March 19, 2021
The pandemic year 2020 was trying for everyone in countless ways, but for some multilevel marketers (MLMs) offering supplements and other health-related products via direct sales, it meant record-breaking growth and lots of sales success.
Financial statements for publicly traded MLMs like Herbalife, Nu Skin and USANA showed that 2020 was a strong one for these companies’ bottom lines, with the unique conditions of the pandemic underlying that success.
“In 2020, we saw our best year ever, with record net sales as our distributors met the global demand for better nutrition,” said John Agwunobi, chairman and CEO of Herbalife Nutrition, in a press statement announcing financials for the company (NYSE: HLF).
Full-year 2020 net sales of US$5.5 billion at Herbalife increased 13.6% compared to full year 2019, representing the largest annual net sales result in company history. Annual net sales records were set in three of the six global regions in which Herbalife operates: Asia-Pacific; Europe, Middle East and Africa; and North America.
Nu Skin Enterprises Inc. (NYSE: NUS), who direct sells health and beauty products including self-care skin health devices, reported 2020 revenue of US$2.58 billion, a full 7% increase over the prior year. Earnings per share at Nu Skin rose 17%.
“As the pandemic expanded the self-care-at-home beauty trend, the company focused innovation around beauty device systems to meet consumer demand for at-home skin care tools, which grew triple-digits in the U.S. and EMEA in 2020,” analysts with Deutsche Bank surmised about Nu Skin, while raising their FY 2021 guidance about the company.
Other MLMs in health and wellness showed similar gains. USANA Health Sciences (NYSE: USNA), who direct sells nutritional products, dietary supplements and skin care products, also reported 7% revenue growth in 2020, totaling US$1.135 billion.
Amway, a privately held MLM that offers health, beauty and home care products, said that 2020 sales reached US$8.5 billion, an increase of 2% over 2019. Eight of Amway’s top 10 markets grew in 2020, the company said, with sales in the U.S. growing at a robust 10%.
Following a pandemic trend, nutrition was a major growth segment for the diverse company. Amway sells vitamins and supplements under the Nutrilite label, and said nutrition products accounted for more than 50% of overall sales.
“Nutrition has always been an important part of our business and in the coming year, we will increase our investments in nutrition science, innovation and manufacturing as we pivot our portfolio to serve society’s evolving health and wellness needs,” noted a press statement from Amway about the company’s 2020 financial results.
Direct selling success
Unique conditions for consumers stuck at home during pandemic lockdowns—as well as changing attitudes about personal health and wellness—seem to have suited MLM companies that rely on direct selling.
“Direct sellers have embraced more health-centric consumer attitudes, work-from-home structures and social sharing over the past year,” analysts from Jefferies noted in a recent equity analysis of top MLM companies focused on wellness.
The U.S.-based Direct Selling Association (DSA), who counts these and many other MLMs as members, conservatively estimated that direct selling revenue in the U.S. would be up between 2% and 5% in 2020 versus the prior year, increasing to between $35.9 billion and $37 billion in U.S. retail sales.
Some key consumer trends drove this growth, according to the association.
As brick-and-mortar stores closed, direct selling offered a shopping experience that combined personal service with opportunities to have products shipped to the end customer without physical interaction.
Also, the global health crisis amplified the already robust interest among consumers in health and wellness products, and direct selling offered home-bound entrepreneurs a chance to earn needed part-time or supplemental income, according to the DSA.
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