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Y. Steve Henig, Ph.D., Chief Scientific Officer
Y. Steve Henig, Ph.D., Chief Scientific Officer
| industry = Nutrition & Skin Care products
| industry = Nutrition & Skin Care products
| revenue = USD$3.8 billion(2009)<ref>[http://ir.herbalife.com/phoenix.zhtml?c=183888&p=irol-newsArticle&ID=1394343&highlight=]</ref>
| revenue = USD$2.3 billion(2009)<ref>[http://ir.herbalife.com/phoenix.zhtml?c=183888&p=irol-newsArticle&ID=1394343&highlight=]</ref>
| products = Weight management, nutritional supplements, [[personal care]]
| products = Weight management, nutritional supplements, [[personal care]]
| homepage = [http://www.herbalife.com www.herbalife.com]
| homepage = [http://www.herbalife.com www.herbalife.com]
Line 17: Line 17:
}}
}}


'''Herbalife International''' ({{nyse|HLF}}) is a global nutrition, weight-loss and skin-care company. The company was founded in 1980 and it employs around 4,000 people worldwide. Herbalife reported global sales of [[USD]] 3.8 billion in 2009 and its corporate headquarters are in [[Los Angeles]], [[USA]].<ref>[http://articles.latimes.com/2007/mar/30/business/fi-herbalife30 Herbalife calls buyout bids too low]</ref>
'''Herbalife International''' ({{nyse|HLF}}) is a global nutrition, weight-loss and skin-care company. The company was founded in 1980 and it employs around 4,000 people worldwide. Herbalife reported global sales of [[USD]] 2.3 billion in 2009 and its corporate headquarters are in [[Los Angeles]], [[USA]].<ref>[http://articles.latimes.com/2007/mar/30/business/fi-herbalife30 Herbalife calls buyout bids too low]</ref>


The company distributes its products in 73 countries through a network of approximately 2.1 million independent distributors, some of whom earn profit on product sales and additional commission from a [[multi-level marketing]] (MLM) compensation structure.<ref name="report">[http://media.corporate-ir.net/media_files/IROL/18/183888/2008_AR.pdf Herbalife Annual Report 2008]</ref>
The company distributes its products in 73 countries through a network of approximately 2.1 million independent distributors, some of whom earn profit on product sales and additional commission from a [[multi-level marketing]] (MLM) compensation structure.<ref name="report">[http://media.corporate-ir.net/media_files/IROL/18/183888/2008_AR.pdf Herbalife Annual Report 2008]</ref>

Revision as of 20:19, 13 July 2010

Herbalife. ltd
Company typePublic (NYSE: HLF)
ISINKYG4412G1010 Edit this on Wikidata
IndustryNutrition & Skin Care products
FoundedLos Angeles, CA (1980)
HeadquartersLos Angeles, CA
Key people
Michael O. Johnson, Chief Executive Officer

Brett R. Chapman, General Counsel and Corporate Secretary
Des Walsh, President
Carmen Salazar SuperVisor
Richard P. Goudis, Chief Operating Officer
John DeSimone, Chief Financial Officer

Y. Steve Henig, Ph.D., Chief Scientific Officer
ProductsWeight management, nutritional supplements, personal care
RevenueUSD$2.3 billion(2009)[1]
213,900,000 (2017) Edit this on Wikidata
Number of employees
4,500 Edit this on Wikidata
Websitewww.herbalife.com [3]

Herbalife International (NYSE: HLF) is a global nutrition, weight-loss and skin-care company. The company was founded in 1980 and it employs around 4,000 people worldwide. Herbalife reported global sales of USD 2.3 billion in 2009 and its corporate headquarters are in Los Angeles, USA.[2]

The company distributes its products in 73 countries through a network of approximately 2.1 million independent distributors, some of whom earn profit on product sales and additional commission from a multi-level marketing (MLM) compensation structure.[3]

Herbalife has faced occasional legal challenges over the safety of its products. As of 2009, none of these has been upheld.[citation needed]

History

In February 1980, Mark Hughes began selling the original Herbalife weight loss product from the trunk of his car. Hughes often stated that the genesis of his product and program stemmed from the weight loss concerns of his mother, whose death he attributed to an eating disorder and an unhealthy approach to weight loss. Adopting the multi-level marketing system for distribution and growth, the company attracted thousands of distributors who sold its products door-to-door or through word-of-mouth, shunning commercial distribution in retail stores.

The company's slogan, "Lose Weight Now, Ask Me How", became a marketing theme for distributors, featuring heavily on badges, flyers and posters. Early methods to recruit distributors included seminars, which would feature distributors giving health and weight loss testimonials on the Herbalife products and a keynote address by Hughes. By 1982 Herbalife had reached USD 2 million in sales and had expanded into Canada.

In 1985, the California Attorney General sued the company for making inflated claims about the efficacy of its products. The company settled the suit for USD 850,000 without admitting wrongdoing.[4] In 1986 Herbalife became a publicly traded company on the NASDAQ, and in 1996 Herbalife reached USD 1 billion in annual sales.

Mark Hughes died at age 44.[5] The Los Angeles County Coroner autopsy results ruled that the entrepreneur had died of an accidental overdose. The company continued to grow after his death and in 2002 was acquired by Whitney and Co LLC and Golden Gate Capital for USD 685 million, who took the company private again.[6]

In April 2003, Michael O. Johnson joined Herbalife as CEO following a 17-year career with The Walt Disney Company, most recently as president of Walt Disney International.[4] On December 16, 2004, the company had an initial public offering on the NYSE of 14,500,000 common shares at $14/share. 2004 net sales were reported as USD 1.3 billion. In April 2005, the company celebrated its 25th anniversary with a four-day event attended by 35,000 Herbalife Independent Distributors from around the world. In August 2005, Dr. Steve Henig joined the company as Chief Scientific Officer, responsible for product research and development. In 2008, President and COO Greg Probert resigned after it was reported that he had not completed the degree requirements for the MBA he claimed on his resume.[7]

Business

Herbalife is a multi-level marketing (sometimes called MLM or network marketing) company. In addition to profits from product sales, Herbalife distributors can earn additional commissions from sales by their 'downline' distributors. Supporters of MLM contend this is a fair compensation system, whilst critics of MLM contend that it is similar to a pyramid scheme[8]. Critics also argue that the company does not make enough effort to curb abuses by individual distributors, though Herbalife has consistently denied such allegations.[9] Herbalife is a member of the Direct Selling Association in most countries in which it operates.

In its filings with the U.S. Securities and Exchange Commission (SEC), company management note problems with inappropriate business practices in the past, their subsequent long-lasting effects and the need to avoid any repetition. Company management considers the number and retention of distributors a key parameter and tracks it closely in financial reports. By January of each year, sales leaders are required to requalify. In February of each year, they remove from the rank of sales leaders those individuals who did not satisfy the sales leader qualification requirements during the preceding 12 months. For the latest 12-month requalification period ending January 2010, approximately 43.0 percent of the eligible sales leaders requalified, reflecting an improvement from 40.3 percent in 2008.[10]

Herbalife Family Foundation

In 1994 company founder Mark Hughes started the Herbalife Family Foundation, a 501(c)(3), non-profit corporation, to improve children’s lives by helping organizations provide healthy nutrition to children at risk. Additionally, HFF often supports relief efforts in response to natural disasters. .[11]

In 2005, HFF introduced its Casa Herbalife program to help provide healthy and nutritious meals by partnering with existing charities serving children. This program for children-at-risk is named after Casa Herbalife, an orphanage the foundation built in Brazil in 1998 and continues to support today. Today, 52 programs have been established on six continents.

HFF is supported by the Herbalife, its independent Distributors, employees, and friends. After the initial grant, the company promotes the involvement of local independent distributors and employees to directly support their local Casa Herbalife program through financial donations and volunteer activities.

Sports sponsorships

Herbalife sponsors a number of athletes, sports teams and sporting events around the world, including:

A complete list can be found at the Herbalife Sports Sponsorships website.

Product range

Herbalife's product range includes protein shakes, protein snacks, nutrition, energy and fitness supplements and personal care products.[18] The Formula 1 protein shake, a soy-based meal-replacement shake, is the company's number one product and was one of the first products sold by the company. The range also includes targeted products for heart health, digestive health and skin care. Some products are vegetarian, kosher or halal, and Herbalife provides testimonials and advice from health professionals as part of their product marketing.

According to the 2009 10K, many of its weight management, nutritional and personal care products are manufactured for by third party manufacturing companies, with the exception of products distributed in and sourced from China, where they have their own manufacturing facility and several products are manufactured in its recently acquired manufacturing facility in Lake Forest, California. Herbalife is currently making modifications to its recently acquired manufacturing facility in order to increase capability and capacity, and upon completion of these modifications, expect to increase self manufacturing.[19]

=== Clinical studies ===jfkkk

Two clinical studies have been completed on different formulations of Herbalife's Formula 1 protein shake product. The results of the studies, one of which was funded by Herbalife, support the claims made by Herbalife advocates.[20][21][dubious – discuss]

Scientific advisory board

Herbalife's Scientific Advisory Board is chaired by David Heber, M.D. Ph.D, F.A.C.P., F.A.C.N., who is professor of medicine and public health and the founding director of the Center for Human Nutrition in the Department of Medicine at UCLA. According to a 2004 Forbes article, Dr. Heber joined the board at roughly the same time Herbalife made a $3 million donation to establish the Mark Hughes Cellular & Molecular Nutrition Laboratory at his Center for Human Nutrition, leading to criticism of Heber's actions as an inappropriate conflict of interest.

Louis J. Ignarro, Ph.D., a Nobel Laureate in Medicine and Distinguished Professor of Pharmacology at the UCLA School of Medicine, is also a member of Herbalife's Scientific Advisory Board. Ignarro worked with Herbalife to develop Niteworks, a dietary supplement designed to boost the body's own production of nitric oxide, and later became a member of the company's Scientific Advisory Board. Ignarro endorsed this product in exchange for a royalty agreement reported to have earned his consulting firm over $1 million in the first 12 months. Ignarro also promoted Niteworks' ingredients in the prestigious Proceedings of the National Academy of Sciences, without disclosing his financial interest to the publication. After Ignarro's ties to Herbalife were revealed, the journal issued a correction to the article, citing Ignarro's undisclosed "conflict of interest". UCLA conducted its own investigation and determined that Ignarro did not act improperly as all the research was done in Italy and no research funds came from UCLA.[citation needed] Therefore, it was not legally necessary for him to disclose anything. Ignarro presents a one-hour Herbalife promotional video for Niteworks.

Nutrition Advisory Board

Herbalife states that its Nutrition Advisory Board consists of "leading experts in the fields of nutrition and health who help educate and train our independent Distributors on the principles of nutrition, physical activity and healthy lifestyle."[22]

  • David Heber, M.D., Ph.D., F.A.C.P., F.A.C.N., Director of the Center for Human Nutrition at UCLA.[23]
  • Louis Ignarro, Ph.D.
  • Luigi Gratton, M.D., M.P.H., Vice President of Nutrition Education at Herbalife
  • Alexey Borisov, M.D.
  • Joaquim Caetano, M.D.
  • Marco DeAngelis, M.D.
  • Jorge Dominguez, M.D.
  • Marion Flechtner-Mors, Ph.D.
  • Julian Alvarez Garcia, M.D.
  • Shih-Yi Huang, Ph.D.
  • Linong Ji, M.D.
  • Patricio Kenny, M.D.
  • Rocio Medina, M.D.
  • Anoop Misra, M.D.
  • Alla Pogozheva, M.D.
  • Ralph Rogers, M.D.
  • Nikolaos Sitaras, M.D.
  • Nataniel Viuniski, M.D.
  • Yoshio Yoshimoto, M.D.

Controversies

Multi-level marketing

  • A 2004 settlement resolved a class action suit on behalf of 8700 former and current distributors that accused the company and distributors of "essentially running a pyramid scheme." A total of $6 million was to be paid out, with defendants not admitting guilt.
  • In a California class action suit, Minton v. Herbalife International, et al., the plaintiff is "challenging the marketing practices of certain Herbalife International independent distributors and Herbalife International under various state laws prohibiting "endless chain schemes", insufficient disclosure in assisted marketing plans, unfair and deceptive business practices, and fraud and deceit".[24]

Marketing practices

In a West Virginia class action suit, Mey v. Herbalife International, Inc., et al., the plaintiffs allege that some "telemarketing practices of certain Herbalife International distributors violate the Telephone Consumer Protection Act, or TCPA, and seeks to hold Herbalife International vicariously liable for the practices of these distributors. More specifically, the plaintiffs' complaint alleges that several of Herbalife International's distributors used pre-recorded telephone messages and autodialers to contact prospective customers in violation of the TCPA's prohibition of such practices". Herbalife managements insisted they have meritorious defences in both cases and that in the West Virginia case, any such distributor actions also went against Herbalife's own policies. Management also contends that any adverse legal outcomes Herbalife might suffer would not significantly affect their financial condition, particularly since they have already set aside an amount that they "believe represents the likely outcome of the resolution of these disputes".[24] The case was resolved with Herbalife and its distributors paying $7 million into a fund for class members part of the suit.[25] Herbalife International did not acknowledge wrongdoing, or admit culpability for the actions of its distributors.

Product controversies

Some of the original Herbalife weight loss products contained the active ingredient Ma Huang or Sida cordifolia, two herbs containing ephedrine alkaloids. Herbalife stopped using ephedrine in its products in 2002 after several U.S. states banned supplements containing botanical sources of ephedrine alkaloids.[26][27] The U.S. Food and Drug Administration banned supplements containing ephedra in 2004.[28]

Scientific studies in 2007 by doctors at the University Hospital of Bern in Switzerland and the Liver Unit of the Hadassah-Hebrew University Medical Center in Israel found an association between consumption of Herbalife products and hepatitis.[29][30] In response, the Spanish Ministry of Health issued an alert asking for caution in consuming Herbalife products.[31] Herbalife has stated they are cooperating fully with Spanish authorities.[32]

In May 2008 the Fraud Discovery Institute, which claims to be a consumer watchdog organization, reported that laboratory test results of Herbalife products showed lead levels in excess of limits established by law in California under Proposition 65.[33][34] The Fraud Discovery Institute was founded by fraudulent entrepreneur Barry Minkow, who served seven years in jail for stock fraud,[35] and since disclosed that his company was profiting from the allegations by shorting Herbalife stock.[36] Herbalife responded stating its products met federal FDA requirements[37][38] and released independent lab tests proving the products did not exceed Proposition 65 limits.[36][39]

On 10 May 2008 a suit was filed on behalf of a woman who developed lead-related liver complaints that she claimed were a reaction to a combination of Herbalife products.[35][40] The suit was filed by lawyer Christopher Grell, cofounder of the Dietary Supplement Safety Committee and an associate of Barry Minkow.[35] On 17 June 2008, the suit was expanded to add distributors who had supplied the woman with the Herbalife products, with Grell launching a website to offer persons who believe they were harmed by Herbalife products the chance of redress.[41] In August 2008, Minkow retracted all accusations against Herbalife and removed any mention of the company from his web site.[42]

Crazy Fox commercials

As of April 2008, a series of commercials featuring a large red animated fox advertising home-based business opportunities have been running on US television. The advertisements typically feature a series of testimonials from actors playing individuals who have made sums of money between $5,000 USD and $15,000 USD per month as a result of participating in an undescribed business program. The adverts direct viewers to a website that allows them to purchase a "success kit". The kit also provides no information about how the business opportunity works.

These adverts have been found to be run by independent Herbalife distributors, as a method of recruiting new 'downline' distributors.[43] While it is not illegal, critics of this type of advertising prefer advertisers to be up front about their company associations.

Herbalife and Israel

In 2005, Israel's Health Minister began an investigation against Herbalife's products after four persons using Herbalife's products were found to have liver problems. Herbalife's products were accused of containing toxic ingredients such as Qua-qua, Kompri, and Kraska. The products were sent to the Bio-Medical Research Design LTD (B.R.D) laboratory, to a private laboratory in the U.S, and to Israel's Forensic research laboratory. The conclusion from each of these laboratories was that Herbalife's products are safe.

Ugly Betty parody

Herbalife is parodied in comedy Ugly Betty from the first episode. In the Pilot, informally known as "I Am Not Going to Sell Herbalux", Betty's sister Hilda is seen to be a distributor for a company called Herbalux with a logo similar to Herbalife's. Herbalux is the name of a real-life Polish company that specializes in alternative medicine, and has no connection to Herbalife.[44]

In "Trust, Lust, and Must" when Betty opts to sell Herbalux products due to financial pressure, she wears a tag saying "10 pounds in 10 days", similar to the "Lose Weight Now, Ask Me How" badges often used as a marketing tool by Herbalife distributors.

In La Fea Más Bella, a Spanish-language program with a similar storyline to Ugly Betty, the lead character Lety used actual Herbalife products as she underwent an onscreen "physical transformation" in six episodes of the show.[45]

See also

References

  1. ^ [1]
  2. ^ Herbalife calls buyout bids too low
  3. ^ Herbalife Annual Report 2008
  4. ^ a b "Nobel Prize Winner Didn't Disclose Herbalife Contract" Bloomberg News report
  5. ^ Copage EV. Mark R. Hughes, 44; Founded Nutrition Supplement Concern New York Times, 23 May 2000. Section B, Page 11, Column 5.
  6. ^ Herbalife acquisition completed. (Industry News).(Whitney and Co. and Golden Gate Capital acquire Herbalife International)(Brief Article) | Nutraceuticals World | Find Article...
  7. ^ Ethical flap forces exit of president: Herbalife executive Probert credited with company's growth.(HEALTH CARE)(Gregory Probert) | Article from Los Angeles Business Journal | ...
  8. ^ "Herbalife Sets More Layoffs". The New York Times. 1985-05-30.
  9. ^ Statement from Nordic Herbalife Director denying toxicity of Herbalife products, pyramid marketing scheme
  10. ^ http://ir.herbalife.com/phoenix.zhtml?c=183888&p=irol-newsArticle&ID=1394343&highlight=
  11. ^ Herbalife Family Foundation website
  12. ^ LA Triathlon website
  13. ^ AYSO website
  14. ^ LA Galaxy
  15. ^ 2010 IndyCar Series season#Team and driver chart
  16. ^ Superdeporte.es Template:Es icon
  17. ^ [2]
  18. ^ Herbalife Corporate Profile
  19. ^ 2009 Form 10K http://ir.herbalife.com/phoenix.zhtml?c=183888&p=irol-sec
  20. ^ A controlled trial of protein enrichment of meal replacements for weight reduction with retention of lean body mass; Leo Treyzon, Steve Chen, Kurt Hong, Eric Yan, Catherine L Carpenter, Gail Thames, Susan Bowerman, He-Jing Wang, Robert Elashoff and Zhaoping Li; UCLA Center for Human Nutrition, Department of Medicine, David Geffen School of Medicine at UCLA, Los Angeles, USA
  21. ^ Efficacy of low-calorie, partial meal replacement diet plans on weight and abdominal fat in obese subjects with metabolic syndrome: a double-blind, randomised controlled trial of two diet plans – one high in protein and one nutritionally balanced; Belong Cho; The International Journal of Clinical Practice, February 2009
  22. ^ Advisory Boards - Science: Herbalife
  23. ^ University of California Los Angeles
  24. ^ a b Herbalife Quarterly Report to SEC, June 2006
  25. ^ Herbalife Ltd. - HLF Annual Report (10-K) Item 3. Legal Proceedings
  26. ^ Herbalife Ltd. (2005-03-14). "Form 10-K". United States Securities and Exchange Commission. pp. page 15. {{cite news}}: |pages= has extra text (help)
  27. ^ Evans, D. (2002-04-11). "Herbalife, Other Ephedra Marketers Face Soaring Insurance Rates". Bloomberg L.P.
  28. ^ "Sales of Supplements Containing Ephedrine Alkaloids (Ephedra) Prohibited". U.S. Food and Drug Administration.
  29. ^ Association between consumption of Herbalife nutritional supplements and acute hepatotoxicity.
  30. ^ Herbal does not mean innocuous: ten cases of severe hepatotoxicity associated with dietary supplements from Herbalife products.
  31. ^ Spanish Ministry of Health issues precaution on Herbalife brand
  32. ^ Herbalife Responds to Spain's Ministry of Health Alert
  33. ^ Herbalife lead levels draw attention - Regulation - NutraIngredientsUSA - Food, Beverage & Nutrition - Publications - Decision News Media
  34. ^ Second, FDA Registered, Independent Lab affirms Higher Lead Levels in Herbalife Product, reports Fraud Discovery Institute, Children's Herbalife Products contain Materially Excessive Lead Levels affirmed in New Lab Results, Expert reports to Fraud Discovery Institute, New Tests reveal 904 Percent More Lead in Herbalife, NuSkin Nutritional Shakes than Competitors, reports Fraud Discovery Institute
  35. ^ a b c Los Angeles Business Journal Online - business news and information for Los Angeles California
  36. ^ a b Herbalife rebuffs lead allegations
  37. ^ FOXNews.com - Group Says 6 Dietary Supplements Contain Dangerous Levels of Lead - Health News | Current Health News | Medical News
  38. ^ Herbalife Tangles with Prop 65, Testing Company
  39. ^ More lead testing confirms product safety, says Herbalife - Industry - NutraIngredientsUSA - Food, Beverage & Nutrition - Publications - Decision News Media
  40. ^ Herbalife Sued for Negligence and Fraud by Victim
  41. ^ CNN.com
  42. ^ Reuters.com
  43. ^ Work At Home: The Real Deal - NewsChannel 9 WSYR
  44. ^ Herbalux
  45. ^ Herbalife Transforms Lead Character in ‘La Fea mas Bella,’ Mexico's Ugly Betty
Notes
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