its concern and helps its employees to stay healthy through the promotion of an active and healthy lifestyle and the complementary nature that it provides to their health through its products.
Triathlon is one of the most popular sports within Herbalife.
Programa Live Green
Through environmentally friendly initiatives, Live Green and the 3 R’s program – reduce, reuse, recycle – Herbalife focuses on ways to protect the environment.
The company firmly believes that corporate decision-making should not only be based on financial returns but also the social and environmental consequences of its activities.
Herbalife’s headquarters in Los Angeles was created using recycled and rapidly renewable materials. The design has earned the company LEED® (Leadership in Energy and Environmental Design) certification for its environmentally friendly design, efficient use of water, and sustainable materials.
Herbalife encourages its employees and independent distributors to join the Live Green program daily through a variety of incentives.
These incentives include cars or trucks that are used to recycle biodegradable materials and reuse and/or eliminate hazardous materials such as plastic bags and disposable cups.
Herbalife Sports Sponsorships
Herbalife has sponsored the France national volleyball team and the Major League Soccer club LA Galaxy since 2007. It has sponsored Cristiano Ronaldo since 2013. They sponsored FC Barcelona and Lionel Messi between 2010 and 2013. Herbalife has also sponsored the club basketball Herbalife Gran Canaria since 2012.
Patronage to Cristiano Ronaldo
Conclusions about Herbalife
Herbalife health and wellness products are sold exclusively through its distributors and come with a money-back guarantee; For these reasons, there is an incentive for people to buy from Herbalife members.
The company has an established model for onboarding and providing distribution and marketing tools to independent marketers.
The model and the tools that the company provides to its distributors are a solid base to develop your own MLM business.
That said, from your copy of the website, it’s clear that these company insiders are the minority and not the majority.
Herbalife has demonstrated consistent financial performance and growth in recent years, and the impact of federal lawsuits and investigations, while affected, have proven to be evidence of the company’s strength and future sustainability, further demonstrating that it is not an illegal business or pyramid scheme.
The support of shareholders such as Carl Icahn and the resounding failure of the market bets against the company indicates that it is one of the most solid companies, not only in the network marketing industry but also in consumer products in general…
So if you want to start a multilevel marketing business, you can be sure that Herbalife is a safe and reliable option.
If you have the initiative and enough motivation to carry out the distribution and recruitment process, this is your company.
Herbalife Extravaganza in 2017
Learn more about Herbalife on its official website.