The multi-level marketing company, one of the world’s largest devoted solely to the sale of nutritional and personal care products, is based in Salt Lake City, UT, but does the lion’s share of its business in Asia. According to industry publication Direct Selling News, Usana was the world’s 16th largest MLM overall in 2019.
Asia results lead the way
For 2020, Usana recorded 14.5% sales growth in the fourth quarter with revenue of $310.5 million. For the year, the company recorded $1.1 billion in revenue, representing a 7% year over year growth.
In the fourth quarter, $139.1 million of revenue came from Greater China. Possibly due to the continued hangover from that country’s regulatory crackdown on direct sales operations, growth in China was lowest for all of the country’s regions at 5.4%. Sales grew in North Asia by more than 17% and in the Southeast Asia Pacific region by more than 34%. Sales in the Americas/Europe region grew by 14.3%.
Usana CEO Kevin Guest said a keen interest in immunity products drove some of the early sales rise in 2020. But in common with what some other dietary supplement marketers have reported, Guest said the pandemic has further entrenched the use of dietary supplements in consumers’ daily health maintenance regimens.
“We saw a spike initially as kind of the rest of the world started dealing with the COVID pandemic and we saw a spike in some of our immunity products that were designed to go back and support immune functions. And we've definitely seen that spike kind of drift down, but it's still clipping at a higher run rate of growth than the rest of our products. And so, without a doubt, we've seen that -- across all our markets, we're seeing a more keen awareness of health and wellness and it allows us to go back and have more robust conversations and have dialogue with these customers and consumers,” Guest said in an earnings call with analysts. A transcript of the call was posted on the site seekingalpha.com.
Time for renewed expansion
For a number of years Usana has focusing on the markets it currently operates in, with the heavy emphasis being on East Asia and specifically China. Now that those markets are doing well, especially in the wake of the Chinese government’s review of direct selling operations, it may be time to start to think about new markets, said CEO Kevin Guest. Usana operates in 24 countries, whereas its nutritional product MLM competitors operate in far more. Herbalife, for example, has sales associates in more than 80 countries.
“Our strategy for the last several years is -- has been that we wanted to focus our resources on our existing markets and focus on growth, where we were currently doing business. We feel like we've got an upper hand in that area and feel very confident that it's time for us to move into exploring other opportunities around the globe. If you look at some of our peer group, they're in -- some are in 50 or 60 markets around the globe. And we do see that as a potential growth opportunity, but it's not the primary strategic growth strategy for the company. We do see international expansion as an important piece,” he said.
Guest also said that the company’s investment over the past several years into improving its digital platforms stood it in good stead during the market distortions cause by the pandemic.
“Digital enhancement of our business has been a key aspect of our customer experience strategy. We believe that our accomplishments in this area positioned us to sustain and accelerate performance during an unprecedented 2020,” he said.
Bribery probe closed in 2020
In China, the company operates a subsidiary called BabyCare LTD. The subsidiary’s operations had come under scrutiny several years ago because of an apparent violation of bribery laws governing the actions of American companies in foreign markets. According to The Wall Street Journal, the US Department of Justice and the US Securities and Exchange commission had dropped parallel probes into Usana over bribery allegations. This was reportedly due in part to the company having promptly instituted its own investigation and the quick dismissal of certain employees.