Hughes often stated that the genesis of his product and program stemmed from the weight loss concerns of his mother Joanne, whose premature death he attributed to an eating disorder and an unhealthy approach to weight loss. His goal was to change the nutritional habits of the world. His first product was a protein shake designed to help people manage their weight. He structured his company using a direct-selling, multi-level marketing model which attracted thousands of distributors (Herbalife Independent Distributors) who sold its products door-to-door or through word-of-mouth, without relying on commercial distribution in retail stores. The company's slogan, "Lose Weight Now, Ask Me How," became a marketing theme for distributors, featuring heavily on badges, flyers and posters. Early methods to recruit distributors included seminars, which would feature distributors giving health and weight loss testimonials on the Herbalife products and a keynote address by Hughes. By 1982 Herbalife had reached US$2 million in sales and had expanded into Canada. In 1985, the California Attorney General sued the company for making inflated claims about the efficacy of its products. The company settled the suit for $850,000 without admitting wrongdoing.[9] In 1986 Herbalife became a publicly traded company on the NASDAQ, and in 1996 Herbalife reached US$1 billion in annual sales. Mark Hughes died at age 44.[10] The Los Angeles County Coroner autopsy results ruled that the entrepreneur had died of an accidental overdose of alcohol and doxepin, an anti-depressant.[11] The company continued to grow after his death and in 2002 was acquired by J.H. Whitney & Company and Golden Gate Capital for US$685 million, who took the company private again.[12]
In April 2003, Michael O. Johnson joined Herbalife as CEO following a 17-year career with The Walt Disney Company, most recently as president of Walt Disney International.[9] On 16 December 2004, the company had an initial public offering on the NYSE of 14,500,000 common shares at $14/share. 2004 net sales were reported as $1.3 billion. In April 2005, the company celebrated its 25th anniversary with a four-day event attended by 35,000 Herbalife Independent Distributors from around the world. In August 2005, Dr. Steve Henig joined the company as Chief Scientific Officer, responsible for product research and development. In 2008, President and COO Greg Probert resigned after it was reported that he had not completed the degree requirements for the MBA he claimed on his resume.[13]
Products
Herbalife's product range includes protein shakes, protein snacks, nutrition, energy and fitness supplements and personal care products.[14] The Formula 1 protein shake, a soy-based meal-replacement shake, is the company's number one product and was one of the first products sold by the company. The range also includes products for heart health, digestive health, skin care, and the new 24 sports line released in 2011. Some products are vegetarian, kosher, allergen free[15] or halal, and Herbalife provides testimonials and advice from health professionals as part of their product marketing. According to the 2009 Form 10-K, many of its weight management, nutritional and personal care products are manufactured by third-party manufacturing companies, with the exception of products distributed in and sourced from China, where they have their own manufacturing facility, and several products are produced in its manufacturing facility in Lake Forest, California (renovated 2011[16]). Herbalife is currently making modifications to its recently acquired manufacturing facility in order to increase capability and capacity, and upon completion of these modifications, expect to increase self manufacturing.[17]:16
In October 2010, Herbalife held a groundbreaking ceremony in Changsha, Hunan Province, China for its botanical extraction facility for its inner and outer nutrition products. The new facility is expected to open in the second half of 2011. The new extraction facility will purchase botanicals directly from farms in Hunan province, China and other regions, perform extraction and other conversion processes and then send these processed raw materials directly to Herbalife's manufacturing facilities in Suzhou, China and Lake Forest, California, or to its third party manufacturers throughout the world. The new extraction plant will produce botanical extracts, including teas, guarana, chamomile, broccoli and bilberry, among others, for use in many of its products.[18]d other regions, perform extraction and other conversion processes and
