Important company in big industry
Nature’s Sunshine occupies a unique niche in the dietary supplement industry. It was one of the foundational companies for what has become perhaps the largest concentration of dietary supplement manufacturers in any state. Quantifying the industry’s position within the state is difficult; while the word on the street is that it is one of the the largest if not the largest industries in Utah, the claim is not easily supported by publicly available information. For example, the most recent statistics from the U.S. Department of Labor’s Bureau of Labor Statistics puts the Leisure and Hospitality category (which presumably captures the skiing industry) in the state in the No. 1 position in terms of employment in the private sector. Manufacturing of all types comes in at No. 2. Dietary supplement manufacture presumably represents a subset of that figure, though some companies might be categorized under the Trade, Transportation and Utilities sector. The United Natural Products Alliance, a trade organization that includes a lot of Utah companies in its membership, puts the size of the industry in the state at $9.2 billion and said it is "one of" Utah's largest industries.
Some supplement manufacturers are private, of course, which complicates capturing their financial information. And the dietary supplement business in Utah has always been front loaded with multi level marketing companies like Nature’s Sunshine. Network marketing companies as a rule have a certain inward-looking, clannish corporate culture. The prime focus is on communicating with the company’s own distributor base and less on publicly waving the corporate flag as an automobile manufacturer or airline might.
Celebrating longevity
But as Nature’s Sunshine hits an important anniversary, the company’s leadership sought to take steps toward changing that mindset to some extent. The anniversary celebration featured appearances by Utah Gov. Gary Herbert, U.S. Sen. Orrin Hatch and the state Attorney General Sean Reyes. Also in attendance was U.S. Rep. Mia Love. CEO Greg Probert said that the time had come to recognize Nature Sunshine’s achievement in longevity.
“Almost 90% of Fortune 500 companies from the year that we were founded are either out of business or have been acquired,” Probert told attendees at the event, which took place at company headquarters in Lehi, UT. “This company was founded on innovation. This was the first company in the U.S. to encapsulate herbs. This was the first company in this country to really focus on herbal products and herbal medicine. This company started at a kitchen table and has now grown to be operating in more that 40 countries.”
“It is unusual to have a company survive for 45 years,” said Gov. Herbert. “Only a third survive for 10 years. It is not lost on me that Forbes listed Nature’s Sunshine as one of the country’s most trustworthy companies.”
Sen. Hatch credited Nature’s Sunshine and its founders, Gene Hughes and his wife Kristine Hughes, for being at the forefront of the fight to pass the Dietary Supplement Health and Education Act in 1994.
“Without DSHEA we wouldn’t have the industry that we do. Passing DSHEA was one of the most hard fought bills in the history of this country, but we won, and we won big,” he said.
Loren Israelsen, president of the United Natural Products Alliance (Nature’s Sunshine was a founding member), said that the Hughes’ great insight was to put bitter or sharp tasting herbs into clear capsules so that consumers could see what they were getting and use the products without having to just grin and bear the taste. And it was a way to differentiate the products from pharmaceuticals. The Hughes’ first products were hand-filled capsules loaded with capsicum powder.
“The revolution was this little clear hardshell capsule,” Israelsen said as he held aloft an example. “Finding an elegant solution to a problem like that is a rare thing.”
Manufacturing capability
Part of the event was to lay out the company’s commitment to quality manufacturing for this reporter. At a tour of the company’s 270,000-sq-ft manufacturing facility in Spanish Fork, UT, company executives highlighted the extensive lab facilities where incoming raw material is validated, and validated methods are developed to test the company’s more that 600 finished products (that number rises to 2,700 when variants compliant with foreign markets are figured in). The company now makes itself more than 95% of the products it sells. Recent capital expenditures included the purchase of a $750,000 Waters diagnostic instrument and the institution of a company-wide Oracle software suite. More than 900 ingredients come into the facility, and every lot is tested, said Dustin Simons, director of manufacturing.
“We don’t do any skip testing,” Simons said.
The company also does clinical trial design and R&D at its headquarters facility. In recent years, the company claims to have conducted 11 clinical trials on its products that have led to the filing of 12 patents. Recent studies have included verifying the efficaciousness of the company’s multi-product weight loss intervention, a product matrix that includes probiotics and other gut modifiers as well as protein shakes.
Revenue challenges
Further research designed along RCT lines is planned as funding permits, said R&D program manager Clinton Dahlberg. That funding could be under pressure in the near term as the company struggles with tepid financial results. The company lost $6.7 million in the fourth quarter on sales of $84 million. The loss was attributed primarily to expenses related the Oracle implementation as well as investments relating to the planned entry into China, which is being facilitated by a partnership with Chinese company Fosun Pharmacy.
But Nature’s Sunshine has been unable as of yet to obtain a direct selling license in the country, something that was anticipated in 2016. Like other MLMs selling nutritional products, Nature’s Sunshine has seen a decline in results in North America. Another big market for the company has been Russia and Ukraine, with challenges there arising from the ongoing armed conflict and attendant economic uncertainty. Other publicly-traded network marketers such as Herbalife and Usana beat Nature’s Sunshine to the Chinese market and now derive a big portion of their overall revenue there.