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April 01, 2015

Company Focus

Youngevity: Acquisition Is the Name of the Game

by Andrea Tortora

Click here to order the April 2015 issue in which this article appeared or click here to download it to your mobile device.

Company Profile

Founded: 1997
Headquarters: Chula Vista, California
Executives: CEO and Chairman Steve Wallach; Co-Founder Dr. Joel Wallach, Chief Operating Officer Michelle Wallach; Chief Financial Officer Dave Briskie; and President Bill Andreoli.
Products: Health and Wellness, Beauty and Care, Food and Beverage, and Home and Family

Steve WallachSteve Wallach
Dr. Joel WallachDr. Joel Wallach
Michelle WallachMichelle Wallach
Dave BriskieDave Briskie
Bill AndreoliBill Andreoli

Youngevity is proving its mettle with consistent double-digit revenue growth and a knack for acquiring brands that build out its portfolio and encourage people to buy across various categories. Never designed to be a one-product company, the publicly traded Youngevity (YGYI—OTCQX) is launching energy broker services and preparing to be the first direct sales provider of K-Cup® coffee pods. The Chula Vista, California, marketer of nutritional and lifestyle products also is expanding into Russia, Mexico and the Philippines.

Youngevity was started by Dr. Joel Wallach, his wife, Dr. Ma Lan, and Steve and Michelle Wallach. Dr. Wallach, Steve’s father and a renowned researcher, veterinarian and naturopathic physician, made his first significant discovery in 1978 at Emory University when he found that a rhesus monkey had cystic fibrosis, which demonstrated that nutritional imbalances—such as a selenium deficiency—could contribute to the disease. For this discovery he was awarded the 2011 Klaus Schwarz Commemorative Medal, which honors trace element researchers who have made significant discoveries in the field. 

Youngevity began in 1997 as a seller of vitamin and mineral supplements and quickly expanded into skincare, beauty and personal-care products. The company now offers more than 1,000 products in four categories: Health and Wellness, Beauty and Care, Food and Beverage, and Home and Family. (See sidebar below.) For 2014, Youngevity posted annual revenue of $134 million.

Energy Service Powering Growth

The firm’s growth strategy is to partner with and acquire companies and products that fit the Youngevity mission to deliver high-quality items that people use and need on a regular basis. The addition of energy services fits right in, as energy industry deregulation in states like Texas opens up huge sales opportunities for independent brokers. On Jan. 1, Youngevity announced a partnership with Energy Professionals in Clearwater, Florida, to provide energy and natural gas products to Youngevity distributors and customers.

Youngevity headquarters in Chula Vista, California

“This is another consumable product that people use anyway, and it allows us to offer something in addition to our existing product line,” says CEO Steve Wallach.

Youngevity distributors do not need to become energy experts. They just need to tell their networks about the new service. Energy Professionals contracts with 10 top energy providers, and its team will handle the business side of signing up new customers. The greatest benefit lies in the ease of use—customers don’t need to be educated on how to use energy.

Youngevity will pre-launch its energy offerings in Texas, and services will expand to other deregulated states later this year. Options include a green or renewable energy choice to help offset one’s carbon footprint. This dovetails with Youngevity’s “Be the Change” initiative. Additionally, adding energy feeds the Youngevity network and makes the company an attractive buy, says Brandon Primack, an analyst with SeeThru Equity, an equity investment research firm.

“They have a robust network of direct sellers who are hungry for new products,” Primack says. He adds that the green energy offering should help Youngevity reach a younger, healthier and more planet-conscious market. “That could bring in another 50,000 users of a service into their network,” he says.

Healthy Start Pak

CEO Steve Wallach says what works best in mergers is when Youngevity brings on smaller companies and provides them with a platform that allows the founders or entrepreneurs to “lead their people and build upon what they started.”

Acquisitions: More to Come

Wallach says he always keeps an open ear to potential acquisitions. “This leads to opportunities that we may not be planning on, but we see an opportunity to work with great people and offer new products to our field and customer base and membership,” he says.

This philosophy led to the addition of financial services when Youngevity acquired Financial Destination Inc. in August 2011. Youngevity became a public firm in the summer of 2011, when it acquired the Javalution Coffee Co.

What works best in these mergers is when Youngevity brings on smaller companies and provides them with a platform that allows the founders or entrepreneurs to “lead their people and build upon what they started,” Wallach says. He adds, “Direct selling companies are started by entrepreneurs with a vision and excitement and passion around it, and what they tend to find—as many of us do—is that the day-to-day is not what we signed on for.”

That’s where Youngevity comes in, and its track record is impressive, Primack says. “They acquire a firm growing at 5 percent to 10 percent organically, and they take it to 20 percent or 30 percent because they find a way to cross-sell,” Primack says. “It is pretty dramatic.”

Today Youngevity International manages two wholly owned subsidiaries:

  • CLR Coffee Roasters grows, processes and distributes coffee to commercial and retail customers and is a large supplier to the North American cruise line industry.
  • MK Collaborative, launched in January 2014, is a jewelry and clothing line designed by Marisa Kenson and sold through direct selling and an e-tailing boutique.

The firm’s growth strategy is to partner with and acquire companies and products that fit the Youngevity mission to deliver high-quality items that people use and need on a regular basis.

International Expansion

Youngevity ranked 89th among the top 100 global direct selling companies in 2014, according to the DSN Global 100 with nearly 85 percent of its sales coming from the U.S.

Wallach says much of 2014 was spent laying the legal and financial groundwork to begin selling in these markets. “Our plan and model is further international expansion,” Wallach says. Some of Youngevity’s products are easier to export than others. For example, supplements and nutraceuticals require more rigorous approvals from other governments than products without health claims attached to them.

Coffee should also lead to larger sales. CLR Coffee Roasters is now shipping and selling green coffee beans from its plantation in Nicaragua to be roasted by its customers. The margins are slimmer when compared to selling roasted beans, but it is a good business, nevertheless. Once Youngevity solidifies the manufacture of its Javafit, Josey’s Java House and You Be the Change K-Cup® coffee pods, that product will enter Youngevity’s direct sales network.

“[Youngevity] acquires a firm growing at 5 percent to 10 percent organically, and they take it to 20 percent or 30 percent because they find a way to cross-sell. It is pretty dramatic.”

—Brandon Primack, analyst, SeeThru Equity

Technology as a Differentiator

To stand out in a crowded marketplace, Youngevity invests heavily in technology. “As an industry, we are graded against Amazon and Yahoo,” Wallach says. “People expect our e-tailing tools and websites and internal systems to be as good as or better than what they experience in their daily life.”

He says the company is constantly working to make its technology work as smoothly as possible to deliver a superior user interface. “We have that plus—the human element—which is so much more powerful,” Wallach says.

Thanks to Chief Operating Officer Michelle Wallach, Youngevity is rapidly expanding into Twitter, Instagram and Pinterest. She also posts regularly on Facebook and works with Youngevity’s more than 120,000 distributors to help them utilize social media. As a public company, Youngevity’s financials are transparent, and the Wallachs like to keep that same sense of openness on social media as well.

“As an industry, we are graded against Amazon and Yahoo. People expect our e-tailing tools and websites and internal systems to be as good as or better than what they experience in their daily life.”

—Steve Wallach, CEO

Building the Ranks

In Steve Wallach’s words, Youngevity is “simply another channel of providing goods and services to the same people who shop on retail sites and in traditional stores.” To win business, Youngevity must offer superb products and work to continuously improve them, all while providing value. Distributors educate others about products, and customers fill their orders through Youngevity’s online autoship service.

Those who want to sell with Youngevity have multiple avenues through which to find products they are passionate about. The company encourages distributors to “lead” with whatever products get them most excited. Then the remaining product portfolio is also available to them for cross-selling. As a public company, Youngevity also offers stock options, which serve as rewards for top sellers as well as a way to attract and retain top people, Wallach says.

Even acquisitions are consumer-driven, he adds. When customers want certain products, Youngevity will seek them out. Sometimes, customers might recommend a company to Youngevity and “one thing leads to the next.” Wallach says, “What it all comes down to is the person-to-person interaction.”

What’s in Store from Youngevity

Youngevity now offers more than 1,000 products in four categories. Its growth is fueled by acquisitions. The company has recently acquired: Heritage Makers, GoFoods Global, Biometics International, Good Herbs and Beyond Organic.

CEO Steven Wallach talked with Direct Selling News about growth and what’s ahead for each segment.

Health and Wellness

This is the category where Youngevity got its start. The segment includes products for nutrition and physical and emotional health. Supplements target overall well-being, bones and joints, and the cardiovascular system, to name a few. Co-Founder Dr. Joel Wallach began with a mega-supplement in liquid form and followed that with intensive research. Now Youngevity uses soluble powders and continues research and development in the field. The health and wellness division offers hundreds of products, many of which were added through acquisitions.

“We will continue to innovate and introduce new products,” Wallach says. “It is part of our DNA. Our goal is to introduce these to other places in the world.”


On the emotional side is Heritage Makers, a line of digital memory scrapbooks acquired by Youngevity in 2013. Wallach said Heritage Makers fits into Youngevity because people from both companies’ networks were already using the other’s products, and Heritage Makers was heavy on technology that Youngevity could harness and apply across its platforms. When Heritage Makers joined Youngevity it was generating about $1 million in revenue each quarter. In second quarter 2014, Heritage Makers reported $2 million in revenue, only to top it the next quarter with $2.7 million.

Beauty and Care

About five years after its launch in 1997, Youngevity expanded into skincare and cosmetics. Wallach said people were asking for mineral makeup to complement Youngevity’s mineral supplements. Wallach wanted chemical-free and preservative-free products. One acquisition included a vitamin C skin cream formulated by a female physician. When the Heritage Makers digital scrapbooking company joined the Youngevity fold, another 10,000 female distributors came along with it, making for some ready-made customers.

“The same thing happened with our essential oils,” Wallach says. “We had a great line, and that spills over into other markets and lines. And we see with international markets opening that cosmetics are really embraced and understood from the direct sales side of things.”

Beauty-care products come with very little barrier to entry in foreign markets, which allows for rapid expansion without having to navigate a regulatory maze.

Food and Beverage

Acquisitions are taking Youngevity into the functional foods arena as well. GoFoods Global was acquired in October 2013. GoFoods makes storable healthy bars and other foods that are lightweight and easy to ship. Wallach says Youngevity is expanding formulations on some of these products and will add a nutritional bar. Other offerings in the category include healthy chocolates and a liquid antioxidant juice based on a high-caliber cocoa that is added to meal-replacement shakes.

“Things like gluten-free or non-GMO and preservative-free or certified-organic—all of these are so much more important and consumer-driven over the last few years,” Wallach says. That point is what drove the expansion of CLR Coffee Roasters into purchasing a coffee plantation in Nicaragua. The coffee is shade-grown, Rainforest Alliance Certified and Fair Trade Certified. “We don’t have to outsource any aspect of it,” Wallach says. “It creates the efficiency in a huge market with real opportunity.”

Home and Family

Wallach wants to expand this segment in 2015 with a line of green household cleaners and other environmentally sound home-and-garden products. Talks are underway with manufacturers.

Youngevity already offers its minerals in certified-organic agricultural products, and it plans to add pet products, too. It fits, Wallach says, because people love their pets as much as their children, and his father got his start as an exotic animal veterinarian. “It all goes back to our interest to never be a single product or focus firm,” he says. “Like Apple, we want to positively impact your life at every touch point we can.”