July 01, 2016
USANA: Built on Science, Cultivated through Lives Touched
by Heather Martin
Headquarters: Salt Lake City, Utah
Executives: David Wentz, CEO
Products: health and wellness
2015 Revenue: $918 million
To Dave Wentz, half a million is so much more than 1 billion.
Even as the company his father founded is about to hit the 10-figure revenue mark, the USANA Health Sciences co-CEO would rather focus on the 500,000 people around the world who use USANA’s nutritional and skincare products.
“$1 billion is a reason to celebrate, and that’s about it,” he says. “But we’re in half a million families. That’s the number that’s more important to me.”
Any way you look at them, all of USANA’s numbers are worth noting.
For the first quarter of 2016, net sales increased to a record $240.4 million, up 9.6 percent from $219.4 million in the prior-year period, according to the most recent quarterly report. Net earnings for the first quarter increased 13.3 percent to $22.3 million, compared with $19.7 million during the prior-year period.
The bigger picture is just as compelling. In 2014, USANA ranked No. 24 on Direct Selling News’ Global 100 list, with annual net sales of nearly $800 million, up from $718 million in 2013. In 2015, revenue was $918 million. The Utah-based company is projecting net sales of $1.02 billion and earnings per share as high as $8.15 for 2016. Since 2009, USANA’s customer base and its revenue have roughly doubled—and the number of distributors selling USANA products has increased by 75 percent, to nearly 350,000.
Like Wentz, USANA Chief Communications Officer Dan Macuga is most excited about the growth in customers and distributors. “We don’t pay so much attention to the dollar figure as to the number of lives we’re touching,” he says.
Macuga says USANA’s financial success is merely a conduit for expanding company presence and has brought opportunities that weren’t as available when the company was smaller. USANA Chief Marketing Officer Doug Braun agrees. “It opens up a lot of doors to have co-branding and connections to other organizations,” Braun says.
|USANA Brand Ambassador Caroline Wozniacki is a former world No. 1 in the Womens Tennis Association tour and represented Denmark in the 2008 and 2012 Olympic Games.|
Last year, USANA expanded its relationship with Dr. Mehmet Oz, of The Dr. Oz Show. The popular daytime television program regularly features USANA products. Through Team USANA, the company also continues to partner with elite sports organizations such as the Women’s Tennis Association, the U.S. Ski Team and international soccer teams, as well as more than 1,000 Olympic athletes. These heavy-hitter USANA customers not only become great brand ambassadors, Macuga says, they serve as inspiration for the “weekend warriors” in USANA’s customer base who aspire to greater levels of fitness.
Another partnership of sorts that has brought clout to the organization is the addition of Richard Williams to USANA’s board of directors. Williams is the former co-CEO and now nonexecutive board Chairman of direct selling financial products giant Primerica. Williams brings with him deep knowledge of the direct selling industry, Braun says. Perhaps even more important, he knows about the kind of growth USANA is experiencing. “He has gone through what our organization is going through,” Braun says. “The timing is incredibly important.”
True Vision, “True Health”
High-profile partnerships are valuable, but they alone won’t sustain USANA, executives say. Space in this corner of the direct sales market is precious, with approximately one-third of the companies on DSN’s Global 100 list selling supplements or health-related products. Company leaders believe USANA will differentiate itself and succeed only if it stays true to the founder’s vision, maintains its focus and sticks to solid science.
|USANA employees enjoy a special time of fun at Lagoon Day.|
Founded in the early 1990s by Dr. Myron Wentz, USANA (a name that comes from the root words for “true health”) has a different heritage than many direct selling companies. “A lot of them are founded by marketing people,” says Braun, who came to USANA about five years ago and has worked in wellness product direct sales for 25 years. “We were founded by a scientist. Scientists are always looking for new things, but they’re also looking for validation, research and testing.”
Dr. Wentz began his scientific life developing tests to diagnose disease. He made his name known in the medical community when he created the first commercially available test for diagnosing infection with the Epstein-Barr virus. He shifted gears and sold his renowned Gull Laboratories in 1992 to focus on research and development of products that would help prevent disease. And USANA was born.
Since day one, the company has committed to providing financial opportunities and scientifically sound products that change people’s lives, Dave Wentz says. This clear purpose has allowed it to sidestep fads and remain focused.
“Ephedra was a big one we avoided,” he says, remembering the “miracle” weight-loss drug in the mid-1990s that was banned by the U.S. Food and Drug Administration in 2004 after some users died from side effects. Despite pressure from some distributors to jump on the ephedra bandwagon, the company kept its feet on the ground. Even before the fatal effects came fully to light, the science seemed shaky, Wentz says. “Saying no to sales is something I’m very proud of,” he continues. “You can do things wrong for a while and take the benefits early, but then it comes back to get you.”
USANA Brand Ambassadors and professional athletes.
Being cautious hasn’t kept the company from innovating and entering popular product categories. In early May, USANA officially launched its first-ever food product line, the MySmart Foods protein shakes and bars. Staying true to its principles, though, the company has not loaded up its food with sugar to appeal to palates hesitant about health food. “We’re not about people who are looking to eat for pleasure,” Wentz says. These products aren’t going to give that “three-minute high you get from eating sweets.” They will appeal to the consumer who sees food and supplements as fuel for a healthy life.
The shakes and bars also align with the company’s growing “personalization” strategy, allowing customers to combine flavors and ingredients that fit their tastes and wellness goals. This kind of customization appears to be a major key to USANA’s overall growth plans.
|Five-time world champion boxer Tim Bradley has defeated 12 world champions in his career and is ranked as the world’s second best welterweight by the Transnational Boxing Rankings Board.|
From an operations perspective, creating flexible processes for USANA associates has been a particular focus in the past couple of years, Braun says. This is perhaps most obvious in how the company has updated the way it uses technology. Company executives acknowledge that they had become complacent about the digital side of the business, and when they started paying attention they realized they had ground to make up. “In the early days, we were ahead of the curve on the tech side,” Braun said. “It’s hard for a company that’s been around for a long time to change—USANA probably didn’t keep up with it as much as we should have.”
But in the past several years, USANA has developed a team to focus specifically on developing leading-edge technology tools, Macuga says. Now, associates can create personalized websites for their USANA businesses. The company also provides ready-made digital marketing content for distributors to post on their social media platforms and has created an online health assessment for them to administer to current and potential customers.
The assessment offers personalized recommendations for what supplements people will benefit from, depending on specific factors such as where and how they live, Braun says. Not only does it provide immediate feedback to the consumer, it also fills an information gap for newer associates, who can rely on the assessment to deliver the science while they’re still learning about the products. And whether or not a customer ultimately buys a USANA product, he adds, that customer has received some valuable information.
Looking to the East
Introducing new products such as MySmart Foods is certainly one way to feed the bottom line. But opening new markets around the world has been where most of the company’s growth has come from. USANA is now selling in 20 countries, from Mexico to Belgium to Thailand. Asia has accounted for the majority of the company’s expansion in recent years—China alone posted nearly 50 percent of the company’s net sales in 2015, a 62 percent increase over the past two years, according to the latest annual report.
Wentz says China is an ideal market, not only for wellness products but for recruiting direct selling associates: “It’s a very entrepreneurial society. They work harder than anyone I’ve encountered; they’ve got the hunger to change their situation in life, and I can’t think of a country that needs it more.” Wentz says China’s rampant economic growth has compromised its environment and the health of its people. “They’re burning coal like crazy; they have so many cars on the road; they’re congested; and they haven’t been thinking about green at all.”
Growth in the West, particularly in the United States, has been more sluggish. Last year, Europe and the Americas accounted for less than one-third of USANA’s overall net sales, essentially unchanged from the year before and 3 percent lower than in 2013. And the growth in the number of associates, only 2 percent from April 2015 to January 2016, is far below the 16 percent growth in Chinese associates in the same period. Wentz thinks that some of the company’s U.S. distributors may not be as eager as they once were. “They are at a level where they’re comfortable; they’re living the life they dreamed about, and they aren’t as motivated to grow,” he says. “We need to find the next group of hungry leaders who are going to come by and pass them up and take over—or push them to get back to work.”
A Matter of Trust
The rapid international growth in the past several years has required an incredible amount of time and focus for USANA’s leadership team. And about a year and a half ago, to Wentz it felt like work had taken too big of a bite out of his life. So he took some time off. A whole year, to be exact. He says the sabbatical gave him time to reconnect with his wife and their two young children and allowed him to recharge after going full-steam ahead at the company for nearly 25 years.
But Wentz is a savvy strategist, according to Macuga. So this wasn’t just any hiatus. Wentz also stepped back to find out how well his management team would operate without him. “I wanted to test how good of a leader I was…. I don’t want the company to be based on me being here.” Wentz instructed his executives to take chances while he was away. “I told them to try things I hadn’t let them try before.” And he was impressed by the results. “I came back to a new management team,” he says.
Braun and Macuga say Wentz’s sabbatical exemplified the kind of trust that’s become engrained in USANA’s culture. “We all look at our role in USANA in the same way,” Braun says. “Every one of us on the management team takes it very seriously that a major part of our responsibility is to build a team of individuals beneath us who can replace us.” Macuga agrees. Managers are “always looking at bench strength, ensuring we have a great talent pool to pull from,” he says. But Wentz, who is only 45, has no immediate plans to pass his baton. Neither do Macuga or Braun. “All of us want to be here as long as possible,” Braun says.
This high level of engagement doesn’t exist just among USANA’s leadership. The company recently was named one of the Best Places to Work in Direct Selling, an honor given only to organizations that score very well on a rigorous assessment of employee satisfaction and engagement at all levels. Braun says he knows that as the company continues to grow, it will become even more challenging to maintain an environment where each employee feels noticed and appreciated.
|Kristina Mladenovic is currently the highest-ranked French tennis player in singles, holds 16 doubles WTA titles and represented France at the 2012 London Games.|
But Braun is heartened by how veteran employees naturally step up to help newcomers understand how the company works, buy in to the USANA mission and see their place in the organization. That shared ownership of keeping the company culture strong will help drive USANA’s success, he says.
It makes sense that a company that’s as much about selling entrepreneurial opportunity as it is about selling vitamins would have a workforce that takes such initiative. And that workforce is among the many reasons company leaders are so optimistic about what’s ahead for USANA. “I’m excited about our past, and records are nice,” Braun says. “But I’m more excited about the future and where we’re going.”