Forever Living Products
Encyclopedia
Forever Living Products International, Inc. is a Scottsdale
, Arizona
-based direct selling
company that sells aloe vera
and bee
derived drinks, cosmetics, nutritional supplements, and personal care products in over 145 countries. Forever is the world's largest grower, manufacturer and distributor of aloe vera and beehive-based products. FLP was founded by Rex Maughan
in 1978 who is also the CEO. The company was ranked number 340 in the Forbes list of the 400 largest private companies in 2006 and is Arizona's largest privately held company. FLP uses a system of direct selling
where distributors are mainly part-time agents selling products online and locally using in-person presentations.
Forever Living Products has been criticized for being an illegal pyramid scheme
on the basis that participants are said to be rewarded primarily for recruiting new members to the organization, rather than for selling products to genuine end-users. There is a range of products numbering more than 200 contributing to a global turnover of $2.6 billion and a distributor base of more than 9 million people.
, having earned a degree in business administration from Arizona State University with a concentration in accounting in 1962, served as a Mormon missionary in Western Samoa. In 1967, three years after entering the real estate industry, he took a top management position with real estate developer Del E. Webb Corporation only to find that it is highly unlikely for him to rise to that company's presidency. This heavily inspired him to start his own enterprise.
Maughan, who continued to hold his day job with Del Webb, rented an office in Phoenix and warehoused product in his garage. This was a two-room office. He invited 43 people to attend the first Forever Living Products meeting in Tempe, Arizona, where he unveiled a customized plan that would provide him and anyone else with the two very things that Maughan had an undying passion for:
1. Better health
2. Financial freedom
Rex wholeheartedly believed that these two things were significantly important to drastically improve the quality of life. Thus 13 May 1978 witnessed the grand opening of Forever Living Products, a company founded on little more than dreams and hard work in Phoenix, Arizona.
as a distributor selling gasoline additives in his free time. From there, he developed a keen interest in direct selling system. He realized that the key advantage of this strategy was that it relied on word-of-mouth marketing for growth, thereby eliminating the need for an advertising
budget.
Maughan began researching well-known direct sales firms like Avon
, Amway
, Tupperware
and Shaklee. However, he soon observed that most direct selling
companies were designed to benefit the guys who founded them. So he and an associate who had some experience in the field drew up a business plan. He proposed that very simple business idea to his closest family and friends.
After settling on a marketing
strategy, the two partners sought a product. Maughan understood that they needed to offer something expendable to encourage repeat sales. In a 1995 interview with Success magazine's Duncan Maxwell Anderson, the Forever Living founder reflected, "Water purifiers and burglar alarms were very popular at that time but I didn't want anything that wasn't consumable. I was interested in health products and thought other people might be, too. However, I didn't want a me-too item like diet products, soaps, or vitamins."
Maughan found what he thought was an ideal candidate-aloe vera
. He soon came across a group of doctors in Dallas who had developed a method of stabilizing and storing the highly perishable aloe gel, which they used in a sunburn lotion. The Dallas group, Aloe Vera of America, had been trying to sell its product in health food stores with little success. Maughan and his partner believed that the products would benefit from the direct selling
method, which relies heavily on demonstrations, testimonials, and word-of-mouth sales.
That's how they came up with another way to sell products. Instead of dumping big bucks into traditional advertising, they decided to compensate anyone willing to share their aloe based products with their family and friends, thereby bypassing the retail stores and selling directly to customers. They were also interested in offering consumable products to the public that were proven to promote lasting wellness and health. They comprehended that this personal way of selling products to end consumers would prove to be more successful than following the conventional selling strategy.
They took massive action and started recruiting their own downlines in 1978. Thus from an initial investment of $10,000, they recruited about 40 people.
In 1983, Maughan solidified his position at the top by buying out his partner's half interest.
Forever Living Products exceeded $100 million in revenues and 500 employees by 1985, when the company had more than 1,000 acres of aloe growing in Texas's Lower Rio Grande Valley. By this time, the company also owned processing plants and research labs in Dallas, a fleet of trucks, and an official headquarters in Tempe.
Maughan refined Forever Living's marketing plan over the years. By the mid-1990s, sales people were ranked from beginner-level "Distributor" to high-flying "Double Diamond Manager". The company supported these representatives with training materials ranging from booklets and videotapes to "ForeverVision," a bimonthly satellite broadcast featuring product information and motivational programs. In addition to downline bonuses, distributors had the potential to earn vacations to Forever Resorts, autos, electronics, and other incentives.
Aloe drinks generated about 50 percent of Forever Living's annual sales into the mid-1990s. Although Rex Maughan
calls his company "the best-kept secret in Arizona" Forever Living's fame grew in line with its sales in the late 1980s and early 1990s. Revenues mounted from $100 million in 1985 to more than $200 million in 1990 and surpassed $1 billion in 1995.
The company also made dozens of skin care products from aloe, including lotions, creams, soaps, hair care products, deodorant, aftershave, lip balm, and a burn treatment. Other aloe-based goods included toothpaste, colognes and perfumes, and laundry detergent.
" a food
created by honey bee
especially for the queen bee
. Some scientists attribute the queen bee's growth, reproductive ability, and comparative longevity to her consumption of royal jelly. The company offered royal jelly in 250 mg tablets, bee pollen (the worker bees' food source) in 500 mg tablets, bee propolis (from the walls of the hive) in 500 mg tablets, and pure honey. Forever Living made absolutely no claims that humans who consumed these products would obtain the same health benefits apparently enjoyed by the bees, making assurances only about the source, potency, quality, and purity.
published a list of 100 top direct selling companies in the world based on 2009 year-end wholesale revenue (in U.S. dollars) which they claimed was one of the industry’s most comprehensive reports assembled. Forever Living Products holds the 10th position on the list, while Avon and Amway hold the 1st and 2nd position respectively.
Forever Living also owns Forever Resorts, which manages resort and recreational properties in the United States, Europe and Africa.
In Hungary they were found to violate several laws related about advertising, registration or nutritional products and using cosmetics as medicaments; the company was fined approximately $280000.
Scottsdale, Arizona
Scottsdale is a city in the eastern part of Maricopa County, Arizona, United States, adjacent to Phoenix. According to the U.S. Census Bureau, as of 2010 the population of the city was 217,385...
, Arizona
Arizona
Arizona ; is a state located in the southwestern region of the United States. It is also part of the western United States and the mountain west. The capital and largest city is Phoenix...
-based direct selling
Direct selling
Direct selling is the marketing and selling of products directly to consumers away from a fixed retail location. Peddling is the oldest form of direct selling. Modern direct selling includes sales made through the party plan, one-on-one demonstrations, and other personal contact arrangements as...
company that sells aloe vera
Aloe vera
Aloe vera, pronounced , also known as the true aloe or medicinal aloe, is a species of succulent plant in the genus Aloe that is believed to have originated in the Sudan. Aloe vera grows in arid climates and is widely distributed in Africa, India, Nepal and other arid areas.The species is...
and bee
Bee
Bees are flying insects closely related to wasps and ants, and are known for their role in pollination and for producing honey and beeswax. Bees are a monophyletic lineage within the superfamily Apoidea, presently classified by the unranked taxon name Anthophila...
derived drinks, cosmetics, nutritional supplements, and personal care products in over 145 countries. Forever is the world's largest grower, manufacturer and distributor of aloe vera and beehive-based products. FLP was founded by Rex Maughan
Rex Maughan
Rex G. Maughan is the founder, president, and CEO of Forever Living Products and Terry Labs. He is a philanthropist who has purportedly given millions of US dollars to several causes....
in 1978 who is also the CEO. The company was ranked number 340 in the Forbes list of the 400 largest private companies in 2006 and is Arizona's largest privately held company. FLP uses a system of direct selling
Direct selling
Direct selling is the marketing and selling of products directly to consumers away from a fixed retail location. Peddling is the oldest form of direct selling. Modern direct selling includes sales made through the party plan, one-on-one demonstrations, and other personal contact arrangements as...
where distributors are mainly part-time agents selling products online and locally using in-person presentations.
Forever Living Products has been criticized for being an illegal pyramid scheme
Pyramid scheme
A pyramid scheme is a non-sustainable business model that involves promising participants payment or services, primarily for enrolling other people into the scheme, rather than supplying any real investment or sale of products or services to the public...
on the basis that participants are said to be rewarded primarily for recruiting new members to the organization, rather than for selling products to genuine end-users. There is a range of products numbering more than 200 contributing to a global turnover of $2.6 billion and a distributor base of more than 9 million people.
Founding
The company was founded by Rex MaughanRex Maughan
Rex G. Maughan is the founder, president, and CEO of Forever Living Products and Terry Labs. He is a philanthropist who has purportedly given millions of US dollars to several causes....
, having earned a degree in business administration from Arizona State University with a concentration in accounting in 1962, served as a Mormon missionary in Western Samoa. In 1967, three years after entering the real estate industry, he took a top management position with real estate developer Del E. Webb Corporation only to find that it is highly unlikely for him to rise to that company's presidency. This heavily inspired him to start his own enterprise.
Maughan, who continued to hold his day job with Del Webb, rented an office in Phoenix and warehoused product in his garage. This was a two-room office. He invited 43 people to attend the first Forever Living Products meeting in Tempe, Arizona, where he unveiled a customized plan that would provide him and anyone else with the two very things that Maughan had an undying passion for:
1. Better health
2. Financial freedom
Rex wholeheartedly believed that these two things were significantly important to drastically improve the quality of life. Thus 13 May 1978 witnessed the grand opening of Forever Living Products, a company founded on little more than dreams and hard work in Phoenix, Arizona.
Business model
Maughan first got involved with direct sellingDirect selling
Direct selling is the marketing and selling of products directly to consumers away from a fixed retail location. Peddling is the oldest form of direct selling. Modern direct selling includes sales made through the party plan, one-on-one demonstrations, and other personal contact arrangements as...
as a distributor selling gasoline additives in his free time. From there, he developed a keen interest in direct selling system. He realized that the key advantage of this strategy was that it relied on word-of-mouth marketing for growth, thereby eliminating the need for an advertising
Advertising
Advertising is a form of communication used to persuade an audience to take some action with respect to products, ideas, or services. Most commonly, the desired result is to drive consumer behavior with respect to a commercial offering, although political and ideological advertising is also common...
budget.
Maughan began researching well-known direct sales firms like Avon
Avon
-Rivers:*River Avon or Avon River , various rivers*Avon Water, a river in Scotland*Afon, the Welsh word for river, often anglicised to 'avon'-Canada:*Avon, New Brunswick, in the province of New Brunswick...
, Amway
Amway
Amway is a direct selling company and manufacturer that uses network marketing to sell a variety of products, primarily in the health, beauty, and home care markets. Amway was founded in 1959 by Jay Van Andel and Richard DeVos...
, Tupperware
Tupperware
Tupperware is the name of a home products line that includes preparation, storage, containment, and serving products for the kitchen and home, which were first introduced to the public in 1946....
and Shaklee. However, he soon observed that most direct selling
Direct selling
Direct selling is the marketing and selling of products directly to consumers away from a fixed retail location. Peddling is the oldest form of direct selling. Modern direct selling includes sales made through the party plan, one-on-one demonstrations, and other personal contact arrangements as...
companies were designed to benefit the guys who founded them. So he and an associate who had some experience in the field drew up a business plan. He proposed that very simple business idea to his closest family and friends.
After settling on a marketing
Marketing
Marketing is the process used to determine what products or services may be of interest to customers, and the strategy to use in sales, communications and business development. It generates the strategy that underlies sales techniques, business communication, and business developments...
strategy, the two partners sought a product. Maughan understood that they needed to offer something expendable to encourage repeat sales. In a 1995 interview with Success magazine's Duncan Maxwell Anderson, the Forever Living founder reflected, "Water purifiers and burglar alarms were very popular at that time but I didn't want anything that wasn't consumable. I was interested in health products and thought other people might be, too. However, I didn't want a me-too item like diet products, soaps, or vitamins."
Maughan found what he thought was an ideal candidate-aloe vera
Aloe vera
Aloe vera, pronounced , also known as the true aloe or medicinal aloe, is a species of succulent plant in the genus Aloe that is believed to have originated in the Sudan. Aloe vera grows in arid climates and is widely distributed in Africa, India, Nepal and other arid areas.The species is...
. He soon came across a group of doctors in Dallas who had developed a method of stabilizing and storing the highly perishable aloe gel, which they used in a sunburn lotion. The Dallas group, Aloe Vera of America, had been trying to sell its product in health food stores with little success. Maughan and his partner believed that the products would benefit from the direct selling
Direct selling
Direct selling is the marketing and selling of products directly to consumers away from a fixed retail location. Peddling is the oldest form of direct selling. Modern direct selling includes sales made through the party plan, one-on-one demonstrations, and other personal contact arrangements as...
method, which relies heavily on demonstrations, testimonials, and word-of-mouth sales.
That's how they came up with another way to sell products. Instead of dumping big bucks into traditional advertising, they decided to compensate anyone willing to share their aloe based products with their family and friends, thereby bypassing the retail stores and selling directly to customers. They were also interested in offering consumable products to the public that were proven to promote lasting wellness and health. They comprehended that this personal way of selling products to end consumers would prove to be more successful than following the conventional selling strategy.
They took massive action and started recruiting their own downlines in 1978. Thus from an initial investment of $10,000, they recruited about 40 people.
Growth in the first two years
The 40 people that Rex and his partners recruited sold $700,000 worth of aloe-based products under the Forever Living name that first year. Initially, the company started only with Aloe Vera juice, gelly and lotions in several Western states of America. Within just two years, annual sales had increased to more than $30 million. Feeling confident that he had achieved "financial freedom", a 43 years old Maughan quit Del Webb to concentrate on Forever Living Products (FLP) full time in 1980.1980s
In 1981, Forever Living Products purchased Aloe Vera of America's patents, its cosmetic production plant, and its field processing operations. From 1980 to 1981, the company's sales more than doubled to more than $71 million, ranking FLP among America's fastest growing firms. This rapid expansion drew the attention of "dozens" of brokers seeking to take the company public or merge it with another firm. But Maughan was not ready to cash out. In the mid-1980s, he reflected, "I was not interested then, nor now. I'm still in it to help other people."In 1983, Maughan solidified his position at the top by buying out his partner's half interest.
Forever Living Products exceeded $100 million in revenues and 500 employees by 1985, when the company had more than 1,000 acres of aloe growing in Texas's Lower Rio Grande Valley. By this time, the company also owned processing plants and research labs in Dallas, a fleet of trucks, and an official headquarters in Tempe.
Maughan refined Forever Living's marketing plan over the years. By the mid-1990s, sales people were ranked from beginner-level "Distributor" to high-flying "Double Diamond Manager". The company supported these representatives with training materials ranging from booklets and videotapes to "ForeverVision," a bimonthly satellite broadcast featuring product information and motivational programs. In addition to downline bonuses, distributors had the potential to earn vacations to Forever Resorts, autos, electronics, and other incentives.
Product diversification
Although aloe is most commonly used topically, Forever Living's key product has been its aloe vera beverage. The substance has long been used as a purgative agent, to which Maughan may have been referring when he asserted, "Aloe vera helps our bodies perform like they are supposed to." By the mid-1990s, the company had developed three flavors of aloe "juice": cranberry, apple, and natural. Although Forever Living promotes the natural flavor as "exotic," Christopher Palmeri characterized the taste as more near that of "turpentine" in his 1995 piece.Aloe drinks generated about 50 percent of Forever Living's annual sales into the mid-1990s. Although Rex Maughan
Rex Maughan
Rex G. Maughan is the founder, president, and CEO of Forever Living Products and Terry Labs. He is a philanthropist who has purportedly given millions of US dollars to several causes....
calls his company "the best-kept secret in Arizona" Forever Living's fame grew in line with its sales in the late 1980s and early 1990s. Revenues mounted from $100 million in 1985 to more than $200 million in 1990 and surpassed $1 billion in 1995.
The company also made dozens of skin care products from aloe, including lotions, creams, soaps, hair care products, deodorant, aftershave, lip balm, and a burn treatment. Other aloe-based goods included toothpaste, colognes and perfumes, and laundry detergent.
Bee products
FLP launched its line of Forever Bee Products in 1983. At the core of this group of nutritional supplements is "Royal JellyRoyal jelly
Royal jelly is a honey bee secretion that is used in the nutrition of larvae, as well as adult queens. It is secreted from the glands in the hypopharynx of worker bees, and fed to all larvae in the colony....
" a food
Food
Food is any substance consumed to provide nutritional support for the body. It is usually of plant or animal origin, and contains essential nutrients, such as carbohydrates, fats, proteins, vitamins, or minerals...
created by honey bee
Honey bee
Honey bees are a subset of bees in the genus Apis, primarily distinguished by the production and storage of honey and the construction of perennial, colonial nests out of wax. Honey bees are the only extant members of the tribe Apini, all in the genus Apis...
especially for the queen bee
Queen bee
The term queen bee is typically used to refer to an adult, mated female that lives in a honey bee colony or hive; she is usually the mother of most, if not all, the bees in the hive. The queens are developed from larvae selected by worker bees and specially fed in order to become sexually mature...
. Some scientists attribute the queen bee's growth, reproductive ability, and comparative longevity to her consumption of royal jelly. The company offered royal jelly in 250 mg tablets, bee pollen (the worker bees' food source) in 500 mg tablets, bee propolis (from the walls of the hive) in 500 mg tablets, and pure honey. Forever Living made absolutely no claims that humans who consumed these products would obtain the same health benefits apparently enjoyed by the bees, making assurances only about the source, potency, quality, and purity.
Nutritional supplements
Although the founder has asserted that, initially, he was not interested in selling vitamins and diet products, nutritional supplements would become an important segment of the Forever Living line. The company combined aloe with vitamins, ginseng, minerals, fish oils, garlic, and other substances to make an array of nutritional supplements. Forever Living's promotions were peppered with pseudo-scientific terms like "flavonoid extract" and "bioflavonoids," but the most the company would guarantee was that its products would "make people feel better and more beautiful."International expansion
Having fleshed out its product lines, Forever Living began to diversify geographically in 1983. The company focused first on the Far East, where natural remedies enjoy a strong heritage and high esteem. By 1995, FLP had distributors in 40 countries.FLP Bangladesh
Forever Living Products launched in Bangladesh on May 12, 2010 through a Grand Opening at Raddisson Hotel in Dhaka. The Products arrived at 12 August 2010. Bangladesh Government approved 32 products in the first phase.DSN ranking
In June 2010 Direct Selling NewsDirect Selling News
Direct Selling News is a full-color business magazine that releases 12 issues per year and serves executives in the direct selling industry...
published a list of 100 top direct selling companies in the world based on 2009 year-end wholesale revenue (in U.S. dollars) which they claimed was one of the industry’s most comprehensive reports assembled. Forever Living Products holds the 10th position on the list, while Avon and Amway hold the 1st and 2nd position respectively.
Forbes ranking
Forever Living was ranked number 340 on the Forbes list of the 400 largest private companies in 2006. In 2011 it comes in first position in Nutritional Products.World's largest aloe producer
Forever Living Products, together with its affiliates, is the world's largest grower, manufacturer and distributor of aloe vera and aloe based products. Forever Living owns 5,000 acres of land in the United States, Mexico and the Dominican Republic where they grow and harvest aloe vera. The company has a patented stabilization process ensuring that their aloe is essentially identical to the inner leaf gel.Forever Living also owns Forever Resorts, which manages resort and recreational properties in the United States, Europe and Africa.
Problems
Forever Living Products is selling nutritional supplements and cosmetics but advertise these products as medicaments, and often state that they can cure various illnesses which effect is not scientifically proven but suported by "stories of cures". Since drug control is very strict the company had to adjust several times its communication to prevent being attacked by legislation and governmental control. In most countris these "stories" now restricted to company resellers and forbidden to be told customers to prevent it being advertising, and it is forbidden for the resellers to state that the products cure anything or could be used to relieve symptoms (unless they get written permission from the company). If, however some products were accepted officially as drugs it would be impossible to sell them in the same business model, and this may be one important reason the company keeps their nutritional supplement status.In Hungary they were found to violate several laws related about advertising, registration or nutritional products and using cosmetics as medicaments; the company was fined approximately $280000.