CEO Brent Willis told NutraIngredients-USA that the conditions of the pandemic, harsh as they have been for many individuals, have actually benefited his company. NewAge uses a ‘social selling’ model, in which independent distributors promote and sell products via their own individual social media feeds. To outsiders the model might look like a multi level marketing setup sans the face to face meetings, but Willis said the difference is one of emphasis. In New Age’s model emphasis is placed on ability of distributors to more efficiently sell products directly to consumers and earn commissions on those sales, rather than stressing the building of a ‘downline’ distribution organization as a way to earn compensation.
Distributors’ energy substitutes for massive ad budgets
“Our distributors take our products and immerse those products into their lifestyles and share that experience with their followers,” Willis said. “In that way we are a very Esty-like company. In fact, we view them as one of our direct competitors.”
“We are primarily a direct selling business. Part of the reason we have grown so well especially lately is because people need jobs,” he said.
Willis said NewAge, which is based in Denver, CO, has also latched onto a fundamental shift in the retail landscape. In his past guise as a CPG company executive, he doled out millions of dollars in advertising in an attempt to get consumers to go to a store to buy products. Money is energy, after all, and in the New Age model, the energy to promote the products is provided by the distributors themselves, he said.
“When I was at InBev, I spent 3.3 million euros a year on advertising,” Willis said. “But the old models of CPG are really challenged these days. The No. 1 driver of intent to purchase is word of mouth, and the second is the input of friends and family.”
Building a company on noni
NewAge advertises that it “builds brands across three primary platforms including health and wellness, healthy appearance, and nutritional performance.” The company’s primary product is a line of beverages and shots based on noni (Morinda citrifolia), a fruit-bearing tree in the coffee family native to Southeast Asia and islands in the Pacific. The fresh fruit’s strong, unpleasant odor and noisome taste have prevented it from becoming a staple in Western markets, but NewAge adds grape, apple and lemon juice concentrates to its shots and beverages to mask the flavor. It also adds other functional ingredients to condition specific shots aimed at sleep, focus, immunity and other indications.
The company also markets a line of personal care products and dietary supplements. Willis said sales of those products actually account for 20% or more of the company’s overall revenue. NewAge recently completed acquisition of Utah-based supplement and personal care product company Ariix, which when combined with NewAge’s organic revenue puts the combined company over the $500 million pro forma revenue mark.
CBD products will help speed growth
Willis said NewAge has achieved its revenue milestone after recording just $2 million in revenue in 2016. The addition of CBD to the line of noni products will help drive additional growth going forward, he said. NewAge is active in 50 countries and the CBD products are sold in select foreign markets. As a publicly traded company, CBD products are still off limits in the US until FDA removes the regulatory impediments, he said.
Recent research has suggested that noni can inhibit the action of certain endocannabinoid degradation enzymes, which could support the assertion of a synergistic effect between the two ingredients.
“We believe noni is one of the best sources of antioxidants,” he said. “And it has this property of ‘opening up’ the CBD receptors allowing the CBD to have something of an additional effect.”
Following the company’s earnings release this past week the company’s share price has climbed. The shares are now trading at $3.19, up from a recent low of $1.05 a little less than a year ago. But that’s off the company’s all time high of almost $8.50 in October 2019.