Provo » Lasting 25 years in a business where you must convince hundreds of thousands of people to distribute pricey vitamins and personal-care products for you with no guaranteed salary is no little thing.

But that's what Nu Skin Enterprises has done, despite some bumps and criticisms along the way.

From its 10-story headquarters along Main Street in Provo, Nu Skin this month is celebrating its 25th anniversary of selling nutritional supplements and other goods through independent distributors.

From its origins in the living room of a Utah County home in 1984 as an upstart personal-care products company, Nu Skin said that last year it had $1.2 billion in sales to more than 755,000 distributors and customers in 48 countries.

In the world of direct sellers -- also known as network, or multilevel, marketers -- where new businesses come and go with rapidity, Nu Skin appears to have found a formula for longevity and financial success. Though some critics question whether that success is centered in the hands of just a few, the company's leadership says Nu Skin's resilience is no mistake.

"It's funny because even here in our community, if you go back 20, 25 years, the stars of the local business environment would have been WordPerfect, would have been Novell, would have been Geneva Steel," CEO Truman Hunt said in an interview from his office in the striking building that seems to want to define downtown Provo. "And where are they today? Pretty much gone from the landscape. I think the fact here we are 25 years later is a testament that something's going right here."

Scott Van Winkle, who follows Nu Skin as managing director of equity research at the Canadian-based financial services firm Canaccord Adams, said the company's longevity can be traced to the quality of its products and sales materials, which he called "the best in the industry."

"Nu Skin sells a product that's very endearing," he said, while also noting that the company faces its share of challenges in the year ahead. "They sell quality nutritional supplements, vitamins, minerals. There's nothing questionable. There's no hot new trend they jump on. There isn't some fly-by-night, hot new ingredient that only lasts a few years in the consumer's mind."

Fresh out of Brigham Young University, Blake Roney started Nu Skin in 1984 with the help of his sister, Nedra Roney. She had badgered him to do so after finding that new discoveries about skin care were not being translated into products on store shelves, said Steve Lund, vice chairman of Nu Skin's board. Lund knew Blake Roney from BYU and has been with the company almost from the start.

Research by Roney, now executive chairman, showed there might be a market for new skin-care and other personal products, said Lund. Blake, his sister and friend Sandie Tillotson, now a senior vice president, started marketing 12 original products.

"They would go around and talk to their friends and stop people in supermarket parking lots and invite people to meetings where the products would be demonstrated," said Lund.

From the beginning, the envisioned sales model was direct selling, or network marketing. In this structure, independent distributors buy the products wholesale and sell them at a markup, but for many the biggest attraction is being able to earn commissions on the sales to other distributors recruited into the company. The new recruits go on to recruit others, building what is known as a downline that for the highly successful distributors can stretch to thousands of people from whom commissions trickle up -- but not down.

Six years after its launch, Nu Skin International lived up to its name and expanded into Canada with a line of products that included mascara and body soap. In 1991, it was on to Hong Kong, and by 1993, to Japan.

In 1996, the company's Asia Pacific operations went public with its stock traded on the New York Stock Exchange. Two years later, that part of Nu Skin bought out the rest of operations, and the company issued almost 3 million more shares, taking the entire company public under the name Nu Skin Enterprises.

Today, about 85 percent of the company's sales are in Asia. Japan is its largest market, accounting for about 36 percent of its revenue. It has worldwide employment of 8,000 people, and its shares closed Friday in the $15 range, about $3 off its 52-week high and about $7 above its 52-week low.

There were, however, rocky points in its climb.

In 1994, after an investigation, the Federal Trade Commission ordered the company to have "competent and reliable scientific evidence" to support claims for any product it sold. Then, after a lawsuit was filed in 1997, Nu Skin agreed to pay a $1.5 million fine for violating that order, the third time in three years it paid a penalty of more than $1 million for violations.

The year after that regulatory entanglement, the company brought Pharmanex, a nutritional supplements company. Along with the products, Nu Skin got a team of scientists who now are part of its research arm and a key component in its ability to claim a scientific basis for the benefits of its products and to create new products based on research.

The company has spent at least $8.7 million a year on research the past three years.

"We have about a hundred scientists and about 30 Ph.D's, and we have published papers about every year in peer-reviewed journals," said Mark Bartlett, vice president of Pharmanex global research and development.

Nu Skin's key strategic area is in anti-aging products, both skin care types and nutrition agents. It also sells devices that it says can measure the amount of key antioxidant substances present in the skin to prove whether supplements being taken are at high enough levels in the body where they can be effective.

Nu Skin said it pays out 41 percent to 44 percent of the wholesale price of its products as commissions to distributors, the highest rate among publicly traded competitors. By 2008, it said it disbursed about $6 billion in total commissions.

Still, like other network selling companies, Nu Skin admits to a high churn rate of distributors, as those who quit must be replaced in order to maintain sales levels.

From a company and investor point of view, the multilevel marketing model has advantages, including low relatively low expenses and plenty of cash flow. But just how good of a business opportunity exists for distributors is a matter of dispute.

A former distributor, Jon M. Taylor of Bountiful, has been a longtime critic of Nu Skin and other network marketing companies. Taylor, who has an MBA from BYU and a doctorate in applied psychology from the University of Utah, said he has crunched the numbers from publicly available sources, from informal surveys of accountants and from his own experiences to assert that very little money is made selling products to the public.

Instead, Taylor contends that Nu Skin depends on sales to distributors and, among them, almost no one makes money except for the very top level of distributors and the company itself.

A Nu Skin spokeswoman asserts his numbers are highly inaccurate but for proprietary reasons would not release specific data. She said Nu Skin distributors make a profit from commissions and retail sales that they are required to earn over and above what they pay for products.

"It's an endless chain-selling scheme," said Taylor, who operates a Web site called mlm-thetruth.com. "People think they're buying a business opportunity but for 99.94 percent, they're losing money."

Products range in price from $33 for 4.2 ounces of shampoo to $84 for a 30-day supply of vitamins and minerals.

Jeff Mack isn't one of them. After 10 years, the Mapleton resident is among the top distributors, the Team Elite, reserved for people who have earned at least $10 million in commissions in their Nu Skin careers.

Mack credits part of his success to timing -- he entered just as Nu Skin began to experience a huge spurt of growth -- but also to hard work.

"There's been pain along the way," he said. "I won't kid you. There are times I say, 'Man am I cut out to do this?' You find yourself questioning yourself all along the way."

Critics aside, CEO Hunt sees three reasons for the company's success and its ascent to $1 billion in annual sales: the quality of people involved, good products that people want to buy and company culture.

On the latter, he seems most proud of the company's "Nurse the Children" program, which provides dehydrated food packages to feed children around the world that are paid for by contributions from distributors. The effort has provided more than 100 million meals, including in the impoverished African nation of Malawi, where a plant has been built to manufacture the meals, buying food from local farmers.

"What we've found," said Hunt, "is that at the end of the day people like to have their lives stand for something more than just money."

Nu Skin may have been on the top of its game in recent years but it faces significant challenges.

Analyst Van Winkle sees a transition from "hyper growth to more consistent growth," which has been reflected in recent layoffs at the Provo headquarters and in Japan.

"Their Japan exposure -- that's about a third of their sales -- continues to be a modestly declining business," said Van Winkle. "China, after a tremendous opening a few years ago, growing to almost $100 million overnight, that business is a $60 million business and not showing growth. And you need growth to be a success."

Lund says the company is focused on growing its business in China.

"Right now, we're not laying awake at night worrying about strategic threats that are going to put us out of business," he said. "But rather we just are anxious we don't go backward in any of these markets and we continue to improve the appearance of our offerings around the world."

tharvey@sltrib.com