July 01, 2017
Youngevity: Sharing the Notion of Betterment
by J.M. Emmert
Headquarters: Chula Vista, California
Top Executives: Steve Wallach, CEO; Michelle Wallach, COO; Dave Briskie, President and CFO
2016 Revenue: $163 million
Global 100 ranking: No. 76
Products: Health/nutrition, home/family, food/beverage, spa/beauty, apparel/jewelry, innovative services
Twenty years of study on trace minerals had revealed a basic truth to biomedical research pioneer Dr. Joel Wallach: A deficiency in nutrients could, and would over time, greatly affect one’s physical well-being. With that knowledge in hand, the scientist identified a combination of 90 essential minerals, vitamins, amino acids and fatty acids that would enable a person to not only survive, but also to function fully and thereby attain a high quality of life.
However, in 1997, Dr. Wallach’s groundbreaking research was falling on deaf ears in the world of academia. Discouraged but driven by the desire to help others, he turned to an unlikely vehicle to share the health benefits of micronutrients: direct sales. Through the powerful distribution model of the direct selling channel, he could change the lives of people around the globe for the better.
And so, that same year, Dr. Wallach founded American Longevity, the predecessor of Youngevity International, with his wife, Dr. Ma Lan, his son Steve and his wife, Michelle. The company’s first products were vitamin and mineral supplements. “That’s where it started,” said Steve Wallach, Youngevity’s CEO. “What it has culminated into over 20 years, and what ties into our now diverse product range, is that it’s not just about physical health and wellness but also emotional health and wellness.”
That is to say that, although Youngevity remains firmly rooted in the pioneering principles of Dr. Wallach, much has changed for the Chula Vista, California-based company in recent years. The message of 90 essential nutrients is still a key component of the company’s success, and its health and wellness products, including the popular 90 for Life, are still among its best-selling products. However, while that message drove the business forward for the first 20 years, the company’s present acquisition strategy is allowing it to evolve into a better version of itself, offering a full spectrum of products and services so that every interaction with customers and distributors helps to further improve their lives.
Today, Youngevity is a leading omni-direct lifestyle company that offers products from six retail categories, and is a vertically integrated producer of gourmet coffees. The omni-direct approach, according to Wallach, means selling a variety of products through any number of channels—social selling, multi-level marketing, e-commerce. Wall Street analysts call it a platform company because its cloud-based infrastructure and web portal allow it to accelerate growth domestically and globally as well as efficiently integrate acquisitions. It’s a model that Youngevity executives feel sets up the company to be agents of change—with their goal to pioneer the next generation of direct selling.
Youngevity distributors enjoy the beach during an incentive trip to Punta Cana, Dominican Republic.
When Youngevity was founded, one of the Wallachs’ objectives was to create a legacy company, one that would last for generations. They knew that to accomplish that goal, they would need to have a range of products that would be adaptable over time. While the company initially expanded quickly through the additions of beauty and personal-care products, acquisitions over the past few years have pushed the number of product offerings to more than 3,000. Those offerings span six retail categories: health/nutrition, home/family, food/beverage (including coffee), spa/beauty, apparel/jewelry and small business services.
“If you look at any company that is significant, whether outside direct sales or inside it, there’s been acquisitions in their history, whether product lines or companies they’ve acquired,” said Wallach. “We’ve just done it more and more recently. It’s exciting to all of us because other companies are trying it, and because they are now understanding the synergistic benefits of this concept.”
Wallach says executives look for companies that have a possible interest in selling. Then Youngevity’s decision to purchase comes down to: they look for great people (on the corporate side as well as in the field); they look for great areas of distributor activity where Youngevity has just entered or wants to enter; and they look at products. Above these, culture must always be a good fit.
In the past year, the company has made several acquisitions with an eye toward scalable growth. In August 2016, it acquired Renew Interests, the owner of SOZO Global and Integris, to expand both the company’s salesforce and its product offerings across nutrition, coffee, weight loss, energy and skin care; and Nature’s Pearl Corp., the maker of Muscadine grape seed that gives antioxidant health benefits, to bolster its health and wellness line. At the time of its announced acquisition, Nature’s Pearl had a database of 17,000 distributors and 45,000 customers across the U.S. and international markets. The company was on track to generage $9 million in annual revenue. With the purchase, Wallach said Youngevity became the only direct selling company to offer Muscadine personal-care products.
|Through Youngevity’s Be the Change Foundation, each month distributors, employees and customers participate in a Random Act of Kindness Day helping someone in need.|
Its March 2017 acquisition of BellaVita, which offers food and beauty products inspired by the Mediterranean diet and lifestyle, has helped to raise the company’s profile in the Asia-Pacific region where BellaVita had offices in seven countries with established customers and distributors. That same month, Youngevity added RicoLife, a California direct seller of nutritious teas and coffees, cleanses, and energy and slimming supplements (purple tea developed in Kenya). RicoLife already had a strong following among millennials in the U.S., Mexico and Latin America, and its acquisition will help to fuel Youngevity’s millennial business strategy.
The ability to quickly add other companies into the Youngevity family of products is due to a strong focus on infrastructure. Developing the infrastructure to support its acquisition strategy had meant a huge financial investment; however, the company’s web portal and cloud-based technology has allowed Youngevity to accelerate growth domestically and globally, efficiently integrate acquisitions, and simplify its marketplace for consumers and distributors.
“One of the things we had to do was build this portal so when we have an acquisition, instead of it taking us six months to figure out how to integrate the legacy system, we reduce that time to six days so that they can live on our site,” said President and CFO Dave Briskie.
What’s behind the portal is a huge infrastructure comprised of an API services layer that allows Youngevity to bring other software into its system and deploy them quickly and seamlessly. Responsive file servers stationed in every market ensure there is no latency period during consumer or distributor interactions.
Without the portal, any acquisition would essentially stay a separate company for an indeterminate amount of time. Additionally, it would impede the company’s strategy for cross-selling and cross-marketing as well as Youngevity’s goal to be a “swap where you shop” one-stop destination.
“The technology platforms allow us to take a complex product line and make it simple for the consumer,” said Briskie. “Think Amazon. Amazon has mastered the complexity to make it simple for the consumer in a way that is enjoyable. Internally, to keep bringing on product lines and making them available around the world, we had to do something similar. We are on the verge of releasing this technology platform that takes a complex-to-diverse product range and makes it very understandable to the newest person that joins as either a customer or distributor. It’s been a huge investment, specifically to support the ongoing initiatives around our acquisition strategy and make sense out of it.”
In addition to recognizing the need for a range of products, the Wallachs understood the importance of international expansion. In studying companies that have achieved what they desired, they realized that between 65 and 75 percent of the sales volume of those companies tended to be from international growth. To truly deliver on the residual income promise of network marketing, the Youngevity team felt it had to expand into international markets as well.
The company has done this by successfully establishing beachheads in markets and developing an essential group of products to introduce to consumers. Singapore was the point of entry into the Asian market, which now includes the Philippines, New Zealand, Taiwan, Hong Kong, Indonesia and Malaysia. Guadalajara, Mexico, was the entry point into Latin America, where later this year the company will open in Colombia. And Russia was the starting point for Europe, which currently includes Kazakhstan and will, according to Wallach, add additional markets in the future. Youngevity also has an office in Canada.
While it has been a yeoman’s effort to gain entry into these markets—as a public company reporting on subsidiaries and in adhering to each country’s compliance guidelines—what has been just as challenging has been the issue of which products to introduce. With more than 3,000 products, executives had to develop a core offering that provided a good, strong message of who the company was and then build upon those first products in the market.
“We needed to develop a core grouping of products that would be true to our heritage of Dr. Wallach’s message of nutrition,” said Briskie, “while making sure there was enough of a widening of the product line in the vertical so the rest of the world would understand our omni-direct strategy for betterment.”
Selecting which items posed a dilemma, especially in light of the cross-marketing strategy related to acquisitions. “We bring an almost Amazon-like feel to our industry with a vast array of verticals and a vast array of products. The excitement is overwhelming,” says Michelle Wallach, who serves as Youngevity’s COO.
Charged with telling Youngevity’s evolving story is Loren Castronovo, the company’s Chief Marketing Officer. A 25-year direct selling veteran, she sees success as a simple equation: strong visionary leadership, plus a motivated and capable team, plus great brand experiences. It just comes down to execution. Castronovo is focused on three initiatives for 2017 designed to create memorable brand experiences for consumers and distributors and reinforce the notion of betterment: engagement, infrastructure and branding.
In February, Youngevity unveiled a new logo, which reflects the company’s positioning as an omni-direct lifestyle company. “We wanted to signal this transformation and growth to a full-spectrum products and service marketplace,” said Castronovo. “Omni-direct refers to providing multiple touchpoints of engagement with the company, and lifestyle is all about representing many of the top-selling retail categories. We also wanted to convey that if you are interested in extra earning, Youngevity is a great place for that to happen with so many products to choose from.”
In addition, she is leveraging the pioneering spirit that has been so key to the success of the company and complementing it with disciplines required for the next stage of growth for this business. “As our breadth of categories continues to grow, our products continue to grow, and we want to make sure there is oversight for each vertical and that there are product roadmaps to keep those verticals fresh and compelling,” she said. “This structure focuses on a new level of cross-functional collaboration across the company, and it will help guide the right investment decisions and ensure we are agile in the integration of any new acquisition.”
Rebranding a 20-year-old business with a heritage like Youngevity’s does not happen overnight, especially with a diverse product line that is constantly expanding. While Castronovo will lead marketing initiatives such as the current repackaging effort and a new catalog strategy, she understands messaging centers on gaining trust and ensuring that with every interaction a consumer or distributor has with Youngevity, their lives get a little better.
“Belief in physical wellness goes hand in hand with emotional wellness,” she said. “It’s really about cultivating a glass-half-full optimism and the belief that there are things you can do every day to make each day a little bit better. Anything worth having does take a little effort, and we are happy to be here to help, whether it is through the great products, the community that we are building or the training we are providing.”
Last year was a good year for Youngevity. In fact, it was a record-breaking year, with annual revenue rising 4 percent to an all-time high of $163 million. However, as exciting as that was to executives, what really excited them were acquisitions, infrastructure development and international expansion, which, they say, helped to set the foundation for the next 20 years.
“I look at 2016 as a transformational setup year,” said Briskie. “It was a positioning year. What is impressive to me is knowing that we actually achieved growth while resolving some things we thought important for the future of our company. We’re thrilled that we achieved some growth, but we feel the best is certainly yet to come.”