Utah juice companies offer few prospects | The Salt Lake Tribune
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(Leah Hogsten | Tribune file photo) Dallin Larsen, center, is the founder, chairman and CEO of MonaVie, a nutritional drink company that says it has sold $2 billion worth of its products since its founding in 2005.
Utah juice companies offer few prospects

The once-surging Utah-based seller of a blend of fruit juices, MonaVie LLC, is rebranding itself to the world as "MonaVie Community Commerce: The No. 1 Business Opportunity."

The new slogan is the South Jordan company’s effort to stir up some of the passions and sales that sprung up after its debut almost eight years ago, when it built a cult-like following and generated billions of dollars with a concoction of juices formulated around the supposed healthy attributes of the açai fruit from the Amazon jungle.

The company hopes the phrase better represents what multilevel marketing — also called direct sales or network sales — in which company revenue comes from selling products to independent distributors. Distributors, in turn, are told they can earn anywhere from a few hundred dollars a month to fabulous riches through retail sales and commissions from building "downlines" of distributors beneath them.

But behind the new slogan, which suggests a kind of intimate, we’re-all-in-this-together, friends-and-family business model, still lies a stark statistical reality. An analysis of the average earnings data provided by MonaVie in 2009, when it last supplied distributors with comprehensive numbers, reveals that 98.5 percent of distributors who earned commissions averaged just $129 a month despite the pitches to the contrary.

The history of the rise of MonaVie also reveals a spotted record of exaggerated claims of relief from serious illnesses and questionable claims of nutritional values, as well as odds clearly stacked against low-level distributors who poured in the billions of dollars that fueled the company’s spectacular growth. MonaVie’s story also raises questions about the foundations on which other companies in that thriving segment of Utah’s multibillion-dollar nutritional supplement industry were built.

MonaVie representatives declined to answer specific questions or verify facts for this story, saying the company was disappointed that TheSalt Lake Tribune "continues its assault on the direct sales industry in Utah."

Behind the rise of MonaVie is Idaho native Dallin Larsen, the co-founder, chairman and CEO who got his start in multilevel marketing as a distributor for Nu Skin Enterprises, the multilevel marketer of skin-care and nutritional products, then was president of a string of weight-loss clinics before he became vice president of sales for Usana Health Sciences, also a seller of nutritional and personal-care products.

Story continues below

In 2001, Larsen became vice president of sales for Dynamic Essentials in Lake Mary, Fla., which sold a fruit juice called Royal Tongan Limu, where he claimed to have increased revenue 300 percent.

But in 2002, during Larsen’s tenure, the federal Food and Drug Administration issued a letter to Dynamic Essentials warning that claims on the company’s website that the juice could "treat various diseases such as cancer, arthritis, and attention deficit disorder" were in violation of federal law. Dynamic Essentials sometime after that ceased operation. In October 2003, the FDA said it witnessed the voluntary destruction of 90,000 bottles of Royal Tongan Limu.

Larsen left Dynamic Essentials in February 2003.

The Brigham Young University grad returned to Utah for his next venture. Monarch Health Sciences was registered in the state in August 2003 with a focus on weight-loss products, listing Larsen as co-founder, along with Henry Marsh, the former Olympic track and field athlete, and others.

Early on Monarch, which in 2005 became MonaVie, began using millions of dollars of incentives to lure away successful distributors from other MLMs in order to rapidly build its own business.

One of those was Brig Hart, a Bible verse-spouting reborn Christian from Florida, who came to Monarch after holding a highly successful top-level position at Amway, the original multilevel marketer, before he had a falling out with the company. Another was former top Amway distributor Orrin Woodward, who received a $3 million loan from Monavie he didn’t have to repay if he met certain recruiting distributor goals, according to a lawsuit Amway filed against MonaVie in 2008 that was settled last year. A lawsuit by nutritional juice company Tahitian Noni said one of its distributors also was offered more than $3 million to join MonaVie.

"There are companies who believe their distributors are the property of that company," Larsen said in a 2010 interview. "I believe in free enterprise, and if distributors decide that his or her dreams and goals are better served in this company than that company, they ought to have a right [to change]."

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MonaVie » New slogan but same old stark reality for bottom-level distributors.

Photos
(Leah Hogsten  |  Tribune file photo)  
Dallin Larsen, right, with wife. Karree Larsen. is the founder, chairman and CEO of MonaVie, a nutritional drink company that says it has sold $2 billion worth of its products since its founding in 2005.
(Leah Hogsten  |  Tribune file photo)  
Dallin Larsen, center, is the founder, chairman and CEO of MonaVie, a nutritional drink company that says it has sold $2 billion worth of its products since its founding in 2005.
At a glance

Which is a better gamble?

Privately held juice companies say their profit margins are similar to publicly traded companies.

Nu Skin Enterprises, a publicly traded Utah-based multilevel marketer of body care products, reported to the Securities and Exchange Commission that in 2010 it paid back 42 percent of its revenue to distributors. That means that for each dollar a distributor put in — multilevel marketer revenue comes from distributors — he or she typically got back only 42 cents, although of course a few distributors get back more, and some just buy the product with no expectation of a return.

Most MLM distributors might be better off gambling. The Nevada State Gaming Control Board’s latest report shows that for the year that ended Sept. 30, gamblers on games and tables won back about 88 percent of what they put in, or 94 percent for slot machines, meaning statistically most were losing only 12 percent or 6 percent, respectively, of their money.

MonaVie statement

MonaVie representatives declined to answer specific questions for this story. Instead, the company issued the following statement:

“It is unfortunate that the Salt Lake Tribune continues its assault on the direct sales industry in Utah — an industry that has done so much to improve lives, not only here in our home state, but throughout the world. We are particularly disappointed that the Tribune has chosen to revisit and recycle old and worn allegations related to our company at this time. As a 7-year-old company, we are proud to be a major employer in the state of Utah and to produce quality products and offer an entrepreneurial opportunity that is changing the lives of millions of people around the world.

“We are also gratified to have the opportunity to continue to expand the work of our nonprofit charitable initiative — known as The MORE Project — [which] is providing hope, critical resources and educational opportunities to thousands of impoverished children and families living in the slums of Brazil.

“As we approach 2012, our company is on the threshold of a bold new chapter that we are calling MonaVie 2.0, that will enable us to expand our mission to provide a more meaningful life to people everywhere. As our founder, Dallin Larsen, has stated on many occasions, our goal is not necessarily to be the best company in the world, but the best company for the world, and we believe we are on track to achieve that vision.”

Coming Monday » Consumer habits are unlikely to change despite studies concluding some supplements cause harm.

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