Network marketing giant Herbalife Ltd. is expanding its US manufacturing capacity with the purchase of a facility in Winston Salem NC. The acquisition furthers Herbalife’s goal to increase the number of products it manufactures in-house, the company said.
“This acquisition is part of the ongoing execution of our previously stated ‘seed to feed' strategy — vertically integrating our supply chain to give us even greater control of our products at every stage of the process and increasing our ability to meet the increased product needs of our independent distributors and their customers around the world,” said Rich Goudis, Herbalife's chief operation officer.
In March, in a call with analysts, chief executive Michael Johnson said: “We are currently manufacturing approximately 30% of our global volume in our own manufacturing facilities. Our goal is to self-manufacture as much as two thirds of our inner nutrition products including the extraction of the raw botanical ingredients used in our products today.”
52% sales growth over three years
Herbalife is the third biggest global network marketing company, behind Avon and Amway, according to a recent ranking by Direct Selling News. It posted $3.5 billion in 2011 direct sales, and posted 52% sales growth in the 2009-2011 period. With the addition of Uruguay in February, the company now sells in 81 countries.
Herbalife paid $22.2 million in cash for the facility in a deal that included city, county and state government incentives. The company said it plans to invest an additional $100 million in new equipment and facility improvements to bring it into compliance with GMP requirements.
The company said it will add approximately 500 new employees at the facility. It said it plans to close the deal by the end of the year, subject to due diligence.
The company has achieved impressive results with its Herbalife24 sports nutrition range, which has helped the company to reach a new, younger “Generation H ” demographic of distributors and consumers. With two product launches in October, the line now has seven products on the market.