The headline from the Salt Lake Tribune’s Tom Harvey, first published Dec 10 2011 and then updated Dec 12, 2011 reads…
“Utah juice companies offer few prospects”
The tone of the article quickly paints MonaVie in a negative light. Notice the use of the past tense for MonaVie’s successes:
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.
Unfortunate for the industry overall, the article also points out some of the biggest problems that have plagued the industry from the beginning – (bold is by me)
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.
Also of interest, the article gives an overview of founder and CEO Dallin Larsen’s career which includes previous run ins with the FDA:
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.
Here some of the other points made in the article that, if true, illustrate practices that have created ill will:
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.
While any company in any kind of business certainly has the right to pay any kind of incentives that they would like to recruit top talent, it creates a unique problem in the network marketing industry as pointed out in the article:
…payments to lure in top-level distributors also illustrate the company’s practice of providing capital to help certain distributors, while telling new ones they can prosper with little investment.
Other comments of interest:
Hart said in an interview earlier this year that when he approached Monarch he found a company “merchandising substandard weight-loss products” but in time was able to convince its officers to emphasize the açai juice. Soon after MonaVie was launched in early 2005 with its signature juice, Hart and others started making claims that there was evidence it could relieve various conditions and diseases, including cancer.
At one meeting, top-level distributor Jason Lyons said that MonaVie was “helping people with arthritis, diabetes, cholesterol, high blood pressure, aches and pains, energy levels, sleeping, just numerous ailments out there,” according to transcripts that are part of the Amway lawsuit.
The suit also uncovered an internal MonaVie memo by Ralph Carson, the company’s chief science officer, who created the original juice. The memo was in response to raised eyebrows about claims being made about the juice. Carson cautioned that the drink was “expensive flavored water. Any claims made are purely hypothetical, unsubstantiated and, quite frankly, bogus,” according to a court transcript that quoted an Amway attorney. That attorney also read from a portion of a transcript of a deposition in which another attorney questioned Carson:
“You have indicated, as I understood it, during your deposition today, that you never understood or knew the contents of MonaVie’s drink. Is that correct?”
Answer: “Completely correct.”
“When you say completely, what do you mean by that?”
Answer: “If you were to ask me how much açai is in the product, I do not know.”
After citing a number of rather dismal income statistics for MonaVie, Xango, and Tahitian Noni, the article quotes Brig Hart again (bold, in disgust, is mine):
Top-level MonaVie distributor Hart freely admitted in an interview earlier this year that the MLM business was about constantly attracting new people.
“I have nothing to lose or gain in telling the truth. I love this industry,” Hart said. “But our industry is all about sponsoring them faster than they quit. So you have to put them in faster than they get out.”
Gee, all along I thought our industry was about a better way to move great products and services that we really believe in to end consumers in such a way as to provide a real opportunity for the average person to make additional profit.
My opinion? Network Marketing done well is an absolutely beautiful concept and business. Unfortunately, “done well” is relatively rare, IMHO. The 12 Critical Success Factors in my book and course would successfully have excluded most of the companies that experience some of the biggest complaints like those in this SL Tribune article.