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Here’s the good news: Among the many industries falling by the wayside, the direct selling industry is charting a strong and steady course around the world. So strong and steady that we thought it would be interesting to see how the industry’s top companies—those with annual billings of more than US$1 billion—were faring, despite all the doom and gloom reported by the media.
We decided to call this very exclusive group of industry leaders the billion-dollar club. Although each company has a healthy respect for today’s global economic challenges, each is experiencing continued growth and success.
Most of the executives we spoke to believe the current financial crises are responsible, at least in part, for the direct selling industry’s current solvency and success.
And now, we’d like to invite you to peek inside the companies that comprise the direct selling industry’s own billion-dollar club.
Topping the billion-dollar club list is, of course, New York City-based public company Avon (AVP—NYSE), the industry’s mother ship. As the world’s largest direct seller, Avon markets to women in more than 100 countries through 5.5 million independent sales representatives.
Judging by Avon’s latest financial figures and its third-quarter earnings statement, the company is in a growth cycle.
In 2007, Avon’s revenue was $9.9 billion. Over the last four quarters—Q4 2007 through Q3 2008—Avon’s revenue was $10.9 billion. Additionally, third-quarter 2008 revenue grew to $2.6 billion, a 13 percent increase over Q3 2007.
“Avon’s third-quarter performance reflects continued momentum of our turnaround plan,” Andrea Jung, Avon Chairman and CEO, said in a press release. “Our investments in advertising and the Representative Value Proposition (RVP) are yielding strong results.”
Avon was ranked No. 265 on the 2008 Fortune 500 list.
Name of Company: Avon Products Inc.
Type of Company: Public (AVP—NYSE)
Number of Employees: 42,000
Number of Markets: More than 100
Revenue: $10.9 billion in revenue for last four quarters (Q4 2007 – Q3 2008); $9.9 billion in revenue for 2007
Jul – Sep 2008 (Q3 2008): $2.6 billion in revenue
Apr – Jun 2008 (Q2 2008): $2.7 billion in revenue
Jan – Mar 2008 (Q1 2008): $2.5 billion in revenue
Oct – Dec 2007 (Q4 2007): $3.1 billion in revenue
In the No. 2 spot is direct selling giant Amway. Its annual sales for 2007 were $7.16 billion, and for 2008 were $8.2 billion. Amway Chairman Steve Van Andel says the company continues to remain optimistic about its future growth potential, despite a bleak economic outlook in some of its markets. “Amway’s rapid expansion around the world and the acceptance of the direct selling business model by countries such as Russia, India, Ukraine and others, has blunted the impact of the economic downturn on our company,” he says.
In late 2007, Amway completed its production and warehousing facility in Vietnam. Since then, Amway Vietnam Co. Ltd. has become one of the company’s fastest-growing markets. “Officially launched in February 2008, Amway Vietnam now has more than 40,000 independent business owners throughout the country,” Van Andel says.
In 2009, Amway plans to increase its efforts in more established markets such as the United States and Great Britain—“to revive our former buoyancy,” Van Andel says.
“We’re expecting big things to happen in 2009, such as continuing to increase our visibility through advertising, sponsorships and a growing physical presence around the world,” he says.
Name of Company: Amway Corporation
Type of Company: Private
Number of Employees: 13,000
Number of Markets: More than 80
Sales: $7.16 billion annual sales in 2007; $8.2 billion annual sales in 2008
Founded in 1883 as a carpet company, Wuppertal, German-based private
firm Vorwerk & Co. KG has been selling quality products—from
household appliances to cosmetics—through the direct sales channel
since 1930. For 2007, Vorwerk reported a sales volume of $3.15 billion
(€2.32 billion).
Vorwerk is the parent company of JAFRA Cosmetics, which had a sales volume of $469.71 million (€342 million) in 2007.
Regarding the current monetary malaise affecting countries worldwide, “Vorwerk’s managing partners decided not to participate in the global economic crisis,” says Vorwerk Senior Vice President of Corporate Communications Jürgen Hardt. “In truth, the European—and especially German—economy is better prepared for global turbulences than other parts of the world.”
While Hardt says Vorwerk’s growth has been significant in the past 10 years, he admits the firm must be careful to balance potentially negative influences. “The company will not be totally free of the negative impact of the crisis,” he says.
But to a certain extent, Vorwerk is protected from financial turbulence. “As a financially viable, family-owned company, we are not dependent on banks,” Hardt says.
Hardt says, as others have, that more people may be willing to join Vorwerk—and other direct selling companies, too—during tough financial times. “Availability of salespeople is one of the most important factors for success in direct sales,” he says. “Our growth expectations are unlimited.”
Name of Company: Vorwerk & Co. KG
Type of Company: Private – parent company of JAFRA Cosmetics
Number of Employees: 23,000
Number of Markets: 61
Sales Volume: €2.32 billion ($3.15 billion) in sales volume for 2007
Los Angeles-based public company Herbalife (HFL—NYSE) sells its products through more than 1.9 million independent distributors who conduct business worldwide. In 2007, Herbalife’s net sales were $2.14 billion. Over the last four quarters—Q4 2007 through Q3 2008—the company’s net sales were $2.4 billion.
“While our business isn’t countercyclical to the economy, as of Q3 2008, it seems to be resilient to the economy,” says Des Walsh, Herbalife Executive Vice President, Worldwide Operations and Sales. “Eighty percent of our business is outside the United States, so we’re constantly operating in various economies. Naturally, in a tough economic climate, our business opportunity is even more attractive to someone who loses his job or is in need of supplemental income.”
Walsh says Herbalife has made substantial investments in markets outside the United States. In 2008, Herbalife opened four new markets: Honduras, Guatemala, Nicaragua and Ecuador.
Herbalife has also invested more than $50 million in upgraded Oracle applications, so it has the IT infrastructure necessary to support significant future growth.
“We’re currently doing business in 70 countries, but there are several markets we are planning to open in 2009,” Walsh says. “Also, we’re focused on more deeply penetrating our existing markets and globalizing best practices.”
Name of Company: Herbalife Ltd.
Type of Company: Public (HFL—NYSE)
Number of Employees: 3,644
Number of Markets: 70
Net Sales: $2.4 billion in net sales for last four quarters (Q4 2007 – Q3 2008); $2.14 billion in net sales for 2007
Jul – Sep 2008 (Q3 2008): $602.2 million net sales
Apr – Jun 2008 (Q2 2008): $639.7 million net sales
Jan – Mar 2008 (Q1 2008): $604.4 million net sales
Oct – Dec 2007 (Q4 2007): $578.1 million net sales
Addison, Texas-based private company Mary Kay Inc. was founded in 1963 by Mary Kay Ash with her life savings of $5,000. From its humble beginnings in a 500-square-foot Dallas storefront, Mary Kay Inc. has grown into one of the largest direct sellers of skin care and color cosmetics in the world, with a global independent salesforce exceeding 1.8 million.
Since the firm’s founding, Mary Kay Inc. has averaged double-digit
growth each year. In 2007, the firm generated $2.4 billion in wholesale
sales.
Mary Kay opened its first international market—Australia—in
1971, and its most recent—India—in 2007. Among its more than 35 active
markets, Mary Kay’s three top international markets are China, Russia
and Mexico.
In 2009, Mary Kay Inc. plans to invest time and money in its corporate social responsibility initiative, Pink Changing LivesSM. Mary Kay Inc.’s financial and product donations spotlight changing the lives of women and children around the world, with a focus on the prevention of violence against women. Additionally, Mary Kay Inc. will plant 100,000 trees in North America and embark on a groundbreaking initiative to turn waste from its manufacturing process into usable energy.
Name of Company: Mary Kay Inc.
Type of Company: Private, family-owned
Number of Employees: 5,000
Number of Markets: More than 35
Sales: $2.4 billion in wholesale sales for 2007
Based in Duluth, Ga., private firm Primerica Financial Services—a subsidiary of public parent company Citi (C—NYSE)—boasts the largest salesforce in the financial services industry. There are approximately 100,000 licensed, independent Primerica representatives across the United States (including Puerto Rico), Canada and Spain.
For Primerica, the current credit crunch is a blessing in disguise, or maybe just a blessing. Primerica Co-CEO John Addison is known for saying, “There might be a recession in America, but there’s no recession at Primerica.”
The numbers bear him out. “Through the first three quarters of last year, of the top 100 largest life insurance companies in the United States, 89 had a net decrease in their capital base,” Addison says. “Only 11 had an increase in their capital base, and the third largest capital base increase out of all the life insurance industry was Primerica Life at $120 million.”
At a time when layoffs and cutbacks are the rule not the exception, especially in the financial services industry, Primerica is investing in its future. “We’ve implemented a new bonus that’s very much aimed at licensing and building new people,” Addison says. “We’re making significant investments in our technology platform to make the recordkeeping for our independent contractors simpler.”
Addison expects these investments to pay dividends in the near-term—and even in the midst of a recession. “Our model of building distribution weathers the storms that are going on in the world incredibly well,” he says. “Our goal is a 20 percent increase in recruiting, a 20 percent increase in licensing. While everybody else is focused on doing damage control, we’re going to go do some damage.”
Name of Company: Primerica Financial Services Inc.
Type of Company: Private, subsidiary; Parent company, Citi (C—NYSE)
Number of Employees: 2,000
Number of Markets: Three
Revenue: $2.3 billion in revenue in 2007
Publicly traded Tupperware Brands Corporation (TUP—NYSE), based in Orlando, Fla., sells storage and serving products through Tupperware, and beauty and personal care products through Avroy Shlain, BeautiControl, Fuller, NaturCare, Nutrimetics, Nuvo and Swissgarde.
In 2007, Tupperware’s sales were $1.98 billion. In the last four
quarters—Q4 2007 through Q3 2008—the company’s sales were $2.21
billion.
“Our emerging markets accounted for 56 percent of our
third-quarter sales, and the bulk of these businesses continued to
perform extremely well,” says Chairman and CEO Rick Goings in
Tupperware’s Q3 earnings release. “We believe we will generate modest
local currency growth from established markets in 2009 and forward, as
we’ve seen the payoff in selected markets of the work we’ve done over
the last several years to revitalize these businesses.
Tupperware is listed as No. 903 on the 2008 Fortune 1,000 list.
Name of Company: Tupperware Brands Corporation
Type of Company: Public (TUP—NYSE)
Number of Employees: 12,800
Number of Markets: 100
Sales: $2.21 billion in sales for last four quarters (Q4 2007 – Q3 2008); $1.98 billion in sales for 2007
Jul – Sep 2008 (Q3 2008): $513 million in sales
Apr – Jun 2008 (Q2 2008): $584 million in sales
Jan – Mar 2008 (Q1 2008): $543 million in sales
Oct – Dec 2007 (Q4 2007): $577 million in sales
Private firm Forever Living Products, based in Scottsdale, Ariz.,
sells aloe vera drinks and aloe vera-based aromatherapy products,
cosmetics, dietary and nutritional supplements, lotion, soap and tooth
gel products in some 135 markets. Annual sales for 2007 were $2.1
billion.
According to Rex Maughan, Forever Living CEO and Chairman of the Board, “2008 has been a remarkable year for Forever Living.
“In
spite of the global turmoil, I am grateful for the fact that Forever
Living is going strong,” Maughan says. “Although I have not seen all
the figures yet, I am confident that 2008 will be a great year.
Although no business is recession-proof, there is always opportunity in
every business climate.
“When times are tough, people often look for ways to earn more money or even find an alternate source of income in case their ‘main’ job is threatened.”
Name of Company: Forever Living Products International Inc.
Type of Company: Private
Number of Markets: 135
Annual Sales: $2.1 billion in sales for 2007
Swedish company Oriflame offers high-quality skin care, fragrances, color cosmetics, toiletries and accessories. Oriflame has grown rapidly, recently opening two markets—Iran and China.
“We have increased sales by more than 17 percent per year on average for the last 20 years,” says Magnus Brännström, Oriflame’s CEO. “This is clearly above-market growth. We intend to continue to grow more than the cosmetics market in the future. We believe we will take market share in 2009.”
Name of Company: Oriflame Cosmetics
Type of Company: Public (ORI—SDB.ST)
Number of Employees: 7,000
Number of Markets: 61
Sales: $1.68 billion in sales for 2007
São Paulo, Brazil-based firm Natura Cosmeticos SA is traded on the São Paulo Stock Exchange (NATU3). Natura operates in the Chile, Peru, Argentina, Mexico, Colombia and Venezuela. It manufactures deodorants, sunscreens, lotions, creams, lipsticks and perfumes. Over the last four quarters—Q4 2007 through Q3 2008—Natura’s revenue was $1.52 billion.
Natura’s Q3 earnings statement says: “The globalized world’s main economies are currently undergoing a period of significant change. Developing countries, however, may be less affected by the crisis, and could thus play an important role in the growth of the global economy. Our company is highly profitable, has strong cash generation and a treasury that operates safely and selectively.”
Natura is focusing on international expansion, but the firm is choosing its markets with care. “Studies for the implementation of a United States operation have shown that the moment is not suitable,” reads the Q3 earnings report. “We have decided to suspend our entry into that market for an indeterminate period. We will maintain our operation in France as part of a group of initiatives to build our global brand and as a source of learning about demand in a highly sophisticated market.”
Name of Company: Natura Cosmeticos SA
Type of Company: Public – São Paulo Stock Exchange (NATU3)
Number of Employees: 5,919
Number of Markets: Seven
Net Revenue: $1.52 billion in net revenue for last four quarters (Q4 2007 – Q3 2008)
Jul – Sep 2008 (Q3 2008): Net revenue R$921.1 million = $412.21 million
Apr – Jun 2008 (Q2 2008): Net revenue R$883.1 million = $395.21 million
Jan – Mar 2008 (Q1 2008): Net revenue R$668 million = $298.66 million
Oct – Dec 2007 (Q4 2007): Net revenue R$937.8 million = $419.29 million
Provo, Utah-based publicly traded company Nu Skin Enterprises Inc.
(NUS—NYSE) markets personal care products under the Nu Skin® brand;
science-based nutritional supplements under the Pharmanex® brand; and
technology-based products and services under the Big Planet® brand.
Over
the last four quarters—Q4 2007 through Q3 2008—Nu Skin Enterprises’
revenue was $1.23 billion. In 2007, the firm’s revenue was $1.15
billion.
Ritch Wood, Nu Skin Enterprises Chief Financial Officer, says although there are repercussions for every company because of the current economic situation, he believes Nu Skin Enterprises is in a position to weather the storm due to its sales momentum, innovative products and strong balance sheet.
“In 2008, we experienced double-digit growth in many of our markets around the world, and we look for this momentum to continue in 2009,” Wood says. “We are looking forward to a great 2009.”
Nu Skin Enterprises opened two new markets—South Africa and the Czech Republic—in 2008, bringing the company’s market total to 48. “We have already seen great excitement in these two markets,” Wood says. “As of December 2008, South Africa has welcomed 2,100 distributors. We look forward to continued growth from both of these markets in 2009.”
Finally, Nu Skin reminds us that sharing success is the key to attracting more success.
“Nu Skin and its distributors continue to generate success—and in the process, continue to be a force for good by giving back to those in need,” Wood says. “As dollars for charitable giving shrink, the Nu Skin Force for Good Foundation continues to grant more than $1 million each year to help nourish the minds and bodies of children.”
Name of Company: Nu Skin Enterprises Inc.
Type of Company: Public (NUS—NYSE)
Number of Employees: 1,200
Number of Markets: 48
Revenue: $1.23 billion in revenue for last four quarters (Q4 2007 – Q3 2008); $1.15 billion in revenue for 2007.
Jul – Sep 2008 (Q3 2008): $310.27 million in revenue
Apr – Jun 2008 (Q2 2008): $321.7 million in revenue
Jan – Mar 2008 (Q1 2008): $298.1 million in revenue
Oct – Dec 2007 (Q4 2007): $306.1 million in revenue
Although we did not include Keller Williams Realty in the official
billion-dollar club, the company deserves to be mentioned in this
story. Though Keller Williams’ corporate office reports annual revenue
of $119 million in 2007, the company’s 70,000 agents generated $3
billion in transaction commissions. The corporate office paid $40
million to its agents based on a seven-level profit-sharing plan.
With
its multilevel compensation and recruitment model, Keller Williams
Realty may just be the direct selling industry’s best-kept secret. It
has become one of the largest and fastest-growing real estate franchise
systems throughout North America.
Keller Williams Realty was
founded in 1983 by Gary Keller and Joe Williams. It began franchising
in 1991 and opened its first Canadian office in 1998. Keller Williams
may not be the largest residential real estate franchise in the United
States, but its agent-friendly business concept has made its mark. Each
Keller Williams franchise is agent-owned and -operated, commissions are
split at least 70/30 and the company rewards agents through multi-level
compensation, which they call profit sharing.
With more than
70,000 agents working from about 650 locations in the United States (13
of those locations are in Canada), the strength of Keller Williams’
foundation begins with its distinctive business model. The company is
built on four focal points—culture, profit sharing, education and
technology. These areas define Keller Williams Realty as an industry
innovator and leader.
“Keller Williams Realty’s mission is to
build careers worth having, businesses worth owning and lives worth
living,” Keller Williams CEO Mark Willis says. “Not only do we believe
we can achieve our goals, but that our associates can best fulfill that
mission by emphasizing the values of God, family and then business, in
that order.” It’s these philosophies that have given Keller Williams
its unique culture within the industry—something they call the “Keller
Williams family.”
| Company Name | Year Founded | Revenue (in US Dollars) |
| Avon Products Inc. | 1886 | 10.9 billion |
| Amway Corporation | 1959 | 8.2 billion |
| Vorwerk & Co. KG | 1883 | 3.15 billion |
| Herbalife Ltd. | 1980 | 2.4 billion |
| Mary Kay Inc. | 1963 | 2.4 billion |
| Primerica Financial Services Inc. | 1977 | 2.3 billion |
| Tupperware Brands Corp. | 1951 | 2.21 billion |
| Forever Living Products Intl. Inc. | 1978 | 2.1 billion |
| Oriflame Cosmetics | 1967 | 1.68 billion |
| Natura Cosmeticos SA | 1969 | 1.52 billion |
| Nu Skin Enterprises Inc. | 1984 | 1.23 billion |
Although these companies did not qualify for membership in the billion-dollar club, their annual sales and dynamic growth indicate they will soon join.
Based in Idaho Falls, Idaho, private company Melaleuca was founded in 1985 to market a tea-tree oil formulation called melaleuca oil. The company sells personal care products, cosmetics, household-cleaning supplies and vitamins.
Melaleuca began with seven people; it now employs more than 2,400.
Its net sales for 2007 were $859 million, a fact it openly displays on
its Web site.
The company’s operations are run from a
100,000-square-foot corporate office complex along with manufacturing
and distribution plants in Idaho Falls and Rexburg, Idaho (totaling
274,000 square feet). Melaleuca also has a 170,000-square-foot
manufacturing and distribution facility in Knoxville, Tenn.
Name of Company: Melaleuca Inc.
Type of Company: Private
Number of Employees: 2,400
Number of Markets: 18
Net Sales: $859 million in net sales for 2007
Dallas-based private company Ignite is a subsidiary of electricity and natural gas provider Stream Energy. When Texas’s electricity market was deregulated four years ago, Stream Energy saw an opportunity. It chose direct selling as its marketing method, and Ignite was born in 2005. Already, the company is predicting more than $800 million in revenue for 2008.
“When Stream Energy entered the Texas market in 2005, roughly 10 percent of consumers had changed providers from their incumbents,” says Founder of Ignite and Co-Founder of Stream Energy Chris Domhoff. “Now, 50 percent of consumers have changed, and many of those customers went with Stream Energy/Ignite.”
In the January 2009 Direct Selling News, Domhoff attributed these impressive numbers to a product that’s a necessity, saying, “One of the great things about Ignite is that we offer a product that is habitually used and everyone must have, regardless of how the economy is performing.“
Stream Energy Chairman Rob Snyder says Ignite has benefited from the current economic downturn “since an increasing number of people have been investigating new avenues for earning income and providing a ‘fallback’ career.
“As to the parent company, Stream Energy itself, the firm has been almost wholly unaffected by the economic downturn insofar as, during periods of recession, consumers consistently pay their utility bills before purchasing items of discretionary spending,” Snyder says.
In 2008, Ignite expanded into Georgia, competing in that state’s natural gas market. The company already boasts approximately 2 percent of the market and 20,000 independent associates.
“In 2009, Stream Energy and Ignite intend to enhance their existing market positions in Texas for electricity services and Georgia for natural gas services,” Snyder says. DSN
Name of Company: Ignite
Type of Company: Private, subsidiary of Stream Energy
Number of Employees: 350
Number of Markets: Two
Retail Sales: $606 million in retail sales for 2007; over $800 million in retail sales for 2008
Direct Selling News has accumulated this information from various sources, including interviews, press releases, online sources such as Lexis Nexis and Hoover’s Online and public-company earnings reports. The companies included on this list are ones we were able to confirm through our research; there may be others with revenue of more than $1 billion. No company was intentionally omitted.
