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Latinos crucial to Herbalife's financial health

L.A. company Herbalife estimates Latinos account for about 60% of its U.S. sales made through its network of independent distributors.

February 15, 2013|By Stuart Pfeifer, Los Angeles Times

Some said they had successful businesses that generated thousands of dollars of monthly income. Many said they ran nutrition clubs based in storefronts or at their homes. Others just had a dream.

Hipolito Bolaños, 55, wore a pin on his shirt that read, "Pierda peso ahora. Pregunteme como!" the slogan made famous by Herbalife founder Mark Hughes: "Lose weight now, ask me how."

"My hope is to open my own club, to build a business out of it," Bolaños said in Spanish. Other than pitching products to friends and co-workers, he had no business plan. He said he first started using Herbalife products to deal with joint pain developed while working a construction job in New York.

Gustavo Parra, who was loading the trunk of his BMW 528i with Herbalife products, runs a nutrition club in a Bellflower strip mall. He has a long list of customers and more than 500 distributors beneath him who feed his monthly commissions, which he says nets $6,000 to $12,000 a month.

"I can't believe this happened to me," said Parra, 44, who came to the United States about 25 years ago from Mexico and has been selling Herbalife products for 10 years. "I love this job because I help people feel great and the company pays me."

Parra's success story is an exception. About 90% of Herbalife distributors make little or no income, the company acknowledges.

Ismael Vasquez of Riverside said he gave up his nutrition club in January 2012 because he wasn't making enough money. "There was not a lot of profit, just $500 to $600 per month," Vasquez said.

He had other concerns.

Herbalife encourages distributors to be more than salespeople; it asks them to build relationships with customers, to counsel them about the products and help them achieve their goals. Vasquez said distributors do not receive enough training to do that.

"Some of the people we had in our organization, they were not promoting the product in a way that was recommended by the company," said Vasquez, who now works at a Montebello bakery. "They would create their own ideas, telling people they could use aloe [vera juice] for eye drops. When we would find out about those kinds of things, we would try to correct it."

Operating from homes is a concern to the Los Angeles County Department of Public Health.

It's against the law to prepare and sell food — even nutrition shakes — from homes, said Eric Edwards, a county environmental health specialist. The county has shut down two Herbalife nutrition clubs in the last year for operating in retail space without proper health licenses, according to health department records.

"You can't operate a restaurant out of your home," Edwards said. "When they are making the shakes they are preparing food. Then they're expected to follow all the same rules, regulations and laws that a restaurant would."

Walsh, the Herbalife president, said the company instructs its distributors to follow all local ordinances.

Ruben Guerra, chairman of the Latino Business Assn., said he knows people who have made "pretty good money" selling Herbalife products.

However, he believes it's a job that requires a significant investment of time and energy in order to succeed.

"Unfortunately, some in the Latino community are vulnerable mainly because they come from Mexico or poor communities and they're always feeling like they want to get ahead," Guerra said. "When they tell you about these get-rich-quick ideas, they're very vulnerable. Who doesn't want to get rich quick?"

Times staff writer Salvador Rodriguez contributed to this report.

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