Mannatech: Sound Science Yields Value & Growth

Mannatech Headquarters HQ

Throughout its history, Mannatech has founded its success on rock solid science and is now poised for robust growth.

Since its founding in 1994, Mannatech, Inc. has made a name for itself through product innovation and a commitment to sound science. Indeed, when you walk into the company’s headquarters in Flower Mound, Texas, the first thing you might see are white-coated scientists in a fully working lab.

Alfredo (Al) Bala

MANNATECH, INC.
Founded: 1994
Headquarters: Flower Mound, Texas
Top Executive: Alfredo (Al) Bala, CEO and President
2017 Net Sales: $176.7 Million
Products: Health and Wellness; Skincare; Weight and Fitness

“We have a passion for science,” says Mannatech President and CEO Alfredo (Al) Bala, “Throughout its history, Mannatech has obtained more than 135 patents. Currently, Mannatech holds 90 patents in major global markets, we really pay attention to the quality of the ingredients we offer, some of them exclusive ingredients that can only be found at Mannatech.”

Value to End Consumer

Mannatech has spent more than $50 million on research and product development since the company’s inception nearly 25 years ago. According to Bala, he wants to bring to the marketplace new ideas in the science of nutrition. “We want to make sure those ideas are not only patented, but add overall value to the end consumer. At the end of the day, every company is going to rise and fall on the value they provide to an ultimate customer.”


“Mannatech has obtained more than 135 patents. Currently, Mannatech holds 90 patents in major global markets.”
— Al Bala, Mannatech President and CEO

Mannatech has conducted 17 human clinical trials that have been published, 13 of which were double-blind, placebo-controlled studies—the gold standard for product validation. The company makes a point to invest in “blood serum” clinical studies—not just those done on a product’s ingredients but on the finished product itself, and not just conducted in a test tube but on a human.

They analyze the human blood to make sure that the product is having an effect on a human, not just in a test tube. This is where Bala feels the FDA is going. “I think they’re going to be requiring that if you’re going to make any health benefit claims, that clinical study should be done on your final product, not on your list of ingredients.”

Compliance Correction

The company’s investment in science and R&D paid off with early success. From 1994 to 2007, Mannatech had an amazing growth curve, almost hitting the $450 million mark during that time.

Then, a correction came in the form of a civil suit instigated by the Texas Attorney General in 2007 alleging Mannatech had made “dubious claims about the health benefits of its products.”


“Mannatech has expanded their footprint and are now in 26 countries. Their goal is to be in 100 countries over the next five to 10 years.”
— Al Bala

“We got into a little bit of an issue with the Texas Attorney General, and that dropped our sales to below $150 million,” says Bala. “Our biggest sin is we believed the product worked, people got very excited about it, and went out and said a lot of things about the product. There was certainly over exuberance on the part of some associates. And we paid the price for that.”

Because of this compliance correction, Mannatech now goes to great lengths to maintain strict standards of regulatory compliance. Because of this issue in 2007, Bala says they took the high road and became one of the most compliant companies in network marketing. “I have a poster in my office that says, ‘king of compliance.’ So, we take compliance very seriously.”

Circumspection comes at a cost, however. Bala notes there is an inverse relationship between higher compliance and lower sales. “We went from hyper-growth to correction, and now we’re back into growth again,” he says. “So, we have done the typical S curve. It took a while to re-engineer the company, to re-engineer the message and now we’re back into the growth mode again.”

Onward March

With lessons hard-learned, Mannatech looks forward to what’s to come. The company sees an opportunity to benefit both from the pearls of wisdom gained in the past and the promise of a bright future. They have expanded their footprint and are now in 26 countries. Their goal is to be in 100 countries over the next five to 10 years.

To accomplish this goal, Mannatech has implemented several changes, including revising its compensation plan to make the opportunity more attractive to Associates. Two years ago, the company began a major initiative to strengthen their overall business opportunity starting with the compensation plan. “We wanted something that would help compete with those being offered in the gig economy, an opportunity for the millennials,” says Bala. “I believe it’s just now about to pay off.”

Instead of a wide-spectrum product strategy, which is what they’ve had since the company’s inception, Mannatech is updating its product marketing strategy by creating as many product verticals as they can. They say this will help them be more focused on direct benefits that consumers can relate to, such as this is a brain product, this is a heart product, this is an eye product.

New Technologies In the Works

To be relevant in the future, Bala says they will need to be able to leverage technology and provide the same kind of services that an Ali Baba or an Amazon are now providing. “They have set a new standard for that consumer experience that we need to match. We’re looking for that ultimate customer experience.”


“At the end of the day, every company is going to rise and fall on the value they provide to an ultimate customer.”
— Al Bala

 

One technological upgrade in the works is becoming more mobile friendly. The back-office platform is going to be very mobile-centric since that’s where business is being done today. “That is the way of the future, and that’s where we need to be,” says Bala.

Mannatech is also revamping its Associate training and other programs. From a training and onboarding standpoint, they’re focusing on teaching Associates how to present the business opportunity in an authentic way that serves the need of the prospect.

Ultimately, the goal of Mannatech’s training is to show Associates the one-of-a-kind opportunity that direct sales offers. “We want new Associates to fall in love with direct selling, fall in love with social selling, and understand the relevance of it in today’s world,” says Bala.


“We believe the network marketing or social selling model is more relevant today than it’s ever been.”
— Al Bala

Mannatech is also focusing inward to create a culture of providing excellent service and value to everybody they touch. Whether that’s the customer who uses their product, an Associate who depends on those products to create a living, or whether it’s a child that depends on it for nutritional intake. “As a publicly-traded company, we also want to deliver value to our shareholders since we are a publicly traded company,” says Bala.

Industry Outlook

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Bala is optimistic about the future, not just for Mannatech but the entire channel. He believes the network marketing or social selling model is more relevant today than it’s ever been. “More people today are joining the gig economy because they want the freedom. We see the rise of the entrepreneur movement, and this direct selling model offers a great opportunity for people who want to be entrepreneurs.”

Another factor that puts Mannatech in the sweet spot for growth is its position as a global health and wellness company in the nutrition industry. They believe that wellness is going to be the biggest, fastest growing market ever because of the baby boomers who want to look and feel good and live longer. “People are going to be more focused on wellness, and nature and science are a good combination of those two things,” says Bala.

All this bodes well for the company and the direct selling channel. “I really believe direct selling is the next trillion-dollar industry,” adds Bala. “As much as Amazon and Ali Baba will be trillion-dollar companies, I believe this industry is absolutely poised to be right there with them if we keep a laser focus on providing exceptional value for our distributors and customers alike.”


On a Mission 5 Million®

According to the World Health Organization and UNICEF, roughly 100 million children in developing countries are underweight, and over 150 million are malnourished. This can hinder brain development, reduce intellectual capacity and stunt growth.

To help fight global malnutrition among youth, Mannatech created the Mission 5 Million (M5M)® Foundation. With every Mannatech product purchase, a donation is made to the Mission 5 Million Foundation, which is used to buy and supply Mannatech’s nutrient-rich PhytoBlend™ product to children in need. PhytoBlend is a plant-based powder that provides many of the nutrients otherwise found in fruits, vegetables, meals, minerals, grains and oils.

“In M5M®, Mannatech has created what we call a social entrepreneur model, which is the concept that every product you sell automatically contributes to the wellbeing of a child somewhere in the world,” says Alfredo (Al) Bala, Mannatech President and CEO. “And it’s done from our top line, not from our bottom line. The difference is that many people give from their profits, but we give from our sales. Every product that moves creates a donation that is passed on to a child, almost like the TOMS® Shoes concept.”

From 2009 through 2017, Mannatech’s programs have generated over 122 million servings of nutritional support for malnourished children. For 2018, Mannatech set a goal to provide 16 million meal servings to malnourished children. By mid-year 2018, the company had reached 10 million servings, putting it well on track to reach the 16 million mark before the year is over.

“Mission 5 Million connects what we do every day to an effort to better the world,” Bala says. “That’s appealing to everyone but certainly to the millennial generation who likes to make sure that every dollar they spend has a butterfly effect that will create something good. And that’s exactly what you do with Mannatech.”

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