Herbalife facts for kids
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| Public company | |
| Traded as |
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| Industry | Multi-level marketing |
| Founded | February 1980 in Los Angeles, California, U.S. |
| Founder | Mark R. Hughes |
| Headquarters | L.A. Live Los Angeles, California, U.S.; legal domicile: Cayman Islands |
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Key people
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Stephan Gratziani (CEO) Michael O. Johnson (Executive Chairman) |
| Products |
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| Revenue | US$5.06 billion (2023) |
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Operating income
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US$356 million (2023) |
| US$142 million (2023) | |
| Total assets | US$2.80 billion (2023) |
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Number of employees
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8,900+ (2023) |
Herbalife Nutrition Ltd. is a big American company that makes and sells dietary supplements. These are products like vitamins, protein shakes, and other items that help people with their nutrition. The company is known for its multi-level marketing (MLM) business model. This means its products are sold by a large network of independent distributors, not in regular stores.
Herbalife was started by Mark R. Hughes in 1980. Today, it has thousands of employees and operates in many countries around the world. The company has faced discussions about its business model and how its distributors earn money. In 2016, it reached an agreement with the U.S. Federal Trade Commission (FTC) to change some of its business practices in the United States.
Contents
Herbalife's Story
In February 1980, Mark R. Hughes started selling his first Herbalife product, a weight management shake, from his car. He often said he was inspired to create these products because his mother had health problems related to weight loss. His goal was to help people manage their weight in a healthier way. He built his company using a direct-selling and multi-level marketing approach.
Over the years, Herbalife grew very quickly. By 1985, it was considered one of the fastest-growing private companies in America. However, the company also faced some challenges. Government agencies like the Food and Drug Administration (FDA) and the Attorney General of California looked into some of the claims made about Herbalife products. The company worked to update its product claims and change some product ingredients.
In 1986, Herbalife became a publicly traded company, meaning its shares could be bought and sold on the stock market. It expanded its business to many other countries, including Japan, Spain, and Mexico.
New Leadership and Growth
After Mark Hughes passed away in 2000, the company continued to grow. In 2002, two investment firms, J.H. Whitney & Company and Golden Gate Capital, bought Herbalife. Around this time, some ingredients like ephedrine were removed from Herbalife products in places where they were banned.
In 2003, Michael O. Johnson became the CEO of Herbalife. He had a long career at The Walt Disney Company before joining Herbalife. In 2004, Herbalife became a public company again, listing its shares on the NYSE.
Over the next few years, the company continued to expand and make changes. In 2018, Herbalife Ltd. officially changed its name to Herbalife Nutrition Ltd. Michael O. Johnson served as CEO for many years, then became Executive Chairman. In 2020, John Agwunobi became CEO, but he left in 2022, and Michael O. Johnson returned as interim CEO. In May 2025, Stephan Gratziani was appointed Chief Executive Officer.
Herbalife Products
Herbalife Nutrition offers a variety of products. These include shakes and bars for weight management and protein, as well as teas, aloe drinks, vitamins, and products for sports nutrition and personal care. The company's very first product, the Formula 1 protein shake, is still one of its most popular items. It's a soy-based shake designed to be a meal replacement.
Herbalife makes its products in its own factories in the U.S. and China, and also works with other manufacturing partners. The company uses a "seed to feed" approach. This means they try to trace where the ingredients in their products come from, all the way back to the farm. They have a special facility in China that extracts plant ingredients like teas and herbs for their products. These ingredients are tested many times to make sure they are good quality.
While Herbalife claims its products offer health benefits, these claims have been reviewed by doctors and government groups. In 2008, there were discussions about lead levels in some products, but the company's own tests showed the levels were not high enough to require special warnings.
How Herbalife Works
Herbalife Nutrition uses a multi-level marketing (MLM) business model. This means that people who sell Herbalife products (called distributors) can earn money in two main ways: by selling products directly to customers, and by recruiting new distributors who also sell products.
After a settlement with the FTC in 2016, Herbalife had to make some important changes to its business in the United States. Now, the company must show that most of its sales (at least 80%) are made to people who are not distributors. Distributors also need to provide proof of their sales to real customers. The rules also changed so that distributors can only earn a smaller part of their rewards from recruiting new people.
In the U.S., people can join Herbalife either as a "member" to buy products at a discount, or as a "distributor" to sell products and build a business. Members who just want discounts cannot earn money or sell products. An outside group also checks Herbalife's practices for seven years to make sure they follow these new rules.
Health Concerns and Product Safety
Over the years, some hospitals and doctors in different countries have reported cases of liver problems in patients who used Herbalife products.
For example, in 2004, Israel's Health Minister started looking into Herbalife products after some people reported liver issues. Studies were done to see if there was a link. In 2007, doctors in Switzerland and Israel also published studies suggesting a connection between Herbalife products and liver problems. Because of this, the Spanish Ministry of Health advised caution when using Herbalife products. Herbalife said they worked with the authorities, and later the alert was removed.
In 2009, a group of scientists in Spain reviewed cases from several countries. They concluded that they could not find a direct cause-and-effect link between liver problems and Herbalife's dietary supplements. They thought some cases might be related to big changes in diet without proper guidance.
More recently, in 2019, a paper was published about a case of liver failure in India linked to Herbalife slimming products. However, this paper was later removed from the journal.
Discussions About the Business Model
Herbalife's business model has been discussed by critics who have suggested it might operate like a pyramid scheme. A pyramid scheme is a business model where people mainly make money by recruiting new members, rather than by selling actual products to customers outside the network. Herbalife has always said that it does not operate as a pyramid scheme.
In 2011, a court in Belgium ruled that Herbalife was an illegal pyramid scheme, but this decision was later overturned by a higher court in 2013.
In 2012, a well-known investor named Bill Ackman publicly stated that he believed Herbalife was a pyramid scheme. He made a large financial bet that the company's stock price would go down. He argued that most distributors did not make much money and that the company focused too much on recruiting new sellers. However, Herbalife's stock price actually went up, and Ackman eventually ended his bet against the company.
FTC Review
In March 2014, the Federal Trade Commission (FTC), a U.S. government agency that protects consumers, started an investigation into Herbalife. Herbalife said it welcomed the investigation and would cooperate fully.
In July 2016, Herbalife reached a settlement with the FTC. As part of this agreement, Herbalife had to change how it does business in the U.S. and pay $200 million. The FTC stated that it was "virtually impossible to make money selling Herbalife products" for many distributors. The lawsuit claimed that Herbalife misled people into thinking they could earn a lot of money from selling products or from the business opportunity. The FTC wanted to make sure that distributors were earning money from selling products to real customers, not just from recruiting others.
Herbalife also faced investigations from the United States Department of Justice (DOJ) and the U.S. Securities and Exchange Commission (SEC) regarding its business practices in China. In 2019, the SEC announced that Herbalife agreed to pay $20 million to settle charges about statements made about its business in China. In 2020, Herbalife agreed to pay $123 million to the DOJ and SEC to resolve issues related to following rules in China.
Sports Partnerships
Herbalife Nutrition is a sponsor for many sports teams and athletes around the world. They have sponsored the Major League Soccer club LA Galaxy since 2007. They also sponsored famous soccer players like Cristiano Ronaldo and Lionel Messi in the past.
Other sponsorships include the basketball club Herbalife Gran Canaria and the Guangzhou Charge in the Overwatch League. Herbalife Nutrition has also sponsored national Olympic committees, like the Olympic Committee of Israel and the Indian Olympic Association during the 2020 Summer Olympics. In 2023, they became a sponsor of the Indian Premier League (a cricket league) and the main shirt sponsor for the Western Sydney Wanderers FC women's football team.
Media Discussions
Herbalife has been featured in various media. In 2016, a documentary called Betting on Zero explored the claims made by investor Bill Ackman that Herbalife was a pyramid scheme. It also shared stories from distributors.
Also in 2016, the TV show Last Week Tonight with John Oliver discussed multi-level marketing, focusing on Herbalife. The show criticized the company's structure and mentioned the FTC report.
A 2018 book titled When The Wolves Bite: Two Billionaires, One Company, and an Epic Wall Street Battle by Scott Wapner also talks about the financial battle involving Herbalife.
