Direct-to-Consumer Selling in the Nutrition Industry Report · PDF file · 2012-07-31Is Turkey the Next Big Market for Direct-to-Consumer Sales? ... Swedish MLM Oriflame Builds Beauty

Direct-to-Consumer Selling in the Nutrition Industry Report

2012

An analysis of non-retail markets, trends, competition and strategy in the U.S. Nutrition Industry.

NBJ’s Direct Selling Report 2012

2 www.nutritionbusinessjournal.com ©2012 Penton Media, Inc.

Table of Contents

©2012 Penton Media, Inc. www.nutritionbusinessjournal.com 3

2.1. ACKNOWLEDGEMENTS ................................................................................................................................................... 15 2.2. RESEARCH METHODOLOGY ............................................................................................................................................. 15

2.2.1. Disclaimer ........................................................................................................................................................ 16 2.2.2. Copyright ......................................................................................................................................................... 16

2.3. DEFINITIONS ................................................................................................................................................................. 16 2.3.1. Product Categories .......................................................................................................................................... 16 2.3.2. Sales Channels ................................................................................................................................................. 17

3.1. NUTRITION INDUSTRY OVERVIEW ..................................................................................................................................... 21 3.2. U.S. NUTRITION INDUSTRY RETAIL VS. DIRECT .................................................................................................................... 23 3.3. NUTRITION INDUSTRY DIRECT-TO-CONSUMER SALES ........................................................................................................... 26

3.3.1. Nutrition: Direct Channel Overview ................................................................................................................. 27 3.3.2. Nutrition: Product Category Sales ................................................................................................................... 29 3.3.3. Nutrition: Growth & Forecast .......................................................................................................................... 31

3.4. DIRECT-TO-CONSUMER SUPPLEMENT SALES ....................................................................................................................... 33 3.4.1. Supplements: Direct Channel Overview ........................................................................................................... 35 3.4.2. Supplements: Product Category Sales ............................................................................................................. 38 3.4.3. Supplements: Growth & Forecast .................................................................................................................... 41

3.5. SUPPLEMENTS: TOP DIRECT-SELLING COMPANIES ............................................................................................................... 43 3.6. TOP DIRECT-SELLING SUPPLEMENTS ................................................................................................................................. 45 3.7. DIRECT-SELLING MANUFACTURER SURVEY ......................................................................................................................... 46 3.8. A BRIEF HISTORY OF SUPPLEMENTS .................................................................................................................................. 50 3.9. DIRECT-SELLING TRENDS ................................................................................................................................................ 60

3.9.1. Brain Space Blossoms with Novel Ingredients & Mature Sales Strategies....................................................... 60 3.9.2. Single-Channel Marketing is Never Enough ..................................................................................................... 63 3.9.3. FTC Regulations Change the Marketing Landscape for Nutrition Direct Sellers .............................................. 64 3.9.4. Direct Marketing Goes Increasingly Mobile..................................................................................................... 67 3.9.5. Amazon.com Opens Door to E-commerce Success for U.S. Nutrition Companies ........................................... 67 3.9.6. Direct Marketing Accelerating as Retailers See Branding Benefits ................................................................. 68 3.9.7. U.S. Animal Nutrition in the Direct Channels ................................................................................................... 69

4.1. NUTRITION INDUSTRY INTERNET SALES .............................................................................................................................. 72 4.1.1. Nutrition: Channel Comparison ....................................................................................................................... 73 4.1.2. Nutrition: Product Sales ................................................................................................................................... 76

4.2. SUPPLEMENT INTERNET SALES ......................................................................................................................................... 78 4.2.1. Supplements: Channel Comparison ................................................................................................................. 79 4.2.2. Supplements: Product Sales ............................................................................................................................. 81 4.2.3. Supplements: Growth and Forecast ................................................................................................................. 83 4.2.4. Top Internet Supplement Companies .............................................................................................................. 85

4.3. INTERNET/E-COMMERCE TRENDS ..................................................................................................................................... 85 4.3.1. Green PolkaDot Box Brings Affordable Organics to Your Doorstep ................................................................. 85 4.3.2. Social Media Roundup ..................................................................................................................................... 87 4.3.3. Is Turbulence in Online Sales of Supplements Truly Bad for Business? ............................................................ 90



4.3.4. Has Online Grocery Reached Its Tipping Point? ............................................................................................... 93 4.3.5. Wellness Websites Work for 80% of Consumers ............................................................................................. 97 4.3.6. FTC Takes Action against Internet Marketers of Acai Weight-Loss Supplements ........................................... 99 4.3.7. Amazon.com Sells Banned Steroids Posing as Supplements, Researchers Find............................................. 100 4.3.8. Jeremy Johnson and I Works Give Internet Marketing a Bad Name.............................................................. 102 4.3.9. The Dark Side of Direct Selling ....................................................................................................................... 103 4.3.10. Internet Proves Useful Tool for Aiding Supplement Sales via Healthcare Practitioners ................................ 103 4.3.11. One-Third of Online Americans Use Social Media for Health ........................................................................ 106

5.1. NUTRITION INDUSTRY MAIL ORDER/DRTV, RADIO SALES .................................................................................................. 111 5.1.1. Nutrition: Channel Comparison ..................................................................................................................... 112 5.1.2. Nutrition: Product Sales ................................................................................................................................. 115

5.2. SUPPLEMENT MAIL ORDER/DRTV, RADIO SALES .............................................................................................................. 116 5.2.1. Supplements: Channel Comparison ............................................................................................................... 117 5.2.2. Supplements: Product Sales ........................................................................................................................... 119 5.2.3. Supplements: Growth and Forecast ............................................................................................................... 121 5.2.4. Top DRTV/Radio Supplement Companies ...................................................................................................... 123 5.2.5. Top Mail Order Supplement Companies ........................................................................................................ 123

5.3. MAIL ORDER/DRTV & RADIO TRENDS ........................................................................................................................... 124 5.3.1. The Great Debate: Catalog vs. Internet. ........................................................................................................ 124 5.3.2. Dr. Bronner’s a Rising Star in Home Shopping in South Korea....................................................................... 127 5.3.3. Keep Your Eyes on ShopNBC .......................................................................................................................... 129 5.3.4. Infomercials and Internet Advertising Still Ripe for Egregious Claims ........................................................... 129 5.3.5. Deciding Between Television and Radio Advertising ..................................................................................... 132 5.3.6. Supplement Infomercial Marketers Ordered to Pay Nearly $70 Million in Fines ........................................... 133

6.1. NUTRITION INDUSTRY NETWORK MARKETING SALES .......................................................................................................... 136 6.1.1. Nutrition: Channel Comparison ..................................................................................................................... 137 6.1.2. Nutrition: Product Sales ................................................................................................................................. 140

6.2. SUPPLEMENT NETWORK MARKETING SALES ..................................................................................................................... 141 6.2.1. Supplements: Channel Comparison ............................................................................................................... 142 6.2.2. Supplements: Product Sales ........................................................................................................................... 144 6.2.3. Supplements: Growth and Forecast ............................................................................................................... 146 6.2.4. Top Network Marketing Supplement Companies .......................................................................................... 148

6.3. NETWORK MARKETING TRENDS ..................................................................................................................................... 149 6.3.1. Beachbody Grows Beyond P90X, Goes Big in MLM ....................................................................................... 149 6.3.2. Is Turkey the Next Big Market for Direct-to-Consumer Sales?....................................................................... 151 6.3.3. Nu Skin and Herbalife Chart Two Paths to Global Growth ............................................................................ 153 6.3.4. Swedish MLM Oriflame Builds Beauty Empire in Developing World ............................................................. 157 6.3.5. Medifast Ups the MLM Ante.......................................................................................................................... 161 6.3.6. Medifast’s Multi-Channel Sales Approach Generates Double-Digit Revenue Growth ................................... 161 6.3.7. Juice Plus+ Squeezes Sales Success From Children’s Market ......................................................................... 165 6.3.8. Despite a High Failure Rate, a New Generation of MLMs is Entering Nutrition Market ............................... 167 6.3.9. Yoli Explodes onto Nutrition Market with New Blast Cap Technology .......................................................... 170 6.3.10. Qivana Capitalizes on Management’s MLM Experience ............................................................................... 170 6.3.11. Lifemax Brings ‘Miracle Seed’ to the MLM Masses ....................................................................................... 171 6.3.12. MLMs: Long-Term Success for MLMs Requires Science to Trump Marketing ............................................... 172 6.3.13. Understanding the MLM Supply Chain .......................................................................................................... 173 6.3.14. MLM Ingredient Trends ................................................................................................................................. 177

Table of Contents


7.1. NUTRITION INDUSTRY PRACTITIONER SALES ...................................................................................................................... 180 7.1.1. Nutrition: Channel Comparison ..................................................................................................................... 181 7.1.2. Nutrition: Product Sales ................................................................................................................................. 183

7.2. SUPPLEMENT PRACTITIONER SALES ................................................................................................................................. 184 7.2.1. Supplements: Channel Comparison ............................................................................................................... 185 7.2.2. Supplements: Product Sales ........................................................................................................................... 187 7.2.3. Supplements: Growth and Forecast ............................................................................................................... 189 7.2.4. Top Supplement Companies in the Practitioner Channel .............................................................................. 191

7.3. PRACTITIONER SURVEY ................................................................................................................................................. 192 7.4. PRACTITIONER TRENDS ................................................................................................................................................. 199

7.4.1. Can Supplements Help Your Club Increase its Revenues? .............................................................................. 199 7.4.2. Nutrition Legend Jeffrey Bland on Supplements and the Future of Healthcare............................................. 202 7.4.3. Declines in Service Revenue and Supplement Sales Plague Chiropractic Channel ......................................... 203 7.4.4. Industry Credibility Grows as Supplements Move into Conventional Practices ............................................. 207 7.4.5. Thorne Research Changes Hands, Moves into Cancer Support ..................................................................... 211 7.4.6. Standard Process Puts People First ................................................................................................................ 213 7.4.7. U.S. Education Spurs Global Growth of Supplements through Practitioner Channel .................................... 214 7.4.8. Should Doctors Be Selling Supplements to Patients? ..................................................................................... 217 7.4.9. Nutrition Education Programs Offer Vocational Knowledge in Integrative Medicine ................................... 220 7.4.10. Emerson Ecologics Works to Break Down Barriers Separating Practitioners and Dietary Supplements ....... 223 7.4.11. How to Achieve Practitioner Channel Success ............................................................................................... 226 7.4.12. Whither Goes the Wise Woman .................................................................................................................... 227 7.4.13. Case Study: Using Practitioner Endorsement to Increase Online Sales.......................................................... 228 7.4.14. Schools Helping Physicians and Consumers Learn About Integrative Medicine ............................................ 231

8.1. MULTICHANNEL APPROACH BUILDS ‘HALO OF CREDIBILITY’ AROUND NEW VITALITY ................................................................ 235 8.2. BEYOND ORGANIC BRINGS ANCIENT AGRARIANISM TO AN MLM AUDIENCE .......................................................................... 237 8.3. Q&A: QIVANA’S DEREK HALL ON NETWORK MARKETING ................................................................................................... 240 8.4. DISRUPTIVE THINKING TO SAVE OUR HEALTHCARE SYSTEM ................................................................................................. 241 8.5. WHAT DOES THE FUTURE HOLD FOR INTEGRATIVE MEDICINE? ............................................................................................ 243 8.6. GNLD: AFRICA IS ALL ABOUT OPPORTUNITY .................................................................................................................... 248 8.7. FROM ASIA TO THE AMERICAS, ANTI-AGING IS THE GLOBAL TREND TO BANK ON .................................................................... 251 8.8. LEAPFROGGING 50 YEARS OF POOR CHOICES AND CONVENTIONAL WISDOM .......................................................................... 253 8.9. SEARCH ENGINE MARKETING CAN BE CRUCIAL COMPONENT OF SUCCESSFUL ONLINE SALES ..................................................... 255 8.10. DIRECT MAIL STILL BEST FOR MANY NUTRITION PRODUCTS ................................................................................................ 258 8.11. UNDERSTANDING INFOMERCIALS: THE SCIENCE OF DIRECT-RESPONSE AD CAMPAIGNS IN THE NUTRITION INDUSTRY ..................... 260

9.1. 24-HOUR FITNESS (APEX FITNESS) ................................................................................................................................. 267 9.2. ADVOCARE INTERNATIONAL........................................................................................................................................... 270 9.3. AGEL ENTERPRISES ...................................................................................................................................................... 273 9.4. ALLERGY RESEARCH GROUP (KI NUTRICARE) .................................................................................................................... 275 9.5. ALTICOR (AMWAY, NUTRILITE) ...................................................................................................................................... 278 9.6. ARBONNE INTERNATIONAL ............................................................................................................................................ 281 9.7. ATRIUM INNOVATIONS (DOUGLAS LABS, PURE ENCAPSULATIONS, SEROYAL, SEDONA LABS PRO) ............................................... 283 9.8. BASIC RESEARCH/ ZOLLER LABS (ZANTREX, RELACORE, LEPTOPRIL, ETC.) ............................................................................... 287 9.9. CARLYLE GROUP – NBTY (PURITAN’S PRIDE) ................................................................................................................... 290 9.10. DESIGNS FOR HEALTH .................................................................................................................................................. 293 9.11. DRUGSTORE.COM........................................................................................................................................................ 296 9.12. EMERSON ECOLOGICS .................................................................................................................................................. 298 9.13. FOREVER LIVING.......................................................................................................................................................... 301



9.14. FREELIFE INTERNATIONAL ............................................................................................................................................. 303 9.15. GNLD INTERNATIONAL ................................................................................................................................................ 305 9.16. GREEN POLKADOT BOX ................................................................................................................................................ 307 9.17. HEALTHY DIRECTIONS LLC (DOCTOR'S PREFERRED) ........................................................................................................... 309 9.18. HERBALIFE INTERNATIONAL ........................................................................................................................................... 312 9.19. ISAGENIX INTERNATIONAL ............................................................................................................................................. 315 9.20. JUVENON ................................................................................................................................................................... 317 9.21. LIBERTY INTERACTIVE (BODYBUILDING.COM) .................................................................................................................... 319 9.22. LIFE EXTENSION FOUNDATION ....................................................................................................................................... 322 9.23. LIFEVANTAGE ............................................................................................................................................................. 325 9.24. MANNATECH .............................................................................................................................................................. 327 9.25. MARKET AMERICA SCIENCE (ISOTONIX) ........................................................................................................................... 330 9.26. MEDIFAST .................................................................................................................................................................. 333 9.27. MELALEUCA ............................................................................................................................................................... 336 9.28. METAGENICS .............................................................................................................................................................. 338 9.29. MONARCH HEALTH PRODUCTS (MONAVIE) ..................................................................................................................... 341 9.30. MORINDA BIOACTIVES (TAHITIAN NONI) ......................................................................................................................... 343 9.31. NATURAL PARTNERS .................................................................................................................................................... 346 9.32. NATURE'S SUNSHINE PRODUCTS .................................................................................................................................... 348 9.33. NEW VITALITY ............................................................................................................................................................ 351 9.34. NEWAYS INTERNATIONAL .............................................................................................................................................. 353 9.35. NORDIC NATURALS ...................................................................................................................................................... 355 9.36. NSA (JUICE PLUS+) ..................................................................................................................................................... 357 9.37. NU SKIN ENTERPRISES (PHARMANEX) ............................................................................................................................. 359 9.38. NUTRISYSTEM, INC. ..................................................................................................................................................... 361 9.39. ORTHO MOLECULAR PRODUCTS ..................................................................................................................................... 363 9.40. PERRICONE MD .......................................................................................................................................................... 365 9.41. PROCAPS LABORATORIES (ANDREW LESSMAN) ................................................................................................................. 368 9.42. PROGRESSIVE LABS ...................................................................................................................................................... 370 9.43. PURITY PRODUCTS (ULTIMATE HA) ................................................................................................................................ 372 9.44. QIVANA ..................................................................................................................................................................... 374 9.45. RBC LIFE SCIENCES ...................................................................................................................................................... 376 9.46. RELIV INTERNATIONAL .................................................................................................................................................. 378 9.47. RESERVEAGE ORGANICS ............................................................................................................................................... 381 9.48. SCHWABE NORTH AMERICA (INTEGRATIVE THERAPEUTICS) ................................................................................................. 384 9.49. SHAKLEE .................................................................................................................................................................... 387 9.50. STANDARD PROCESS .................................................................................................................................................... 390 9.51. SUNRIDER INTERNATIONAL ............................................................................................................................................ 393 9.52. SWANSON HEALTH PRODUCTS ....................................................................................................................................... 396 9.53. THORNE RESEARCH ...................................................................................................................................................... 399 9.54. UNICITY INTERNATIONAL .............................................................................................................................................. 402 9.55. UNIVERA, INC. ............................................................................................................................................................ 404 9.56. USANA HEALTH SCIENCES ........................................................................................................................................... 406 9.57. VEMMA NUTRITION COMPANY ...................................................................................................................................... 409 9.58. VISALUS SCIENCES ....................................................................................................................................................... 411 9.59. VITACOST.COM ........................................................................................................................................................... 413 9.60. VITAL NUTRIENTS ........................................................................................................................................................ 416 9.61. VITAMIN RESEARCH PRODUCTS/HEALTH RESOURCES (CASTANEA PARTNERS) ......................................................................... 418 9.62. VITAMIN SHOPPE, INC. ................................................................................................................................................. 420 9.63. WISE WOMAN HERBALS............................................................................................................................................... 423 9.64. XANGO ..................................................................................................................................................................... 425 9.65. XYMOGEN .................................................................................................................................................................. 428 9.66. ZRII .......................................................................................................................................................................... 430

Index of Figures


Figure 1-1 U.S. Nutrition Industry Direct-to-Consumer Sales in 2011 .................................................................... 13 Figure 3-1 U.S. Nutrition Industry Total Sales by Product Category in 2011 .......................................................... 21 Figure 3-2 U.S. Nutrition Industry Sales & Growth, 1997-2011 .............................................................................. 22 Figure 3-3 U.S. Nutrition Industry Sales by Channel in 2011 ................................................................................... 23 Figure 3-4 U.S. Nutrition Industry Sales Growth by Channel in 2011 ..................................................................... 24 Figure 3-5 U.S. Nutrition Industry Retail vs. Direct Sales and Growth, 2001-2011 ................................................. 24 Figure 3-6 U.S. Nutrition Industry Retail vs. Direct Sales and Growth, 2012e-2020e ............................................. 25 Figure 3-7 U.S. Nutrition Industry Retail vs. Direct Sales Growth, 1998-2011 ........................................................ 25 Figure 3-8 U.S. Nutrition Industry Direct Sales & Growth, 1997-2011 .................................................................... 26 Figure 3-9 U.S. Nutrition Industry Direct Sales by Channel in 2011 ........................................................................ 27 Figure 3-10 U.S. Nutrition Industry Direct Sales by Channel, 1997-2011................................................................ 28 Figure 3-11 U.S. Nutrition Direct Sales by Channel, 2001-2011 .............................................................................. 28 Figure 3-12 U.S. Nutrition Direct Sales Growth by Channel, 2001-2011 ................................................................. 28 Figure 3-13 U.S. Nutrition Direct Sales by Channel as % of Total, 2001-2011 ........................................................ 29 Figure 3-14 U.S. Nutrition Industry Direct Sales by Product Category in 2011 ....................................................... 29 Figure 3-15 U.S. Nutrition Industry Direct Sales by Product, 1999-2011 ................................................................ 30 Figure 3-16 U.S. Nutrition Industry Direct Sales & Growth, 1997-2020e ................................................................ 31 Figure 3-17 U.S. Nutrition Direct Sales by Channel, 2012e-2020e .......................................................................... 31 Figure 3-18 U.S. Nutrition Direct Sales Growth by Channel, 2012e-2020e ............................................................. 32 Figure 3-19 U.S. Nutrition Direct Sales by Channel as % of Total, 2012e-2020e .................................................... 32 Figure 3-20 U.S. Supplement Direct Sales & Growth, 1999-2011 ........................................................................... 33 Figure 3-21 U.S. Supplement Retail vs. Direct Sales, 1999-2011 ............................................................................ 33 Figure 3-22 U.S. Supplement Retail vs. Direct Sales and Growth, 2001-2011 ........................................................ 34 Figure 3-23 U.S. Supplement Retail vs. Direct Sales and Growth, 2012e-2020e .................................................... 34 Figure 3-24 U.S. Supplement Direct Sales by Channel in 2011 ............................................................................... 35 Figure 3-25 U.S. Supplement Direct Sales by Channel, 1999-2011 ......................................................................... 36 Figure 3-26 U.S. Supplement Direct Sales by Channel, 2001-2011 ......................................................................... 36 Figure 3-27 U.S. Supplement Direct Sales Growth by Channel, 2001-2011 ............................................................ 37 Figure 3-28 U.S. Supplement Direct Sales by Channel as % of Total, 2001-2011 ................................................... 37 Figure 3-29 U.S. Direct Supplement Sales by Product Category in 2011 ................................................................ 38 Figure 3-30 U.S. Supplement Direct Sales by Product, 2000-2011 ......................................................................... 39 Figure 3-31 U.S. Supplement Direct Sales by Product, 2001-2011 ......................................................................... 39 Figure 3-32 U.S. Supplement Direct Sales Growth by Product, 2001-2011 ............................................................ 40 Figure 3-33 U.S. Supplement Direct Sales by Product as % of Total, 2001-2011 .................................................... 40 Figure 3-34 U.S. Supplement Direct Sales & Growth, 2000-2020e ......................................................................... 41 Figure 3-35 U.S. Supplement Direct Sales by Channel, 2012e-2020e ..................................................................... 41 Figure 3-36 U.S. Supplement Direct Sales Growth by Channel, 2012e-2020e ........................................................ 42 Figure 3-37 U.S. Supplement Direct Sales by Channel as % of Total, 2012e-2017e................................................ 42 Figure 3-38 Top 30 Companies for U.S. Direct Sales of Supplements in 2011 ........................................................ 43 Figure 3-39 Top 30 U.S. Direct-Selling Supplements, 2010-2011 ............................................................................ 45 Figure 3-40 NBJ Survey: Market Drivers in 2011 Direct Selling Market .................................................................. 46 Figure 3-41 NBJ Survey: Planned Direct Sales Channel Entrance in 2012 ............................................................... 47 Figure 3-42 NBJ Survey: Planned Investment Dollar Allocation for Future Channel Growth ................................. 47 Figure 3-43 NBJ Survey: Changes in FTC Claims Enforcement Role ........................................................................ 48



Figure 3-44 NBJ Survey: Claims Alterations Due to FTC Enforcement .................................................................... 48 Figure 3-45 NBJ Survey: Percentage of Senior Customers (Over 65) ...................................................................... 49 Figure 3-46 NBJ Survey: Success When Using Different Social Media Platforms .................................................... 49 Figure 4-1 U.S. Nutrition Industry Internet S.W.O.T. Analysis................................................................................. 71 Figure 4-2 U.S. Nutrition Industry Internet Sales & Growth, 1997-2011 ................................................................ 72 Figure 4-3 U.S. Nutrition Industry Internet Sales as a % of Total Nutrition Industry Sales in 2011 ........................ 73 Figure 4-4 U.S. Internet Nutrition Sales as a % of Direct Nutrition Sales in 2011 ................................................... 74 Figure 4-5 U.S. Nutrition Industry Internet vs. Total Direct Sales and Growth, 2001-2011 .................................... 74 Figure 4-6 U.S. Nutrition Industry Internet vs. Total Direct Sales and Growth, 2012e-2020e ................................ 75 Figure 4-7 U.S. Nutrition Industry Internet Sales & Growth, 1999-2020e .............................................................. 75 Figure 4-8 U.S. Nutrition Industry Internet Sales by Product, 2001 vs. 2011 .......................................................... 76 Figure 4-9 U.S. Nutrition Internet Sales by Product, 1999-2011 ............................................................................. 77 Figure 4-10 U.S. Internet Supplement Sales & Growth, 1999-2011 ........................................................................ 78 Figure 4-11 U.S. Internet Supplement Sales as a % of Total Supplement Sales in 2011 ......................................... 79 Figure 4-12 U.S. Internet Supplement Sales as a % of Direct Supplement Sales in 2011 ....................................... 79 Figure 4-13 U.S. Supplement Internet vs. Total Direct Sales and Growth, 2001-2011 ........................................... 80 Figure 4-14 U.S. Supplement Internet vs. Total Direct Sales and Growth, 2012e-2020e ....................................... 80 Figure 4-15 U.S. Internet Supplement Sales by Product, 2001 vs. 2011 ................................................................. 81 Figure 4-16 U.S. Internet Supplement Sales by Product, 2001-2011 ...................................................................... 81 Figure 4-17 U.S. Internet Supplement Sales Growth by Product, 2001-2011 ......................................................... 82 Figure 4-18 U.S. Internet Supplement Sales by Product as % of Total, 2001-2011 ................................................ 82 Figure 4-19 U.S. Internet Supplement Sales & Growth, 2000-2020e ...................................................................... 83 Figure 4-20 U.S. Internet Supplement Sales by Product, 2012e-2020e .................................................................. 83 Figure 4-21 U.S. Internet Supplement Sales Growth by Product, 2012e-2020e ..................................................... 84 Figure 4-22 U.S. Internet Supplement Sales by Product as % of Total, 2012e-2020e ............................................ 84 Figure 4-23 Top Companies – U.S. Supplement Sales in the Internet Channel in 2011 .......................................... 85 Figure 4-24 U.S. Natural & Organic Food Sales by Channel in 2011 ....................................................................... 94 Figure 4-25 NBJ Survey: Tools Used to Increase Product Sales ............................................................................... 97 Figure 4-26 NBJ Survey: Technologies Practitioners Use to Increase Supplement Sales ...................................... 105 Figure 5-1 U.S. Nutrition Industry Mail Order/Catalog S.W.O.T. Analysis ............................................................ 109 Figure 5-2 U.S. Nutrition Industry Direct-Response TV S.W.O.T. Analysis ............................................................ 110 Figure 5-3 U.S. Nutrition Industry Direct-Response Radio S.W.O.T. Analysis ....................................................... 110 Figure 5-4 U.S. Nutrition Industry Mail Order/DRTV, Radio Sales & Growth, 1997-2011 .................................... 111 Figure 5-5 U.S. Mail Order/DRTV, Radio Nutrition Sales as a % of Total Nutrition Sales in 2011 ......................... 112 Figure 5-6 U.S. Mail Order/DRTV, Radio Nutrition Sales as a % of Direct Nutrition Sales in 2011 ....................... 113 Figure 5-7 U.S. Nutrition Industry Mail Order/DRTV, Radio vs. Total Direct Sales and Growth, 2001-2011 ........ 113 Figure 5-8 U.S. Nutrition Industry Mail Order/DRTV, Radio vs. Total Direct Sales and Growth, 2012e-2020e .... 114 Figure 5-9 U.S. Nutrition Industry Mail Order/DRTV, Radio Sales & Growth, 1999-2020e .................................. 114 Figure 5-10 U.S. Nutrition Industry Mail Order/DRTV, Radio Sales by Product, 2001 vs. 2011 ............................ 115 Figure 5-11 U.S. Nutrition Mail Order/DRTV, Radio Sales by Product, 1999-2011 ............................................... 116 Figure 5-12 U.S. Mail Order/DRTV, Radio Supplement Sales & Growth, 1999-2011 ............................................ 116 Figure 5-13 U.S. Mail Order/DRTV, Radio Supplement Sales as a % of Total Supplement Sales in 2011 ............. 117 Figure 5-14 U.S. Mail Order/DRTV, Radio Supplement Sales as a % of Direct Supplement Sales in 2011 ............ 118 Figure 5-15 U.S. Supplement Mail Order/DRTV, Radio vs. Total Direct Sales and Growth, 2001-2011 ............... 118 Figure 5-16 U.S. Supplement Mail Order/DRTV, Radio vs. Total Direct Sales and Growth, 2012e-2020e ........... 119 Figure 5-17 U.S Mail Order/DRTV, Radio Supplement Sales by Product, 2001 vs. 2011 ...................................... 119 Figure 5-18 U.S. Mail Order/DRTV, Radio Supplement Sales by Product, 2001-2011 .......................................... 120 Figure 5-19 U.S. Mail Order/DRTV, Radio Supplement Sales Growth by Product, 2001-2011 ............................. 120

Index of Figures


Figure 5-20 U.S. Mail Order/DRTV, Radio Supplement Sales by Product as % of Total, 2001-2011 ..................... 120 Figure 5-21 U.S. Mail Order/DRTV, Radio Supplement Sales & Growth, 1999-2020e .......................................... 121 Figure 5-22 U.S. Mail Order/DRTV, Radio Supplement Sales by Product, 2012e-2020e ...................................... 121 Figure 5-23 U.S. Mail Order/DRTV, Radio Supplement Sales Growth by Product, 2012e-2020e ......................... 122 Figure 5-24 U.S. Mail Order/DRTV, Radio Supplement Sales by Product as % of Total, 2012e-2020e ................. 122 Figure 5-25 Top Companies – U.S. Supplement Sales in the DRTV/Radio Sales Channel in 2011 ........................ 123 Figure 5-26 Top Companies – U.S. Supplement Sales in the Mail Order Channel in 2011 ................................... 123 Figure 6-1 U.S. Nutrition Industry Network Marketing Channel S.W.O.T. Analysis .............................................. 135 Figure 6-2 U.S. Nutrition Industry Network Marketing Sales & Growth, 1997-2011 ............................................ 136 Figure 6-3 U.S. Nutrition Industry Network Marketing Sales as a % of Total Nutrition Industry Sales in 2011 .... 137 Figure 6-4 U.S. Network Marketing Nutrition Sales as a % of Direct Nutrition Sales in 2011 ............................... 138 Figure 6-5 U.S. Nutrition Industry Network Marketing vs. Total Direct Sales and Growth, 2001-2011 ............... 138 Figure 6-6 U.S. Nutrition Industry Network Marketing vs. Total Direct Sales and Growth, 2012e-2020e ........... 139 Figure 6-7 U.S. Nutrition Industry Network Marketing Sales & Growth, 1999-2020e .......................................... 139 Figure 6-8 U.S. Nutrition Industry Network Marketing Sales by Product, 2001 vs. 2011 ..................................... 140 Figure 6-9 U.S. Nutrition Network Marketing Sales by Product, 1999-2011 ........................................................ 141 Figure 6-10 U.S. Network Marketing Supplement Sales & Growth, 1999-2011 ................................................... 141 Figure 6-11 U.S. Network Marketing Supplement Sales as a % of Total Supplement Sales in 2011 .................... 142 Figure 6-12 U.S. Network Marketing Supplement Sales as a % of Direct Supplement Sales in 2011 ................... 143 Figure 6-13 U.S. Supplement Network Marketing vs. Total Direct Sales and Growth, 2001-2011 ....................... 143 Figure 6-14 U.S. Supplement Network Marketing vs. Total Direct Sales and Growth, 2012e-2020e ................... 144 Figure 6-15 U.S Network Marketing Supplement Sales by Product, 2001 vs. 2011.............................................. 144 Figure 6-16 U.S. Network Marketing Supplement Sales by Product, 2001-2011 ................................................. 145 Figure 6-17 U.S. Network Marketing Supplement Sales Growth by Product, 2001-2011 .................................... 145 Figure 6-18 U.S. Network Marketing Supplement Sales by Product as % of Total, 2001-2011 ............................ 146 Figure 6-19 U.S. Network Marketing Supplement Sales & Growth, 1999-2020e ................................................. 146 Figure 6-20 U.S. Network Marketing Supplement Sales by Product, 2012e-2020e ............................................. 147 Figure 6-21 U.S. Network Marketing Supplement Sales Growth by Product, 2012e-2020e ................................ 147 Figure 6-22 U.S. Network Marketing Supplement Sales by Product as % of Total, 2012e-2020e ........................ 147 Figure 6-23 Top Companies – U.S. Supplement Sales in the Network Marketing Channel in 2011 ..................... 148 Figure 6-24 2010 Nu Skin Global Sales by Region ................................................................................................. 154 Figure 6-25 2010 Herbalife Global Sales by Region ............................................................................................... 155 Figure 6-26 Oriflame Sales & Growth, 1990-2011 ................................................................................................ 158 Figure 6-27 Performance & Highlights of Top Global MLMs ................................................................................. 159 Figure 6-28 Oriflame Sales by Category in 2010 ................................................................................................... 160 Figure 6-29 Medifast Revenue and Growth: 2000-2011 ....................................................................................... 162 Figure 6-30 U.S. Nutrition Industry Practitioner Channel S.W.O.T. Analysis ........................................................ 179 Figure 7-1 U.S. Nutrition Industry Practitioner Sales & Growth, 1997-2011 ........................................................ 180 Figure 7-2 U.S. Nutrition Industry Practitioner Sales as a % of Total Nutrition Industry Sales in 2011 ................ 181 Figure 7-3 U.S. Practitioner Nutrition Sales as a % of Direct Nutrition Sales in 2011 ........................................... 181 Figure 7-4 U.S. Nutrition Industry Practitioner vs. Total Direct Sales and Growth, 2001-2011 ............................ 182 Figure 7-5 U.S. Nutrition Industry Practitioner vs. Total Direct Sales and Growth, 2012e-2020e ........................ 182 Figure 7-6 U.S. Nutrition Industry Practitioner Sales & Growth, 1999-2020e ...................................................... 182 Figure 7-7 U.S. Nutrition Industry Practitioner Sales by Product, 2001 vs. 2011 .................................................. 183 Figure 7-8 U.S. Nutrition Practitioner Sales by Product, 1999-2011 ..................................................................... 184 Figure 7-9 U.S. Practitioner Supplement Sales & Growth, 1999-2011 .................................................................. 184 Figure 7-10 U.S. Practitioner Supplement Sales as a % of Total Supplement Sales in 2011 ................................. 185



Figure 7-11 U.S. Practitioner Supplement Sales as a % of Direct Supplement Sales in 2011 ............................... 185 Figure 7-12 U.S. Supplement Practitioner vs. Total Direct Sales and Growth, 2001-2011 ................................... 186 Figure 7-13 U.S. Supplement Practitioner vs. Total Direct Sales and Growth, 2012e-2020e ............................... 186 Figure 7-14 U.S Practitioner Supplement Sales by Product, 2001 vs. 2011 .......................................................... 187 Figure 7-15 U.S. Practitioner Supplement Sales by Product, 2001-2011 .............................................................. 187 Figure 7-16 U.S. Practitioner Supplement Sales Growth by Product, 2001-2011 ................................................. 188 Figure 7-17 U.S. Practitioner Supplement Sales by Product as % of Total, 2001-2011 ......................................... 188 Figure 7-18 U.S. Practitioner Supplement Sales & Growth, 1999-2020e .............................................................. 189 Figure 7-19 U.S. Practitioner Supplement Sales by Product, 2012e-2020e .......................................................... 189 Figure 7-20 U.S. Practitioner Supplement Sales Growth by Product, 2012e-2020e ............................................. 190 Figure 7-21 U.S. Practitioner Supplement Sales by Product as % of Total, 2012e-2020e ..................................... 190 Figure 7-22 Top Companies – U.S. Supplement Sales in the Practitioner Channel in 2011 .................................. 191 Figure 7-23 NBJ Practitioner Survey: Primary Practitioner Type ........................................................................... 192 Figure 7-24 NBJ Practitioner Survey: Patient Visits in 2011 vs. 2010 .................................................................... 193 Figure 7-25 NBJ Practitioner Survey: Acceptance of Health Insurance ................................................................. 193 Figure 7-26 NBJ Practitioner Survey: How Knowledgeable Are You About Supplements? .................................. 194 Figure 7-27 NBJ Practitioner Survey: Do You Offer Supplements for Sale in Your Office? ................................... 195 Figure 7-28 Where Practitioners Not Selling Supplements Recommend Patients Go to Buy Supplements ........ 196 Figure 7-29 NBJ Practitioner Survey: Percentage of Patients Buying Supplements in Practitioner Office ........... 196 Figure 7-30 NBJ Practitioner Survey: Breakdown of Supplement Sales by Product Category .............................. 197 Figure 7-31 NBJ Practitioner Survey: Factors Affecting Which Supplement Brands are Stocked ......................... 197 Figure 7-32 NBJ Practitioner Survey: Dollar Amount of Average Supplement Sale .............................................. 198 Figure 7-33 NBJ Practitioner Survey: Growth of Supplement Sales in 2011 vs. 2010 ........................................... 198 Figure 7-34 NBJ Practitioner Survey: Acceptance of Insurance by Chiropractors................................................. 204 Figure 7-35 NBJ Practitioner Survey: Change in Insurance Coverage for Chiropractors ....................................... 204 Figure 7-36 NBJ Practitioner Survey: Average Supplement Sales for Chiropractors............................................. 206 Figure 9-1 24 Hour Fitness (Apex Fitness) S.W.O.T. Analysis ................................................................................ 268 Figure 9-2 Allergy Research Group S.W.O.T. Analysis ........................................................................................... 276 Figure 9-3 Alticor (Amway, Nutrilite) S.W.O.T. Analysis ........................................................................................ 279 Figure 9-4 Atrium Innovations S.W.O.T. Analysis .................................................................................................. 285 Figure 9-5 Basic Research/Zoller Labs S.W.O.T. Analysis ...................................................................................... 287 Figure 9-6 Carlyle Group/NBTY (Puritan’s Pride) S.W.O.T. Analysis ...................................................................... 291 Figure 9-7 Designs for Health S.W.O.T. Analysis ................................................................................................... 294 Figure 9-8 Drugstore.com S.W.O.T. Analysis ......................................................................................................... 297 Figure 9-9 Emerson Ecologics S.W.O.T. Analysis ................................................................................................... 299 Figure 9-10 Forever Living S.W.O.T. Analysis ........................................................................................................ 302 Figure 9-11 Healthy Directions S.W.O.T. Analysis ................................................................................................. 310 Figure 9-12 Herbalife International S.W.O.T. Analysis .......................................................................................... 313 Figure 9-13 Bodybuilding.com S.W.O.T. Analysis .................................................................................................. 320 Figure 9-14 Life Extension Foundation S.W.O.T. Analysis ..................................................................................... 323 Figure 9-15 Mannatech S.W.O.T. Analysis ............................................................................................................ 327 Figure 9-16 Market America Science (Isotonix) S.W.O.T. Analysis ........................................................................ 331 Figure 9-17 Medifast S.W.O.T. Analysis................................................................................................................. 334 Figure 9-18 Metagenics S.W.O.T. Analysis ............................................................................................................ 339 Figure 9-19 Monarch Health Products (MonaVie) S.W.O.T. Analysis ................................................................... 342 Figure 9-20 Morinda Bioactives S.W.O.T. Analysis ................................................................................................ 344 Figure 9-21 Natural Partners S.W.O.T. Analysis .................................................................................................... 347 Figure 9-22 Nature’s Sunshine S.W.O.T. Analysis .................................................................................................. 348

Index of Figures


Figure 9-23 Nordic Naturals S.W.O.T. Analysis ...................................................................................................... 356 Figure 9-24 NSA (Juice Plus+) S.W.O.T. Analysis ................................................................................................... 358 Figure 9-25 Nu Skin Enterprises (Pharmanex) S.W.O.T. Analysis .......................................................................... 360 Figure 9-26 Ortho Molecular Products S.W.O.T. Analysis ..................................................................................... 364 Figure 9-27 Perricone S.W.O.T. Analysis .............................................................................................................. 366 Figure 9-28 ProCaps Laboratories (Andrew Lessman) S.W.O.T. Analysis .............................................................. 369 Figure 9-29 Progressive Laboratories S.W.O.T. Analysis ....................................................................................... 371 Figure 9-30 Purity Products S.W.O.T. Analysis ...................................................................................................... 373 Figure 9-31 Qivana S.W.O.T. Analysis .................................................................................................................... 374 Figure 9-32 Reliv International S.W.O.T. Analysis ................................................................................................. 379 Figure 9-33 ReserveAge Organics S.W.O.T. Analysis ............................................................................................. 381 Figure 9-34 Schwabe North America (Integrative Therapeutics) S.W.O.T. Analysis ............................................. 384 Figure 9-35 Shaklee Corporation S.W.O.T. Analysis .............................................................................................. 388 Figure 9-36 Standard Process S.W.O.T. Analysis ................................................................................................... 391 Figure 9-37 Sunrider International S.W.O.T. Analysis ........................................................................................... 394 Figure 9-38 Swanson Health Products S.W.O.T. Analysis ...................................................................................... 397 Figure 9-39 Thorne Research S.W.O.T. Analysis .................................................................................................... 400 Figure 9-40 Unicity S.W.O.T. Analysis .................................................................................................................... 403 Figure 9-41 Univera S.W.O.T. Analysis .................................................................................................................. 404 Figure 9-42 USANA Health Sciences S.W.O.T. Analysis ......................................................................................... 407 Figure 9-43 Vemma Nutrition Company S.W.O.T. Analysis ................................................................................... 410 Figure 9-44 ViSalus Sciences S.W.O.T. Analysis ..................................................................................................... 412 Figure 9-45 Vitacost.com S.W.O.T. Analysis .......................................................................................................... 414 Figure 9-46 Vital Nutrients S.W.O.T. Analysis ....................................................................................................... 417 Figure 9-47 Vitamin Research Products/Health Resources S.W.O.T. Analysis ...................................................... 419 Figure 9-48 Vitamin Shoppe S.W.O.T. Analysis ..................................................................................................... 421 Figure 9-49 Wise Woman Herbals S.W.O.T. Analysis ............................................................................................ 424 Figure 9-50 Xango S.W.O.T. Analysis ..................................................................................................................... 426 Figure 9-51 Xymogen S.W.O.T. Analysis ................................................................................................................ 429 Figure 9-52 Zrii S.W.O.T. Analysis .......................................................................................................................... 431



1 Executive Summary

©2012 Penton Media, Inc. www.nutritionbusinessjournal.com 1-13

Direct sales of nutrition products remained an attractive industry in 2011, as sales reached $17.7 billion on

8.6% annual growth. Across the major direct channels tracked by NBJ, internet posted the strongest returns with 14% growth, and both multi-level marketing (MLM) and direct media (TV, radio, catalog) posted the weakest at a still healthy 7% growth. In 2011, direct sales accounted for 14% of the nutrition industry’s total sales of $126 billion.

So what explains the growth? Widespread adoption and greater sophistication with the multichannel approach to marketing supplements and nutrition products. “Market consolidation, the explosion of the internet, and the entrance of private investment capital have worked to create a new, highly competitive environment for all DTC nutritional supplement companies,” says Sharon Traina of Conrad Direct, a full-service consultancy in direct-response marketing. “As a result, companies ranging from small to large and private to public are now scrambling to increase market share across channels in order to develop and sustain growth, and also to protect themselves with as highly diversified a media spectrum as possible.” Welcome to the world of multichannel marketing, where infomercials spur online sales, and where targeted but consistent messaging across channels leads to synergies across the entire mix. New Vitality, marketer of the popular Super Beta Prostate formula, is but one company benefiting from this trend, as the company broadened its marketing spend beyond TV spots to build a halo effect across internet and radio in an effort to meet consumers squarely in their preferred buying channel.

The new world order in multichannel marketing also includes retail, however. “Some companies are more traditional and not following this trend,” says Julie Coons, president and CEO at the Electronic Retailing Association, “but I’m hearing more of my members talking about this as a good long-term strategy for them. They continue to build the brand in the direct world, but now they have one more retail outlet. It’s multichannel in adding the retail channel.” Listen to Jonathon Bunt of reBloom, an upstart direct-marketer of age-related sleep beverages: “Whether its TV or radio, you use that as marketing spend to drive transactions at retail. You can then point to that direct-marketing spend—which is paying for itself—instead of having to do aggressive trade spend at retail. You get the benefits of both worlds.”

While the direct world suffers from more than its share of regulatory scrutiny, thanks to unscrupulous affiliate marketing platforms and continued enforcement by FDA and FTC in the weight-loss and acai categories of product, some have bucked the tides to outsized gain. Heavyweights in the MLM space—notably Herbalife,

Figure 1-1 U.S. Nutrition Industry Direct-to-Consumer Sales in 2011

Source: Nutrition Business Journal estimates. (consumer sales)

Supplements 59%

Natural & Organic Food

18%

Functional Foods

5%

N&OPC & Household

18%

Mail/ DRTV, Radio 17%

Network Marketing

45%

Practitioner 19%

Internet 19%


1-14 www.nutritionbusinessjournal.com ©2012 Penton Media, Inc.

who introduced a new sport line, Herbalife 24, in 2011, and newcomer Visalus Sciences with its meal-replacement kits continue to rack up sales. Sales of MLM weight-loss products grew 26% in 2011 to exceed $1 billion, and sports nutrition made a respectable uptick to $320 million in sales on 12% growth.

Social media continues to dominate the strategic planning for major direct-sales players. Blake Mallen, co-founder of the aforementioned Visalus, says: “The whole direction we think commerce is going to go is social, and then mobile. We actually rolled out a whole application that turns people’s Facebook pages into commerce sites.”The company also developed a mobile credit card swiper, a la Square, to up the cool factor with its distributors, 50,000 of whom now use the commerce tool every month.

It’s also worth noting that natural & organic food showed new signs of life in the direct space, with launches from Beyond Organic, the brainchild of Garden of Life’s Jordan Rubin to promote Biblical agrarianism in the modern diet, and Green PolkaDot Box, an online CSA for organic and non-GMO foods with a strong affiliate rewards program. Seems consumer education and price savings are equally important in the natural foods world as in dietary supplements.

In this 430‐page report, you will find:

Historical, current and forecasted U.S. direct-to-consumer sales in the nutrition industry for four major direct-sales channels—internet, MLM, practitioner, and direct media (TV, radio, catalog)

Detailed company profiles for 66 of the top players and up-and-comers in the direct market

SWOT analyses (Strengths, Weaknesses, Opportunities, and Threats) for 52 of the profiled companies

A list of the Top 30 supplements sold via direct channels in 2011

A list of the Top 30 direct supplement sellers in the U.S. nutrition industry

U.S. direct product sales for dietary supplements, functional foods and beverages, natural foods and beverages, organic foods and beverages, and natural & organic personal care and household products

And much more …

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