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Herbalife says study shows millions in U.S. buy its products

June 11, 2013|By Stuart Pfeifer
  • Herbalife CEO Michael O. Johnson said a study funded by the company shows it has a broad base of U.S. consumers.
Herbalife CEO Michael O. Johnson said a study funded by the company shows… (Irfan Khan / Los Angeles…)

Los Angeles nutritional products company Herbalife Ltd. said a survey it funded found that nearly 8 million U.S. residents purchased its products in a recent three-month period.

The study, performed by the Nielsen Co., came as Herbalife fights a hedge-fund manager’s allegations that it operates an illegal pyramid scheme.

“This survey, conducted by one of the world’s most respected research organizations, confirms what we at Herbalife already know to be true: that Herbalife’s products have a broad consumer base here in the U.S. -- nearly 8 million in the last three months -- and that the majority of individuals that purchase Herbalife products do so for personal consumption,”  said Michael O. Johnson, Herbalife's chief executive.

Bill Ackman of Pershing Square Capital Management took a $1-billion short against Herbalife’s shares late last year, then publicly accused the company of running an illegal scheme in which most of its independent sales people lose money.

Herbalife products are not available in retail stores. Instead, the company sells its meal replacement shake mixes, vitamins and nutrition bars through a network of independent distributors who recruit customers, counsel them about nutrition and fitness and sell them products.

Ackman said most Herbalife distributors lose money and end up with unwanted product while a fortunate few, at the top of the pyramid, get rich from commissions of those they recruited into the business.

The company insists that Ackman is wrong. It says most of its distributors sign up to receive discounts on products they personally consume.

Herbalife said Nielsen’s research was based on a survey of more than 10,000 consumers. The results were significantly higher than figures the company released in 2012, which found that 5.6 million U.S. households had purchased its products in a three-month stretch. That study was performed by Lieberman Worldwide Research.

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