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January 01, 2009

Company Focus

MXI Corp: Sweet Success

by Rebecca Larson

Chocolate is inarguably a longtime favorite for sweet snackers. But is it healthy? MXI Corp says yes, backing up its claim with hard science. The very phrase healthy chocolate seems oxymoronic, but MXI insists that their chocolate is not only delicious, but good for you, too.

Healthy Start

MXI Corp was founded in the spring of 2005 by the Brooks family, who actually started in chocolate for retail. Jeanette Brooks, Founder and President of MXI Corp, became pregnant in her 40s and developed gestational diabetes. The family went on a crusade to find good, sugar-free products for Jeanette, who adopted a low-carbohydrate diet, first espoused by Dr. Robert Atkins, to help her through pregnancy. While she could find lots to eat on the diet, she could not find anything to satisfy her sweet tooth.

“We all went on this low-carbohydrate diet, started looking at the products available and realized that there was a need,” says Andrew Brooks, Founder and Executive Vice President of Sales and Marketing at MXI Corp. “There was something missing—a sweet treat.”

Because of Jeanette’s diabetes, the Brooks retired from their retail business so Jeanette could care for herself and her newborn girl. However, their search for a healthier alternative to commercial sweets continued. In 1999, the family started a chocolate company, Pure De-lite™, which distributed Belgian, low-carbohydrate, sugar-free chocolates, and stayed with the traditional model they knew so well—retail.

MXI’s Reno, Nev., headquarters
MXI’s Reno, Nev., headquarters

The company itself was quite profitable, boasting accounts such as Wal-Mart, Rite Aid and GNC, with sales topping $300 million. But it did not satisfy the need for a healthier alternative, and it taught the family some important lessons.

“We did business with these retail giants, believing that retail was a better option for reintroducing a product,” Andrew says. “But we learned that retail is a very fickle market.”

Not only is retail capricious, but it also doesn’t help others build the lives they truly want to have. “Here’s the reality: You can choose to give 50 cents on the dollar to brokers, wholesalers, shelf stockers and demo companies to market your products, ” Andrew says. “We chose to pay thousands of our business owners to share our products, but it’s the same 50 cents on the dollar.”

According to Andrew, when Dr. Atkins died in 2004, the low-carb diet died with him. “He was the mouthpiece for all of our businesses, and there were dozens of low-carb businesses being driven by one single man, Robert Atkins,” Andrew says.

So the Brooks family began researching dark chocolate and developed a product that was low in carbohydrates and still sweet: a dark chocolate bar. “Dark chocolate is not the chocolate of choice in America,” Andrew says. “In Europe, it’s definitely a favorite chocolate product, but North Americans prefer milk chocolate.” After analyzing the marketplace and listening to consumers, the Brooks family realized that they had created a buzz around their chocolate bar, but not for the reasons they thought. The word-of-mouth held the key to their new company—the health benefits of dark chocolate combined with the açai berry.

In June 2005, the founders decided to leave retail for good and join the network marketing industry, focusing solely on healthy chocolate. “We started this journey with the Xoçai™ product,” Andrew says. “The Xo comes from chocolate, and çaí is from the açaí berry, a beautiful berry from Brazil. Unprocessed cacao and açai are the Nos. 1 and 2 antioxidants in the world.”

A Ready Market and Salesforce

Americans consume, on average, 12 pounds of chocolate per person per year, and the United States is 11th in chocolate consumption in the world, with Switzerland weighing in as No. 1. In tough economic times, chocolate intake increases by approximately 35 percent. In 2001, Americans ate 3 billion pounds of chocolate, totaling $13.1 billion in sales revenue.

“You don’t have to talk people into eating chocolate,” Jeanette says. “Chocolate is where it’s at for both health and wealth.”

After an interesting conversation with one of MXI’s main manufacturers in California, the company moved its focus from low-carb to healthy chocolate. “We set a goal that if we could sell $250,000 in healthy chocolate in our Xoçai products through network marketing in the first 60 days, we would give the opportunity to people,” Andrew says. “We said we would go back to our retail accounts and take the products away. At the end of the 60-day period, we sold more than $1.7 million in product.” The company also garnered its first, and founding, distributor, the selfsame manufacturer involved in the original discussion. To MXI’s credit, he remains with the company today.

But no network marketing company becomes successful without its share of pitfalls. MXI Corp faced its biggest challenge early on and learned from it. In an attempt to keep up with other network marketing companies, MXI tried to offer a healthy drink product made from high-antioxidant chocolate and açaí. The company was unable to create the drink without dangerous levels of preservatives—exactly what MXI was trying to avoid. “We couldn’t consider our product ‘healthy’ while adding preservatives,” Jeanette says. MXI’s drink offering was discontinued, and the company wound up paying distributors back for the product—to the tune of approximately $3 million.

For a company in its fourth year of business with $55 million in sales in 2008 alone, it was the right move. MXI Corp is a debt-free company in a 75,000-square-foot facility. “We control our own destiny,” Andrew says. “A lot of pre-launches in network marketing are trying to gather with investors to help capitalize it. We are family-owned—a privately owned and operated company. We do not have any outside debt, no bank loans, no lines of credit. We do not believe in debt, and that’s how we’ve managed our business. Having outside investors truly changes the course of your business, because you’re no longer able to make decisions for your company and its distributors. You have to make decisions based upon investors’ needs, who have different objectives and priorities.”

That ability to put distributors first has resulted in enviable retention rates. “The same 11 people who started with us are still with us,” Jeanette says. MXI Corp now boasts a more than 35 percent retention rate, and that’s just with customers. The company ships out more than 10,000 packages each week, directly to consumers’ doors.

The founders learned from their early mistakes and used those to build their business even more, always maintaining their primary focus on the product. “Hardly a day goes by that dark chocolate isn’t in the news,” Andrew says. “That has been the driving force behind our business. We focus on the product, and it’s been the science that has really driven our company.”

Distributor training centers on tools and simply asking people to try a bite. “We don’t create our consumer,” Andrew says. “What we have to create is awareness. We have to help people understand our philosophy—replacing the bad with the good.”

The company offers distributors Web sites, a magazine and other marketing tools as well as retaining a scientist on staff. “Dr. Steve Warren [a physician] makes sure that the science of what’s being shared is accurate,” Andrew says. “These products are science-based and have information to support them.” The MXI Corp Compliance Department oversees every distributor Web site to keep the company on top of what the salesforce says about the products.

MXI-product

Certified Sweet

Discovered by Mesoamerican cultures more than 3,000 years ago, chocolate, in its purest form, has been used for everything from a fertility drug to currency. The term chocolate is derived from the Aztec word xocolatl, which combines two Aztec terms—xocolli, meaning “bitter,” and atl, which means “water.”

MXI’s focus is on helping consumers trade the bad for the good, enabling them to have their sweets and eat them, too. They zeroed in on the No. 1 one sweet treat—chocolate—and made it guilt-free. The company even places the chocolate’s Brunswick Labs certification and ORAC seal on product packaging. ORAC stands for Oxygen Radical Absorbance Capacity, which measures the antioxidant levels in food. Antioxidants’ strength is in their ability to eliminate oxygen-free radicals. A higher ORAC score means that the food is better at helping humans fight diseases.

There are two types of chocolate—candy chocolate and functional chocolate. What’s the difference? “It has to do with the cacao bean selection, manufacturing processes and finished goods,” Jeanette says. “Carefully monitoring these components contributes to the ORAC score. All our products carry the Brunswick Labs certification seal, and they’re retested quarterly to ensure accuracy.”

Cacao beans contain the highest levels of antioxidants known to man. But a standard, off-the-shelf chocolate bar is anything but healthy. How can chocolate itself be healthy, but a chocolate bar isn’t? Andrew offers the answer: “Every time you do something to the cacao bean, you alter the antioxidant value, especially alkalization. If you alkalize chocolate, you destroy 70 to 80 percent of its antioxidant value.

“A good example is steaming vegetables. Although they may taste more palatable, you’ve destroyed some of their nutrients.”

Conventional, processed chocolate—the kind that appears in candy bars around the world—contains loads of unhealthy ingredients, including processed sugars, vegetable oils, waxes and fillers. MXI’s products are made from cold-pressed cocoa and freeze-dried açaí berries, protecting the natural antioxidants, and sweetened with raw cane juice crystals.

“We use sweeteners that are all low-glycemic, those that are not going to affect diabetics or those with pre-diabetic conditions,” Andrew says. “We understand the pain that too much sugar is causing in North America in terms of daily diets.”

MXI Corp is currently focusing on another product, Xobiotic Squares, which will be the company’s first probiotic offering, launching in February 2009. One in three Americans suffer from gastrointestinal dysfunction, creating an industry reported to be worth as much as $105 billion annually.

“We are extremely excited about this product,” Andrew says. “We have a major problem with our digestive systems because of our diet. They’re now showing that introducing these good probiotics, good microorganisms, neutralizes damaging bacteria, helping our systems work better. Clinical studies have been able to prove that chocolate is three times more effective in delivering these microorganisms than yogurt or dairy.”

Healthy Future

With its focus on replacing the bad with the good, MXI Corp sees a bright future for the company and its salesforce. “Chocolate is different,” Jeanette says. “It’s a feel-good, emotional product that people do not give up.” With its long history, chocolate will be around for many more years, offering more and more consumers a sweet treat.

“Yesterday, 1 billion people ate chocolate,” Jeanette says. “Today 1 billion people will eat chocolate, and tomorrow 1 billion people will eat chocolate. We don’t have to make up a story; it’s been there for 3,500 years.”