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New Age Beverages Merges with Morinda

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Colorado-based New Age Beverages Corporation (NASDAQ: NBEV) announced the signing of a definitive agreement to acquire lifestyles and beverage company Morinda Holdings, Inc based in Utah.

Consideration for the transaction will be $85 million, comprised of $75 million in cash and $10 million in New Age restricted stock based on the 40-day volume-weighted average price from closing. The cash consideration for the transaction will be sourced from New Age’s current cash balance. The transaction is expected to close in late December. At closing, Utah-based Morinda, which has operations in more than 60 countries around the world, will be bringing a minimum of $25 million in working capital and no debt.

Key Highlights:

  • Merger creates the 40th largest non-alcoholic beverage company in the world with $300 million in net revenue, $20 million in adjusted EBITDA, $200 million in assets, no debt, and $40 million in cash and working capital
  • Combination brings a leading portfolio of healthy beverages, with multi-channel penetration spanning traditional retail, e-commerce, and in-home; with a hybrid route-to-market spanning direct-store-delivery (DSD), wholesale, and direct-to-consumer
  • Provides New Age’s Health Sciences products and portfolio of CBD-infused beverages immediate access into 60 countries, especially in China and Japan

The newly combined global company will be headquartered in Denver, Colorado, with major operations in Shanghai, Tokyo, Munich, Utah and more than 20 other countries, and further strengthens New Age with the infrastructure to expand its portfolio of healthy beverages worldwide.

Hemp–CBD Legalization by Christmas?

New Age CFO Gregory Gould told Hemp Industry Daily that his company isn’t yet certain it will distribute its CBD line of beverages outside the United States, but the deal will provide the infrastructure that would allow it to do so. Like many CBD manufacturers, New Age is waiting for Congress to remove hemp-derived CBD from the Controlled Substances Act, which could happen by year’s end if lawmakers agree to a new Farm Bill.

Senate agriculture leaders have reportedly reached a final agreement on food stamp provisions within the US Farm Bill of 2018, and the included provisions for legalizing industrial hemp and its important CBD derivatives. The Nov. 29th Washington Post expects action before a Dec. 7th Congressional recess.

In other news, the US Hemp Roundtable reported a substantial contribution of $50,000 from Las Vegas-based HempWorx, a direct sales company selling hemp-derived CBD through some 200,000 members.  Last week Roundtable executives testified on hemp-expansion bills before the Georgia legislature, and also were monitoring hemp-bill improvements pending consideration in Michigan’s legislature.

Jeunesse Tour Raises $1.57 Million for Charity Initiatives

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The Jeunesse EXPO9 Thrive 2018 World Tour made stops in five cities from September through November, attracting 62,500 attendees and raising $1.57 million for charity.

The tour opened in Orlando, home of Jeunesse Global, and continued on to Bangkok, Macau and Rome, with a final stop at Jeunesse Arena in Rio de Janeiro. At each event, Jeunesse Founders Randy Ray, CEO, and Wendy Lewis, COO, along with Chief Visionary Officer Scott Lewis and wife Isabel Lewis, led a special celebration of the company’s ninth anniversary, beginning at the Orlando event on Sept. 9. Jeunesse was founded at 9 p.m. Sept. 9, 2009 — a date and time chosen specifically because the number 9 represents longevity in Asian culture.

Attendees raised $1.57 million for the company’s nonprofit Jeunesse Kids™ to fund local charity initiatives in each market aimed at saving and improving the lives of children: providing access to life-saving pediatric cancer treatment, education and clean water, funding rehabilitation services for disabled children, as well as supporting programs that provide increased food security and economic opportunity.

“The 2018 World Tour truly demonstrated how our family of Jeunesse Distributors is thriving by taking action each day to change the lives of people around the world and creating a global movement with lasting impact,” said CVO Scott Lewis. “This was evident in the growth, passion and commitment I witnessed in each market and the incredible support for our mission to provide a brighter future for children.”

Chiefs’ Quarterback Mahomes Newest Member of AdvoCare Endorsement Team

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AdvoCare recently announced the signing of Kansas City Chiefs quarterback Patrick Mahomes II as an AdvoCare Product Endorser.

The 23-year-old star, who is a candidate for this year’s MVP award, is an avid fan of AdvoCare products, having used the supplements as part of his health and performance regimen throughout his career. Originally from Tyler, Texas, Mahomes has been surrounded by people who used AdvoCare products, including his mom. He utilized the company’s Spark, among other products, before games during his college career. Once he joined Kansas City, he saw the extensive range of AdvoCare products and the huge role they played in the locker room.

“I am ecstatic to be professionally playing the game I love and representing a company that has helped me get where I am today,” said Mahomes. “Performing to the best of my ability—to be the leader my team and the Chiefs Kingdom deserves—is of utmost importance to me. It feels great to endorse a line of products I know bring real results, and the ‘family-first’ vibe AdvoCare champions makes me extremely proud to be a part of this company.”

“Showtime,” as Mahomes is nicknamed, is joining an impressive roster of AdvoCare Product Endorsers. The current line-up includes fellow NFL players Drew Brees of the New Orleans Saints, David Johnson of the Arizona Cardinals, Andy Dalton of the Cincinnati Bengals and Alex Smith of the Washington Redskins, as well as Trevor Harris of the CFL Ottawa Redblacks.

AdvoCare’s founder, Charlie Ragus, also played for the Kansas City Chiefs. He was a defensive end for the team during the 1960s. It was during his playing days that he developed a great appreciation for the impact nutrition could have on performance, which ultimately led to the creation of AdvoCare and the company mission: “We Build Champions.”

Mannatech Employees Assemble 55,000 Meals for Malnourished Children

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Employees of Mannatech, Incorporated recently assembled over 55,000 meals for malnourished children around the world.

Working with Mission 5 Million (M5M) and Kids Around the World, employees gathered at the company’s headquarters in Flower Mound, Texas, to assemble the meals. Each meal packet contains six servings, and includes a mixture of lentils, rice, carrots, onions, tomatoes, celery, white cabbage, bell peppers, flax seed and Mannatech’s PhytoBlend powder, which combine to form provide badly needed nourishment to children.

“The love and energy in the room was amazing and wonderful,” said Sarah Louthan, executive director of M5M. “To have nearly 100 Mannatech employees, and even some local Mannatech Associates, giving their time and energy to prepare 55,000 meals is heart-warming and inspirational.”

“I loved that we could all take just a little bit of time and make such a positive impact,” said Stephanie Lusk, Mannatech’s senior director of Human Resources.

Mannatech, M5M and Kids Around the World have combined to provide 16 million meals for malnourished children in 2018. For every $100 in Mannatech products purchased, Mannatech donates a month’s worth of PhytoBlend for a child.

 

ENVY Jewellery Acquired by ARIIX

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Bountiful, Utah-based ARIIX recently announced the addition of ENVY Jewellery to its portfolio of product offerings.

ENVY is an Australian social shopping jewelry company that offers a collection of affordable fine jewelry, available exclusively through independent consultants at in-home parties, one-on-one or online.

“We couldn’t be happier to have ENVY Jewellery join our team,” says ARIIX CEO and Founder Dr. Fred Cooper. “Our market in Australia continues to grow, and with the acquisition of a company like ENVY, we will certainly experience growth in ways that we haven’t before.”

Shaklee Welcomes Renowned Physiologist, Former Olympian

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Shaklee Corporation recently announced the addition of world-renowned sports physiologist Dr. Genadijus Sokolovas and former Olympian Sarah Scherer-Oursland to the Shaklee Pure Performance Team.

Dr. Sokolovas has been the leading researcher on the impacts of lactic acid production in elite athletes. He has worked with Olympic gold medalists, including US swimmer Michael Phelps, and served as director of Physiology for the US Swimming team for nearly 10 years. He currently works with numerous sport national governing bodies to help analyze and prepare athletes for optimum performance in high-exertion activities. His research has led to the development of training and competition protocols for elite athletes all over the world.

“I have spent years seeing the positive impact Shaklee has had on many Games athletes through providing pure and effective nutrition products,” said Dr. Sokolovas. “I’m thrilled to join forces with Shaklee and their Pure Performance Team to explore how Shaklee nutrition can improve athletic performance for Games athletes and developmental athletes.”

Scherer-Oursland graduated magna cum laude from Texas Christian University with a BS in nutrition, then completed the Coordinated Program in Dietetics, an MBA, and a secondary degree in healthcare management. She was also a two-time member of the US Team, competing in shooting in the 2012 Games in London and the 2016 Games in Rio de Janeiro. She has won multiple National Championships and a World Cup gold medal and holds multiple national and world records. She currently resides in Montana and will consult remotely with Shaklee athletes worldwide.

“Many athletes often overlook the importance of proper nutrition, giving precedence to other aspects of their training regimen,” said Scherer-Oursland. “Convincing elite athletes that proper nutrition is fundamental to performance can be challenging. This provides a unique opportunity for me to relate my personal Games performance and nutrition expertise to the next generation of athletes.”

Both Sokolovas and Scherer-Oursland will advise the more than 90 team members on matters concerning sports nutrition and dietary supplements for top performance on the field of play.

Darryl Green Named Stemtech Board Chairman

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Stemtech Corporation recently announced the appointment of Darryl V. Green as its Chairman of the Board.

Darryl V. Green

“The company’s ability to attract someone of Mr. Green’s caliber to our team, reinforces the value proposition we are bringing to the marketplace,” said Ray Carter, Stemtech CEO. “His leadership will help us to reach new levels of global achievement.”

Green’s career has spanned over 30 years in the nutrition sector where he played an instrumental role in driving his former company’s market capitalization from $1 billion to over $3.7 billion.

“I am very excited about the amazing global infrastructure that has been built along with all of the revolutionary patented technologies developed at Stemtech,” said Green. “The company is poised to become a major industry player in the years to come and I am very committed to its success.”

A Modern-Day Gold Rush?

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Marijuana’s misunderstood sister hemp is projected to be a $22 billion market by 2020, but can it overcome the social stigma and federal regulations that threaten to hold it back?

It’s been called the gateway crop. Thanks to its stalks topped with five leaves, hemp shares the same signature look as its intoxicating relative, the marijuana plant. And it’s true that both are varieties of cannabis sativa, a subtype of the cannabis plant, but their differences are much greater than their similarities.

Hemp stands tall, a willowy plant reaching 16 feet high with skinny leaves, while marijuana is a short, fat bush that usually tops out at five feet. And, most notably, hemp doesn’t contain high quantities of the psychoactive ingredient Tetrahydrocannabinol, or THC, like marijuana. Hemp’s THC content is less than 0.3 percent, while marijuana’s THC can be five to ten percent or more. Meaning: Marijuana will get you high. Hemp won’t.

“People think hemp is another word for marijuana,” says Giles Good, the Co-Founder of HALE, a wellness company that sells hemp oil extract products. “It’s not. The use of the words hemp and cannabis as synonyms for marijuana has to stop.”

“Marijuana will get you high. Hemp won’t.”

Why the obsession over nomenclature? Because one simple word means the difference between legal and illegal when it comes to cannabis.

“Cannabis is the species of the plant; think of it as the umbrella,” says Garrett Graff, Senior Attorney at Hoban Law Group, a firm specializing in Cannabusiness Law. “Citrus has many different types of citrus. So too does cannabis. It has one that is marijuana, and that is the psychoactive species. A separate subspecies of cannabis is industrial hemp. Under Schedule 1 of the Controlled Substances Act is marijuana and THC–not CBD, not hemp. Marijuana, not cannabis, is what is defined under federal law as being illegal.”

So while hemp is cannabis, it’s not marijuana, and that makes all the difference.

Change is in the Air

Even without the mind-altering THC compounds, many still confuse hemp’s derivatives, like cannabidiol, called CBD, to be categorized together with marijuana under the Controlled Substances Act as a Schedule 1 drug—the same class reserved for intoxicants like heroin, ecstasy and LSD. And although CBD is a compound that can be derived from marijuana, it is the marijuana that is the distinguishing factor rendering it illegal. If sugar is derived from marijuana, it would be illegal as well—not because it’s sugar, but because it’s derived from marijuana.

With federal and state officials still struggling to fully understand that important difference, any companies seeking to enter the hemp and CBD space will almost certainly face an uphill battle. “Hemp is not marijuana, and that’s the fight and the education you have to engage in with regulators at the state level,” Graff says. “They just don’t understand yet.”

But change is on the horizon. On September 28th of this year, the DEA announced that FDA-approved products containing CBD derived from cannabis that hold no more than 0.1 percent of THC would be categorized as Schedule V drugs, a class that includes household names like Robitussin AC and Codeine. This announcement, spurred by the approval of Epidiolex, a drug used to treat rare forms of epilepsy, does not legalize all CBD oil products, but the landmark decision means doctors could prescribe CBD drugs and have them filled by a traditional pharmacy, rather than referring patients to a medicinal marijuana dispensary. And a proposed amendment to the 1972 Controlled Substances Act that appears in this year’s Farm Bill would exempt hemp from being subject to regulations that relate to the high-THC marijuana plant, further expanding on the 2014 version of the bill which allowed for the domestic growth of hemp for the purpose of state pilot programs or for academic research.

“Domestic hemp farming has been legal in roughly 40 states under state programs since the 2014 Farm Bill,” Good says. “The real question was whether the trace amounts of THC in hemp oil extracts was also legal. The 2018 Farm Bill should resolve that issue once and for all.”

Many supporters of the changes found in this new Farm Bill believe the broader legalization of hemp and CBD oil products is the logical choice, especially when considering hemp’s rich American history.

America’s Past Relationship with Hemp

America’s preindustrial era, before plastic and synthetic materials became available, lauded hemp as a vital material known for its exceptionally strong and durable fibers. When the English navy used 10,000 acres worth of hemp to construct ocean-worthy sails that helped them beat the Spanish Armada in 1588, it paved the way for the Virginia Assembly in 1632 to order that every planter sow hemp seeds in their fields. As a result, hemp was grown throughout the American colonies and used for ropes, bedding and clothes, but its popularity increased as the rapport between Britain and America eroded, leaving America stranded by boycotts of British imports. As fighting ensued in 1775, the American navy depended on hemp products to survive, using hemp ropes, sails and cords on its ships.

Hemp

But with the end of the American Revolution came the end of America’s dramatic demand for hemp. Although it remained a domestic cash crop for a time, it didn’t take long for the versatility and ubiquity of synthetic fibers to lessen the hemp plant’s appeal. Hemp was not irrelevant, but it was no longer unique, and the cons of the psychoactive properties found in its lookalike relative began to outweigh hemp’s resilience and usefulness. What was once a staple in the farming community quickly became illegal as state by state, and then the federal government, criminalized cannabis throughout the 20th century.

“We have a short memory about hemp in our society.”
— Giles Good, Co-Founder of HALE

Why hemp was included in legislation with its THC-rich marijuana plant relative, naming it a psychoactive hallucinogen and illegal to cultivate or possess, is a question with a variety of theories for answers.

Some believe hemp was included because it posed a threat with its five-fingered leaves, looking too much like its relative the marijuana plant, and making it easier for marijuana growers to hide their prohibited crop within its tall stalks. But scientists dispute this, explaining that the cross-pollination of the two would so drastically lower the THC levels in the true marijuana plant that it would destroy the high its growers chase.

Historians cite what they believe to be the lobbying of petrochemical companies, like DuPont, who allegedly used their influence to levy prohibitive tax laws and eventually ban hemp altogether in an effort to undermine what they saw as a threatening competitor.

Whatever the catalyst, the domestic growth of hemp has been federally regulated and marginalized since the Marijuana Tax Act of 1937, with the exception of a brief lift on the ban in 1942, when domestic hemp was again necessary to meet the demand for war supplies during a shortage caused by the Japanese occupation of the Philippines.

“We have a short memory about hemp in our society,” Good says. “The acceptance of hemp goes all the way back to our Founding Fathers who encouraged the Colonists to grow hemp for fiber to support the Revolutionary War effort. We can only hope that as time goes on and people come to relearn the difference between hemp and marijuana, the stigma will subside.”

America’s relationship with hemp is complicated. It’s legal, but also not, and the grey areas can be confusing. What’s certain is that America loves hemp—as long as its imported.

Differing Opinions Abound

The United States is the largest consumer of hemp products in the world, but the United States is the only industrialized country that restricts hemp farming, read a resolution passed without objection in the U.S. Senate in June of this year. It went on to describe hemp as having “great potential to bolster the agricultural economy of the United States.”

The total sales for the U.S. hemp industry last year exceeded $700 million, with almost a quarter of those dollars spent on hemp-derived CBD oil products.

“This is the greatest education opportunity of our lifetime, that I’ve seen so far, in terms of health and wellness product.”
— Steve Wallach, Youngevity Chief Executive Officer

So, if the domestic growing of hemp is still widely illegal, where is the hemp coming from? Canada, mostly. A recent Congressional Resource Services report listed the United States’ northern neighbor as supplying 90 percent of all annual hemp product imports, followed by China and Romania. Canada, whose commercial hemp industry only became legal in the late nineties, saw annual retail sales of their locally grown hemp seed products reach an estimated $40 million last year, while using only one percent of their available farmland.

But not all analysts have agreed in the past that hemp is the cash cow it appears to be. A 2000 USDA study reported that U.S. hemp markets would “likely remain small, thin markets,” and opponents say the intensive process required to harvest and process hemp would be a stumbling block for domestic profitability.

Money isn’t the plant’s only draw, and advocates tout environmental advantages to adding hemp to the American agricultural calendar. Hemp’s drought-tolerant properties and ability to grow in tough conditions has appealed to farmers who boast about the forbidden plant’s deep root systems that help loosen the soil for plants that follow it. Unlike tobacco and traditional crops, hemp does not deplete the soil of its nutrients, but instead restores nutrients to the soil through phytoremediation. And uniquely, it does not require pesticides or herbicides, making it an excellent rotation crop that could break disease and pest cycles without a negative environmental impact.

For opponents of hemp’s legalization, hemp is a risk not worth taking, believing the plant to be too similar to marijuana to be safe. Risky or not, industry experts don’t see the momentum for this niche market slowing down anytime soon. Market analysts expect the rise of hemp and CBD products to only increase in popularity and usage, although the projections for revenue vary widely. The Hemp Business Journal announced their projections for the U.S. hemp industry value as $1.9 billion by 2022, but a recent report by cannabis industry analysts The Brightfield Group projects that CBD will be a $22 billion industry by 2022. “It has been flying under the radar but is set to explode, having profound impacts on CPG and pharma,” their statement read.

“That’s great disparity, I’ll grant you that, but I’ll take either number,” Graff said. “Either way that shows great growth in this marketplace.” Even The New York Times has chimed in about CBD’s speed of acceptance, stating “It’s hard to understate the speed at which CBD has moved from the Burning Man margins to the cultural center.”

Will CBD Deliver?

Where there’s revenue potential, you’ll find entrepreneurs anxious to take their own bite out of the market share. The allure of an untapped product niche on the table has served as a carrot for many direct selling companies who have now appeared on the scene, selling supplements, creams, skin care lines and holistic wellness products formulated on the foundation of hemp.
Like any new product development, choosing the right delivery systems for hemp and its CBD extract will prove imperative for companies entering the space. With hemp’s versatility, the options are only limited by a formulator’s imagination, as delivery can be topical—creams, serums, oils—or internal—pills, capsules, sprays, inhalation, tinctures, sublingual application or strips placed on the tongue.

The trick, scientists are discovering, is creating a formula that is highly bioavailable, or readily absorbed by the body.

“A lot of the delivery systems­—creams, pills, oils—majority of that is not bioavailable to you,” says SS BioMed Chief Science Officer Dr. R. Scott McKinley, PhD. “If we could increase the bioavailability of it we could get it into the human quicker and at a much higher dose. I can’t help but think that would be beneficial. Plus, we would need less of it.”

Why Customers Can’t Stop Talking About Hemp

Network marketing companies are discovering that while the cannabis market is unconventional, the controversy it inherently brings with it can be a plus. Kannaway CEO Blake Schroeder, who touts his company as the first in the direct selling industry to sell hemp-derived products, recently told Direct Selling News, “What we’re trying to do is be a professional company in an unprofessional space. Everybody has a viewpoint, whether it’s positive or negative, educated or uneducated, about cannabis. It’s the easiest thing in the world to talk about, and it’s something people want to talk about. It’s in the news every single day.”

And Kannaway’s revenue stats support that. When Schroeder joined the company in March of 2016, Kannaway was reporting $83,000 in monthly revenue. By July of this year, the company’s monthly revenue had rocketed to $5 million. There are a host of variables that could affect this revenue bump, like a more qualified leadership team or better marketing tools, but if the buzz about CBD wasn’t present, those higher revenue numbers wouldn’t be either.

What began as an eccentric business opportunity has now drawn a flood of investors and entrepreneurs, sending vibrations of excitement across the industry and encouraging pop-up organizations to flash onto the scene with surprising speed. This spontaneity has some executives worried that the reputation of quality hemp-derived products will be tainted by competitors following a get-rich-quick model, with no longevity or stability built into their business plans.

When people focus mainly on getting rich, bad decisions can be made. The direct selling industry wants to raise the bar on safety and quality while building trust and focusing on building brands that care about people, products and the planet. It’s about wellness, not money.

But among these budding companies are organizations who have been planting roots long before they entered the direct selling industry and are striving to make a name for themselves through quality control and reputation.

“What separates us from the rest of the pack is the boutique nature of our product as a result of our verticality,” Good says. “Our roots are literally in the ground. We started as hemp farmers and evolved into extraction, formulation, wholesale, and eventually network marketing. We control every step of the process from soil to oil.”

A Natural Fit For Direct Sellers

Cannabis has never been mainstream for the direct selling industry, but with the emergence of new legislation and drug laws that prove more favorable to companies selling it, a growing number of startups as well as established companies have begun announcing their entry into the new market trend.

In fact, in its most recent study, Direct Selling News has identified at least 25 direct selling companies that already have entered the CBD space and will sell $300 million worth of cannabidiol-related products in 2018, making direct selling the largest channel of distribution for the rapidly growing CBD product sector.

For existing health and wellness companies, adding a CBD oil or hemp product to their existing portfolio aligns well with the missions their companies already espouse.

California-based Youngevity International, a wellness company founded in 1996, is one of the first conventional direct selling companies to throw their hat into the cannabis ring. “We firmly believe in plant-based nutrition, and hemp (CBD) oil perfectly complements our product development philosophy,” says Youngevity Chief Executive Officer Steve Wallach. “Entering this market, which is growing almost exponentially, also should offer a tremendous advantage to our many Distributors around the world.”

Q&A with Steve Wallach, Youngevity Chief Executive Officer

When considering the implications of entering into such a controversial and legally complicated product niche, Wallach says he began consulting with legal experts as early as four years ago and received differing opinions about whether or not the hemp market was the right next move for Youngevity. Ultimately, Wallach says he believes the direct selling channel is the ideal vehicle for bringing hemp and CBD oil to market.

“Part of the challenge is the legal landscape out there because confusion is rampant,” Wallach says. “I actually love that about this category because it’s what our channel does. I see our channel as an education platform; I always have. From that standpoint, this is the greatest education opportunity of our lifetime, that I’ve seen so far, in terms of health and wellness product.”

Still A Lot of Work to Do

The wheels are turning but until—and only if—the new Farm Bill legislation passes, will hemp and all of its derivatives be clearly separated from its ties to marijuana and a Schedule 1 classification under U.S. drug laws. In the meantime, education remains the single most important element for creating a foundation of success within the hemp market.

“We can’t expect everyone at the federal level, we can’t expect everyone at the state level, to be on board on day one,” Graff says. “This is a crop that many haven’t even seen within their generation or within their lifetime.”

A recent report by cannabis industry analysts The Brightfield Group projects that CBD will be a $22 billion industry by 2022.

Pick up the printed issue in which this article is found.

That means maintaining investors and funding supply chains remains delicate. State regulators and third-party retailers find themselves bound by the gray area that lies between hemp and marijuana, making business as usual difficult for companies seeking to partner with hemp-related companies. With the passage of the Farm Bill, the tiers of development behind the scenes could accelerate with the clearer understanding that would accompany hemp regulation and education.

The new Farm Bill would help generate momentum and clarity for state regulators to embrace hemp regulation and help third party retailers and service providers—like banks, merchant processing and insurance—that don’t understand the distinction between hemp and marijuana. It would help propel the growth and development of the industry, ramping up production, cultivation, investment and development of infrastructure.

The DEA’s loosened regulations on low-THC cannabis and the proposed Farm Bill, with its hemp-friendly language, is paving the way for an entirely new niche market of pharmaceuticals, nutraceuticals and natural care products.

“The hemp farming language in the 2018 bill has overwhelming bipartisan support,” Good says. “We don’t see any argument being advanced from any direction for going backwards, especially now that the FDA has acknowledged that CBD can be formulated into a syrup and prescribed by physicians to treat illness.”

Will an end to prohibition lead to a modern-day gold rush? Only time will tell. But with the potential for a $22 billion market up for grabs, the starting gate is beginning to get crowded.

Cannabis: A Safe Investment?

An article in the Wall Street Journal in September of this year compared the rise of the cannabis market to the internet in the late 90s: compelling and crowded. Investors smell blood in the water, and, like sharks, they’ve begun to circle, pouring money into speculative opportunities. But if history is the greatest teacher, then it’s important to remember that no market is a guaranteed bet.

Among the five dominant companies in Canada, the market value has risen from $4 billion to nearly $40 billion in the past year.

That’s why all eyes are on Canada. The only country other than Uruguay to legalize marijuana, Canada is experiencing a flurry of activity among the 120 cannabis-based companies on their Canadian Securities Exchange. Among the five dominant companies in Canada, the market value has risen from $4 billion to nearly $40 billion in the past year.

For now, U.S. banks have remained hesitant because of heavy federal regulations, but leaders within the U.S. hemp and CBD market are hopeful. “The resurgence of the American hemp industry is already well under way,” says HALE Co-Founder Giles Good. “Once the hemp farming language in the 2018 Farm Bill is passed, banks and merchant processors can feel safe doing business with hemp companies without fear of losing their charters or assets and investment in the industry will increase. We’re already seeing an influx of money from traditional industries in anticipation of these changes.”

Q&A with Steve Wallach, Youngevity Chief Executive Officer

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This Q&A is from the December 2018 Cover Story

Youngevity is one of a few established direct selling companies who has launched a line of CBD products. We caught up with CEO Steve Wallach, who not only shares a few thoughts on their experience so far in the CBD space, but offers some friendly advice on what other companies can expect.

What was the deciding factor to launch into the CBD space?

Steve: Four years ago, we seriously started looking into CBD and got legal opinions in all directions. At the end of the day, the business decision was up to us, not the attorneys. It’s your responsibility as the executive to make business decisions based on the best information you have at the time.

Why is the confusion about hemp and CBD an advantage for our channel?

Steve: The confusion surrounding the whole hemp/CBD discussion—is it legal, will it make you high—is what I love about this product category. It gives our channel a leg up on other industries because of the educational platform built into our one-on-one nature. I believe CBD will be the greatest educational opportunity of our lifetime, in terms of a health and wellness product.

What would you say to companies looking to get into this category?

Steve: I would ask them how set in your product category mix are you? Do you have room to expand your product range? My estimation is that 85 percent of the health and wellness companies will have an entry into this product category within the next two years.

How did you discuss CBD with your distributors?

Steve: There were some who were skeptical, but the vast majority were very excited. The ones that weren’t came around pretty quickly once they became educated about the many benefits that come with CBD.

What do you tell them they can say about CBD?

Steve: Because of compliance and filing health claims with FDA, we’ve taken a proactive approach to teaching our distributors what they can and can’t say about supplements. If you can say it about calcium or vitamin C, you can say it about hemp-based products. It’s abiding by the same rules you have always abided by.

How have the products been received?

Steve: We’ve received so much interest in the products, and in the discussion on social media. We told our distributors to ask a question to their social media followers, How many people have tried CBD oil or hemp-based products? Just from that question, many distributors have received a wide array of responses. Some of our distributors were hesitant about engaging in this way, but I said “Aren’t we always looking for people to contact us? That’s what network marketing is all about.” Who wouldn’t love to have leads contacting you? Once you can start a conversation, the education starts.

Pick up the printed issue in which this article is found.

Any challenges with merchant processing?

Steve: We had heard that merchant processing could be an issue so we’ve taken a very conservative approach. Our HempFx by Youngevity is a standalone website and shopping cart. We are also using a separate, domestic merchant processor to keep everything separate. We are seeing major banks being non-committal, using a “Yes…soon…not quite there yet, but we’re with you” kind of approach at the moment. They want to be in this business as much as anyone as they are in business to be in business.

But there is a lot of misunderstanding and confusion at the banking level as many are lumping CBD and hemp oil in with marijuana products. If you’re a smaller or new company, you might have more of a challenge than the more established companies as most banks won’t allow you to process more than you have on deposit at your bank.

Any advice for other companies looking to get into this category?

Steve: Get your attorney in place first who knows about cannabis law, not because you’re going to get sued, but to make sure you are doing everything in the correct order. Make sure your labels and terminology are correct. Do all the same due diligence you would be doing in the other parts of your business. Because you will be watched from a regulatory standpoint if you go out and make a lot of noise.

CANADA: Open For Business

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With over 37 million people, Canada has excellent potential for continued development and expansion.

Given the close geographic and cultural relationship between the U.S.A. and Canada, it is no surprise that many U.S.-based direct selling companies have a long and established presence north of the border. Add a number of successful Canadian and international companies into the mix and it is easy to see why the direct selling channel continues to go from strength-to-strength in the Great White North.

The best news is that the Canadian market, of over 37 million people, is far from saturated, with excellent potential for continued development and expansion. As can be seen from the comparative WFDSA 2017 Global Direct Selling Survey data in the table below, there is definitely room for growth. The percentage of independent consultants as part of the entire population is lower than that in the U.S. (3.5 percent vs. 5.7 percent) and the average annual sales per consultant is also slightly lower ($1,538 vs. $1,882).

Combining these numbers with an upward trend in consumer confidence, a generally prosperous economy and favorable attitudes towards the direct selling model, and there has seemingly never been a better time for companies to enter the Canadian market or to expand their local operations.

Plan Carefully

It is estimated that more than 85 percent of Canadians live within 100 miles of the U.S. border, and for many American companies opening in Canada is the obvious first step into international markets. But while it appears close and inviting, it’s important that U.S. companies do not treat the Canadian market as merely a “51st state.”

History is littered with examples of one-American-size-fits-all expansion attempts, leading to hasty retreats and financial strain. The failed entry of Target Corporation into Canada is a recent and expensive instance from the retail world.

Expansion Basics to Keep in Mind

For direct selling companies, some basics to bear in mind when considering operations in Canada:

  • There are two official languages in Canada, English and French. All packaging must display both. While a majority of the country’s residents speak English, in the province of Quebec and other significant pockets, French is number one (totaling around 19 percent of the population).
  • Canadians are savvy online shoppers and price hunters. They know their products and price points, and won’t be fooled into paying more than is charged in the U.S. or into accepting a lesser product selection.
  • The Canadian direct selling industry is strongly regulated. The federal Competition Bureau closely analyses each businesses compensation plan and advertising, to ensure they meet the requirements of the Competition Act. On top of that, various provincial regulators require a mix of surety bonds and licenses for both companies and individual consultants.
  • Once you cross an international border, customs duties will have an impact and tax regimes will be different. Despite ongoing trade negotiations, which hope to minimize disruptions, careful planning is always required to ensure that products get to consumers in a timely and cost-effective manner and that business practices meet legislated standards. Decisions need to be made about customized logistics, software, payment systems and customer service practices.
“Canadians are savvy online shoppers and price hunters. They know their products and price points, and won’t be fooled into paying more than is charged in the U.S. or into accepting a lesser product selection.”

Important Trends Impacting Canadian Direct Selling

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Many of the technological and socio-economic trends that are facing Canadian direct sellers are familiar across the global industry. These include the emergence of a growing ‘gig’ style economy, the sometimes fraught line between defining employees and contractors, and the ever-looming pressure from online retailers such as Amazon and eBay.

More specifically for Canada, there are some important societal trends that should be considered by proactive direct selling companies:

  • Canada continues to be a nation of immigrants. In 2016, 22.9 percent of the Canadian population were 1st generation immigrants vs. 13.2 percent of the population in the United States. (2016 Canadian Census and 2016 U.S. Census data). New immigrants are often at the forefront of seeking out entrepreneurial opportunity.
  • New immigrants tend to wield considerable spending power. “Not only do recent immigrants represent a new and consistently growing consumer base, they are also arriving in better financial position than previous generations, reflecting the current Canadian immigration policy towards admitting skilled professionals.” (Euromonitor­—Lifestyles Report 2017)
  • The power of networking and selling via social media is strong. 34 percent of Canadian online shoppers said they would consider buying an item from a brand’s advertisement on social media if recommended by a friend or family member. (Euromonitor­—Lifestyles Report 2017)

Partner with the Direct Sellers Association of Canada

Membership of DSA Canada is an important factor for success in the Canadian market and focuses on creating value for its members via:

  • Direct Selling By The Numbers

    Public Affairs: An emphasis on being a strong advocate to government on issues that directly and positively improve the business landscape for direct selling companies and consultants.

  • Ethics & Integrity: Promotion of DSA’s Code of Ethics as the mark of trust and integrity in the direct selling industry. DSA Canada members and their consultants are recognized as the best of the best by government and consumers.
  • Communications: A communications strategy that offers members timely and valuable information, and proactively promotes the amazing opportunity that is the direct selling industry.
  • Member Events & Education: An investment in providing value for money to all members­—through events, educational opportunities, enhanced research, online resources, industry promotion and more. Attendees consistently say that the DSA Canada Annual Conference is the most informative and fun conference they attend all year.

DSA Canada also plays a role as the eyes and ears on the ground for U.S.-based direct selling companies, particular those with a limited bricks and mortar presence. DSA Canada works closely with regulators to ensure that members are first to know about issues impacting them, and that regulators and government understand and appreciate the value that the direct selling industry brings to individual Canadians and to the overall economy.

There is no reward without at least a little risk, but in Canada, those rewards can be significant. What are you waiting for?

 

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Peter Maddox is the President of the Direct Sellers Association of Canada. He has extensive experience in the association world and the marketing industry, having previously held positions with the Canadian Propane Association, Canadian Tire Corporation and Professionals Australia. Peter’s focus at DSA Canada is to promote the positive impact of both the Association and the industry.

Maskcara: A Gorgeous Dream Come True

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Childhood dreams so rarely see the light of adulthood, but when they do, they’re often unstoppable.

A young Cara Brook would tell you that her dream is to own a makeup company one day. “I noticed that all my friends’ moms had makeup, but it seemed like they all complained that they didn’t know how to use it,” says the Maskcara Beauty Founder. “I thought, ‘Someone just hasn’t made an invention that has made this easy enough.’”

With her fifth-grade science project due date approaching, Cara grabbed her modeling clay and got to work. “I form-fitted the clay to my face and then let it dry, so it became a mask,” she explains. “Then I put makeup on it at night so in the morning, all you had to do was smash it to your face. I thought that this was the best of both worlds. You can sleep in; your makeup’s done for you.”

 

Cara Brook

Cara Brook

 MASKCARA BEAUTY
Founded: 2013
Headquarters: St. George, UT
Top Executive: Cara Brook
2017 Net Sales: $15 million
Products: Cosmetics

Building the Business in Her Mind

Cara held fast to her dream, even as she discovered how hard the path to entrepreneurship could be. “You can’t just Google how to start a makeup company,” she jokes. She worked cosmetic counters, became a makeup artist and continued to build the makeup business in her mind. Becoming pregnant with her first child would be the tipping point.

“I was terrified,” Cara shares. “But I thought, ‘If I’m going to be someone’s example, I need to do this thing that I’ve always dreamed of doing.’ So even if I couldn’t do the most obvious thing (find money and have a product made), I just needed to do something. That’s when I started the blog.”

“I noticed that all my friends’ moms had makeup, but it seemed like they all complained that they didn’t know how to use it.”
— Cara Brook, Owner & Founder

From 2009 until 2013, Cara ran her blog sharing beauty tips, tutorials and product recommendations. In her day job as a makeup artist, Cara had always used highlighting and contouring, a makeup technique she calls “HAC,” to accentuate a client’s best features and give an airbrushed look. As the technique went mainstream, Cara saw what could be her big opportunity.

Right Coverage in the Right Places

“Every time I would do someone’s makeup, she would want to know how to recreate what I’d just done, and it was a really frustrating moment because I knew it was a hard thing to do—lots of products and layers of makeup,” Cara says. “I just thought, ‘We’ve got to make this easier. Why are we doing all these layers?’ That was an epiphany moment for me. I realized we just needed to put the right coverage in the right places the first time; then we can do the highlight and contouring as coverage so you don’t need foundation.”

“That was an epiphany moment for me. I realized we just needed to put the right coverage in the right places the first time.”
— Cara Brook

This lightning bolt moment inspired Cara to start mixing her own formulations with cosmetic ingredients and pigments. She was onto something. Meanwhile, the blog was garnering over 3 million hits a month, and every mainstream cosmetic product Cara would recommend would sell out on Amazon. It was time to harness her newfound selling power and apply it to her own makeup line. The dream was about to become a reality.

A Just-in-Time Family Investment

By 2013, Cara had the idea, the audience and some basic color science under her belt, she just needed capital. She’d begun a relationship with a cosmetic manufacturer but didn’t have enough funding for the first run of her product—a palette of various shades of foundation that would make contouring easy for the everyday woman.

“I’d saved $30,000. My parents had agreed to lend me $30,000. I thought, ‘Okay, we’ll probably be able to pay for the first order,’” Cara shares. “I got that first invoice, and it was $180,000, due in two weeks.”

Having already shared the product with her blog followers, Cara knew she had to find $120,000 within the next fourteen days or lose the momentum she’d built for four years. Within days, help had arrived. Cara’s father-in-law had recently retired and his 401k was worth exactly $120,000. “He said he wanted to invest,” Cara says. “I thought then, ‘If this doesn’t work, we have just bankrupted my family.’”

A Long Six Months

Cara and her family would have to wait another six months to find out whether their risk had paid off­—the makeup palettes were to be manufactured just in time for a Black Friday release. “I remember thinking, if we can just sell 100, I know we’ll sell them all,” she says. But when Black Friday arrived, Maskcara’s product release crashed their e-commerce vendor’s server and customers were staying up until all hours of the night to get their hands on the palettes. Within 48 hours of the release, Maskcara’s initial run of 12,000 palettes had sold out. The family was in the black.

Watching from the sidelines was Cara’s sister-in-law and future Maskcara Creative Director, Randi Brook. “Honestly, I’m not a super optimistic person,” she says. “I don’t think I’m a pessimist, but I’m pretty realistic most of the time. I was genuinely just so excited. I thought, ‘This is something that doesn’t exist—this is going to be such an exciting thing for people.’”

A New Business…A New Business Model

After selling out of their first product launch, Cara had to wait a year before Maskcara was ready to sell again. “We had to find a new manufacturer, so we were out of the product for a year which was terrible,” she says. “When you don’t have any clout and barely enough money, nobody really pays much attention to you.”

“I thought, ‘This is something that doesn’t exist – this is going to be such an exciting thing for people.’”
— Randi Brook, Creative Director

Sales continued to grow, despite the wait. In its first year in business, Maskcara had $1 million in sales, which grew to $1.5 million in sales the following year. The product line evolved as well, from a pre-built palette of two colors to customized palettes of different sizes with refillable magnetic tins that can hold a variety of colors of foundation, lip and cheek colors and eye shadows. “You just pick out the colors you like, and you swap them out as you run out,” Randi explains. “I’m really pale naturally, so as I tan or as my tan fades, I can swap out my highlight and contour as needed and I don’t have to buy a whole new palette each time. It’s such a time-saver and a game-changer when you don’t have to buy a new palette every time you want new colors.”

More and more customers were trying Maskcara, sharing it on social media and trying it on their friends at impromptu makeup parties—with no financial incentive, just a love of the product. Friends and family suggested Cara consider transitioning the company into direct sales. “A lot of people had recommended it because it’s such a demonstrative product,” Cara says. “I was super against it but soon realized how incredible the direct sales model is and how the party plan was a perfect fit for us.”

Maskcara launched the direct sales side of the business in January 2017, empowering Maskcara consultants called “Artists” to share both the product line and business opportunity. The company maintained its original e-commerce site but began encouraging customers to work with Maskcara artists for personalized color matching and customer service. In its first year of operating as a direct sales company, Maskcara saw sales jump to $15 million with an anticipated $25 million in sales for 2018.

Maskcara Today

The first Maskcara Artists were simply customers who loved the product and were ready to share it. Today, there are 10,000 Artists across the country, sharing the Maskcara line of products through in-person demonstrations and home parties, as well as social media events and tutorials. New Artists can choose from a Basic Artist Kit or expanded Pro Artist Kit that include foundation shades, brushes, marketing materials and other business supplies. “We wanted the kit to be comprehensive,” Cara says. “We wanted [new Artists] to literally do anyone’s makeup in front of them or shade match anyone with their kit. I want Maskcara to be a real job, so I want people to have everything they need when they sign up.”

New Artists have access to training through the Maskcara app, as Cara and her team found that mobile training was the best fit for the company. “We try to focus everything onto our app,” she explains. “A lot of people don’t even have laptops anymore. They don’t have desktops. They don’t need the computer. They just do everything off of their phone or their iPad.”

Social media is a significant aspect of Maskcara’s success­—from the initial blog in 2009 to the online parties held by today’s Maskcara Artists. “We’ve noticed that our most successful Artists have a social media element to what they do,” Cara says. “We try to do a lot of training on becoming an influencer and growing your social media, and we find that if they share stories, share themselves, and they open up, that’s really where the connection comes in.”

Philanthropy That Hits Home

Connection is everything to Cara and her team—from nurturing relationships with her blog followers to encouraging an environment of support and inspiration amongst the Artist community. “The sisterhood we have is so strong and powerful,” Cara shares. “They’re so generous. We just don’t have a super competitive culture. We have a really generous sisterhood that they want to help each other.”

“The mood of Maskcara is such a generous, kind, loving, creative, optimistic, wonderful place to be.”
— Randi Brook

Randi echoes that sentiment. “There’s so much heart and so much genuine soul in what Cara’s doing and her vision for Maskcara,” Randi says. “The mood of Maskcara is such a generous, kind, loving, creative, optimistic, wonderful place to be.” That sense of connection and heart is also the inspiration for the Maskcara’s philanthropic side—3D Foundation.

“It’s centered around foster care,” Randi says. “Our main goal is to flip the number of homes that are open to bringing in a child in need—to overwhelm the system so that there are more homes than there are children that need to be placed.”

Maskcara offers two eye shadow colors whose profits go directly to the foundation—to date, those sales have raised $68,000, which has gone towards the production of a documentary titled Love is Never Wasted. “The film is meant to open hearts and change minds about the way foster care works and how love is never wasted,” Randi shares. “If you bring a child into your home and they end up being reunified with their families, that doesn’t mean that love you gave was wasted. It just enriches your life. That’s something we’re excited about.”

Beauty Today, Beauty Tomorrow

As Maskcara has grown, Cara, Randi and their team have taken a slow, intentional approach to expanding the product line. “We’re very picky about anything we create,” Randi says. “We have a handful of questions that we ask ourselves before we bring on something new.”

Does it improve our routine in some way?
Does it exist? If so, can we improve it?
Is it necessary?
Can it fit in a compact?
Does it multitask?

“And lastly, we always want everything we make to look pretty,” Randi concludes. “We want you to be sad to throw the packaging away. If you’re not sad to throw it away, it’s not pretty enough.”

What’s Next

So, what’s next for Maskcara, now that Cara’s dream has been realized? New products are on the horizon, along with enhanced training and incentive programs for new Artists and improved technology to keep making running a business easy. Because young Cara’s vision for fun, simple beauty is alive and well.

“It’s nice to make someone feel beautiful, but it’s amazing to make someone know that they are beautiful.”
— Cara Brook

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“It’s nice to make someone feel beautiful, but it’s amazing to make someone know that they are beautiful,” Cara says. “We believe that you can have your cake and eat it too, with enough creativity, optimism and hard work rather than compromising in your life. And that’s kind of what the makeup is. You can still look like a movie star, still look like you’re so put together and enhance all the gorgeous elements on your face, but you don’t need to take all day and a bunch of products and a bunch of money to do it. It’s about finding that third option that you never thought of.”

Mannatech: Sound Science Yields Value & Growth

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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.”