| Type | Private |
|---|---|
| Industry | direct selling |
| Founded | 1978 |
| Headquarters | Scottsdale, Arizona, USA |
| Key people | Rex G. Maughan, Founder and CEO |
| Revenue | $2.5 billion in 2010 |
| Employees | 4,100 in 2006.[1] |
| Website | www.foreverliving.com |
Forever Living Products International, Inc. is a Scottsdale, Arizona-based direct selling company that sells aloe vera and bee derived drinks, cosmetics, nutritional supplements, and personal care products in over 145 countries.[2] Forever is the world's largest grower, manufacturer and distributor of aloe vera and beehive-based products.[2][3] FLP was founded by Rex Maughan in 1978 who is also the CEO.[1] The company was ranked number 340 in the Forbes list of the 400 largest private companies in 2006 and is Arizona's largest privately held company.[1] FLP uses a system of direct selling where distributors are mainly part-time agents selling products online and locally using in-person presentations.[4]
Forever Living Products has been criticized for being an illegal pyramid scheme on the basis that participants are said to be rewarded primarily for recruiting new members to the organization, rather than for selling products to genuine end-users.[5] There is a range of products numbering more than 200 contributing to a global turnover of $2.6 billion and a distributor base of more than 9 million people.
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The company was founded by Rex Maughan, having earned a degree in business administration from Arizona State University with a concentration in accounting in 1962, served as a Mormon missionary in Western Samoa. In 1967, three years after entering the real estate industry, he took a top management position with real estate developer Del E. Webb Corporation only to find that it is highly unlikely for him to rise to that company's presidency. This heavily inspired him to start his own enterprise.[6]
Maughan, who continued to hold his day job with Del Webb, rented an office in Phoenix and warehoused product in his garage. This was a two-room office. He invited 43 people to attend the first Forever Living Products meeting in Tempe, Arizona, where he unveiled a customized plan that would provide him and anyone else with the two very things that Maughan had an undying passion for:
1. Better health
2. Financial freedom
Rex wholeheartedly believed that these two things were significantly important to drastically improve the quality of life. Thus 13 May 1978 witnessed the grand opening of Forever Living Products, a company founded on little more than dreams and hard work in Phoenix, Arizona.
Maughan first got involved with direct selling as a distributor selling gasoline additives in his free time. From there, he developed a keen interest in direct selling system. He realized that the key advantage of this strategy was that it relied on word-of-mouth marketing for growth, thereby eliminating the need for an advertising budget.
Maughan began researching well-known direct sales firms like Avon, Amway, Tupperware and Shaklee. However, he soon observed that most direct selling companies were designed to benefit the guys who founded them. So he and an associate who had some experience in the field drew up a business plan. He proposed that very simple business idea to his closest family and friends.
After settling on a marketing strategy, the two partners sought a product. Maughan understood that they needed to offer something expendable to encourage repeat sales. In a 1995 interview with Success magazine's Duncan Maxwell Anderson, the Forever Living founder reflected, "Water purifiers and burglar alarms were very popular at that time but I didn't want anything that wasn't consumable. I was interested in health products and thought other people might be, too. However, I didn't want a me-too item like diet products, soaps, or vitamins."[6]
Maughan found what he thought was an ideal candidate-aloe vera. He soon came across a group of doctors in Dallas who had developed a method of stabilizing and storing the highly perishable aloe gel, which they used in a sunburn lotion. The Dallas group, Aloe Vera of America, had been trying to sell its product in health food stores with little success. Maughan and his partner believed that the products would benefit from the direct selling method, which relies heavily on demonstrations, testimonials, and word-of-mouth sales.
That's how they came up with another way to sell products. Instead of dumping big bucks into traditional advertising, they decided to compensate anyone willing to share their aloe based products with their family and friends, thereby bypassing the retail stores and selling directly to customers. They were also interested in offering consumable products to the public that were proven to promote lasting wellness and health. They comprehended that this personal way of selling products to end consumers would prove to be more successful than following the conventional selling strategy.[7]
They took massive action and started recruiting their own downlines in 1978. Thus from an initial investment of $10,000, they recruited about 40 people.[6]
The 40 people that Rex and his partners recruited sold $700,000 worth of aloe-based products under the Forever Living name that first year. Initially, the company started only with Aloe Vera juice, gelly and lotions in several Western states of America. Within just two years, annual sales had increased to more than $30 million. Feeling confident that he had achieved "financial freedom", a 43 years old Maughan quit Del Webb to concentrate on Forever Living Products (FLP) full time in 1980.[6]
In 1981, Forever Living Products purchased Aloe Vera of America's patents, its cosmetic production plant, and its field processing operations. From 1980 to 1981, the company's sales more than doubled to more than $71 million, ranking FLP among America's fastest growing firms. This rapid expansion drew the attention of "dozens" of brokers seeking to take the company public or merge it with another firm. But Maughan was not ready to cash out. In the mid-1980s, he reflected, "I was not interested then, nor now. I'm still in it to help other people."
In 1983, Maughan solidified his position at the top by buying out his partner's half interest.
Forever Living Products exceeded $100 million in revenues and 500 employees by 1985, when the company had more than 1,000 acres of aloe growing in Texas's Lower Rio Grande Valley. By this time, the company also owned processing plants and research labs in Dallas, a fleet of trucks, and an official headquarters in Tempe.[6]
Maughan refined Forever Living's marketing plan over the years. By the mid-1990s, sales people were ranked from beginner-level "Distributor" to high-flying "Double Diamond Manager". The company supported these representatives with training materials ranging from booklets and videotapes to "ForeverVision," a bimonthly satellite broadcast featuring product information and motivational programs. In addition to downline bonuses, distributors had the potential to earn vacations to Forever Resorts, autos, electronics, and other incentives.
Although aloe is most commonly used topically, Forever Living's key product has been its aloe vera beverage. The substance has long been used as a purgative agent, to which Maughan may have been referring when he asserted, "Aloe vera helps our bodies perform like they are supposed to." By the mid-1990s, the company had developed three flavors of aloe "juice": cranberry, apple, and natural. Although Forever Living promotes the natural flavor as "exotic," Christopher Palmeri characterized the taste as more near that of "turpentine" in his 1995 piece.
Aloe drinks generated about 50 percent of Forever Living's annual sales into the mid-1990s. Although Rex Maughan calls his company "the best-kept secret in Arizona" Forever Living's fame grew in line with its sales in the late 1980s and early 1990s. Revenues mounted from $100 million in 1985 to more than $200 million in 1990 and surpassed $1 billion in 1995.[6]
The company also made dozens of skin care products from aloe, including lotions, creams, soaps, hair care products, deodorant, aftershave, lip balm, and a burn treatment. Other aloe-based goods included toothpaste, colognes and perfumes, and laundry detergent.
FLP launched its line of Forever Bee Products in 1983. At the core of this group of nutritional supplements is "Royal Jelly" a food created by honey bee especially for the queen bee. Some scientists attribute the queen bee's growth, reproductive ability, and comparative longevity to her consumption of royal jelly. The company offered royal jelly in 250 mg tablets, bee pollen (the worker bees' food source) in 500 mg tablets, bee propolis (from the walls of the hive) in 500 mg tablets, and pure honey. Forever Living made absolutely no claims that humans who consumed these products would obtain the same health benefits apparently enjoyed by the bees, making assurances only about the source, potency, quality, and purity.[6]
Although the founder has asserted that, initially, he was not interested in selling vitamins and diet products, nutritional supplements would become an important segment of the Forever Living line. The company combined aloe with vitamins, ginseng, minerals, fish oils, garlic, and other substances to make an array of nutritional supplements. Forever Living's promotions were peppered with pseudo-scientific terms like "flavonoid extract" and "bioflavonoids," but the most the company would guarantee was that its products would "make people feel better and more beautiful."
Having fleshed out its product lines, Forever Living began to diversify geographically in 1983. The company focused first on the Far East, where natural remedies enjoy a strong heritage and high esteem. By 1995, FLP had distributors in 40 countries.
Forever Living Products launched in Bangladesh on May 12, 2010 through a Grand Opening at Raddisson Hotel in Dhaka. The Products arrived at 12 August 2010. Bangladesh Government approved 32 products in the first phase.[8]
In June 2010 Direct Selling News published a list of 100 top direct selling companies in the world based on 2009 year-end wholesale revenue (in U.S. dollars) which they claimed was one of the industry’s most comprehensive reports assembled. Forever Living Products holds the 10th position on the list, while Avon and Amway hold the 1st and 2nd position respectively.[9]
Forever Living was ranked number 340 on the Forbes list of the 400 largest private companies in 2006. In 2011 it comes in first position in Nutritional Products.
Forever Living Products, together with its affiliates, is the world's largest grower, manufacturer and distributor of aloe vera and aloe based products. Forever Living owns 5,000 acres of land in the United States, Mexico and the Dominican Republic where they grow and harvest aloe vera. The company has a patented stabilization process ensuring that their aloe is essentially identical to the inner leaf gel.[10]
Forever Living also owns Forever Resorts, which manages resort and recreational properties in the United States, Europe and Africa.
Forever Living Products is selling nutritional supplements and cosmetics but advertise these products as medicaments, and often state that they can cure various illnesses which effect is not scientifically proven but suported by "stories of cures". Since drug control is very strict the company had to adjust several times its communication to prevent being attacked by legislation and governmental control. In most countris these "stories" now restricted to company resellers and forbidden to be told customers to prevent it being advertising, and it is forbidden for the resellers to state that the products cure anything or could be used to relieve symptoms (unless they get written permission from the company). If, however some products were accepted officially as drugs it would be impossible to sell them in the same business model, and this may be one important reason the company keeps their nutritional supplement status.
In Hungary they were found to violate several laws related about advertising, registration or nutritional products and using cosmetics as medicaments; the company was fined approximately $280000.[11]