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Youngevity records strong growth in both multilevel supplement marketing and coffee roasting segments

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By Hank Schultz

14-Aug-2014

Youngevity International, a multilevel marketer of nutritional supplements as well as a bulk coffee roaster, reported big increases in net revenue and gross profit in its second quarter of 2014, driven mostly by organic growth aided by acquisitions.

 

Youngevity reported $32.7 million in net revenue in the period, compared to $20.9 million for the second quarter of 2013, representing a 57% increase.  And gross profit was up, too, increasing by  49% to $18.9 million compared to $12.7 million in the same period the previous year.

Recent acquisitions

The company’s recent strategy has been multi-pronged.  Youngevity has acquired several supplement brands to increase the offerings through its direct sales network, and now offers more than 400 products. The acquisitions include the brands Beyond Organic Inc, Good Herbs, GOFoods and Biometrics International. All of these brands have shown significant growth since they were acquired. For example, Biometrics, a brand of liquid dietary supplements, nearly tripled its quarterly revenue to about $1 million since it was brought on board in late 2013, according to Youngevity CFO Dave Briskie.

But the company has sought to balance the growth of the network marketing arm with a bulk coffee business (some of which is sold through network marketing) and to that end spent $2 million to acquire a coffee plantation and processing plant in Nicaragua. According to Ernesto Aguila, head of coffee roasing operations, Youngevity now has the second largest coffee roasting operation, in terms of square footage, trailing only Maxwell House’s facility in Jacksonville, FL.

 

Balancing act

“Direct selling accounts for 87.6% of our business, while the coffee segment accounts for 12.4% of our revenue and that’s as of this quarter. Just a year ago direct selling represented 91% of our revenue while the coffee segment was 9%. So, we’re getting better balance out of the two segments,” chief financial officer Dave Briskie said in an earnings call that was excerpted on the site seekingalpha.com

In the quarter, sales of nutritional supplements through the direct selling network grew by 52%, Briskie said. Meanwhile coffee revenues grew by a 104% year-over-year, driven partly by the launch of a green coffee distribution business. Since the launch of that division in April, the company has contracted to ship more than  3.3 million pounds of coffee at a sale price of $6.3 million, Briskie said.

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