Junkfood Science: Targeting the poor

October 14, 2007

Targeting the poor

There’s gobs of money to be made taking advantage of poor people and convincing them slimness and nutritional products mean better health and social acceptance. And, as the Los Angeles Times revealed, plenty of people are willing to do just that.

Living large on diet aids

Selling loads of costly Herbalife products to Mexico's poor has made a couple fabulously rich. Their 30,000 helpers have the same dream. Selling pricey diet-shake mixes in a developing country wouldn't seem like a very smart business idea, but ... Today, [Enrique Varela] and his wife own a fleet of luxury cars, four ranches and eight houses -— including a custom-built home with an elevator and a cupola-covered hot tub overlooking a golf course in this central Mexican city.

They bought it all with the proceeds from peddling products from Herbalife Ltd., the Century City-based maker of weight-loss aids and nutritional supplements.Varela and his wife, Graciela Mier de Varela, were the No. 1 Herbalife distributors on the planet last year, with network sales topping $100 million. This year the couple got a check for $1.8 million, the largest bonus in the history of the multilevel marketing company. That's on top of the millions the husband-and-wife team has earned through the army of independent salespeople in their network.

Their powder-pushing prowess helped make Mexico Herbalife's top market last year with $373.2 million in sales, besting the U.S. tally of $338.3 million. The Varelas' sales empire is all the more stunning considering that they generate most of their business in Mexico, where a $29 canister of the company's signature diet shake mix equals a week's wages for many consumers.

The secret of their success? Sales 101: Know your customers... Varela said that people come to Herbalife out of “inspiration or desperation."

The technique that proved most successful was taking advantage of the social aspects of getting people together. As a result there are now 30,000 Herbalife “Nutrition Clubs,” according to this report. And the placebo effect among the group is clearly evident as Club members attribute “healthy” nutritional products for perking up their appetite and spirits.

What many followers don’t know is that the company founder, Mark Hughes, was a 24-year-old high school dropout who “made his millions preaching healthy living” on infomercials and died at the age of 44 from an overdose of alcohol and antidepressants, said the LA Times. As it reports, despite multiple charges of shady business practices, fraud and operating a multi-level marketing scheme by state and federal regulators, and customer lawsuits, the company made $1.9 Billion last year. They have set their high hopes next on China. The story goes on to describe how easy it’s been to lure poor people to sell their products and “message of good health” by promising them potential wealth, too. But, most who sign up as distributors never recoup their initial investment.

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