Relìv International, Inc.
Relìv International, Inc.
Sales: $62.9 million (2002)
Stock Exchanges: NASDAQ
Ticker Symbol: RELV
NAIC: 325411 Medicinal and Botanical Manufacturing; 311422 Specialty Canning; 424210 Drugs and Druggists’ Sundries Merchant Wholesalers
Relìv International, Inc. is a producer of personal health products, including nutritional supplements, functional foods, weight management products, sports nutrition products, granola bars, and skincare products. Its most popular products include Relìv Classic and Relìv NOW, both powdered dietary supplements which provide essential vitamins, minerals, proteins, and herbs to assure a healthy, balanced diet, and Relìv Innergize!, a supplement designed to enhance athletic performance. Together these three products account for approximately 50 percent of Relìvs annual sales. Other products include weight-loss aids Relìv Ultrim-Plus and Cellebrate; FibRestore; Arthaffect, a supplement intended to promote healthy joints; ProVantage, a supplement for athletes; Relìv Ultra Bar, a granola bar; SoySentials and Relìv Soy Sense, nutritional supplements for women; Relìv NOW For Kids; and ReversAge, a line of nutritional supplements and skin creams designed to slow down the effects of aging. In 2003, Relìv marketed its products through subsidiaries in nine countries—the United States, Canada, Mexico, the United Kingdom, Ireland, Australia, New Zealand, and the Philippines. Relìv sells its products not through traditional retail outlets but via a multilevel marketing network of some 35,000 individual distributors located throughout the world. Relìv reported $63 million in sales in 2002, of which the United States accounted for about 84 percent.
Bom of a Miracle Cure in 1988
Relìv International evolved out of another company in a completely different line of business, American Life Investors, Inc. Founded in February 1985, the company sold prepaid legal plans. It was so successful that its co-founder, Robert L. Montgomery, was able to retire as a millionaire at the age of 38. He moved to his ranch to devote the rest of his life to raising horses and being with his family. Not long after his retirement, however, Montgomery had the first of two experiences that would decisively alter the direction of his life. The first was an encounter with microbiologist Theodore P. Kalgoris, who deeply impressed Montgomery with his philosophy “Be ashamed to die until you have scored a victory for mankind” as well as a nutritional supplement he had developed which Montgomery began using. In 1987, Montgomery’s life was shaken again when he learned he had a brain tumor. However, not only was the surgery successful, Montgomery recovered in less than half the time expected by his doctors. Montgomery and his wife attributed this remarkable cure to his regular use of Kalgoris’s nutritional preparation, and once he was healthy again Montgomery set out to bring Kalgoris’s formula to the masses. Thinking on the matter further, he decided to do it by means of a company that would enable others to achieve the business security and financial independence that he and his wife enjoyed.
The result was a make-over of Montgomery’s old insurance business. In 1988, it was reincorporated as Relìv Inc. In October of the same year it launched its first product—Relìv’s version of Theodore Kalgoris’s supplement which Montgomery believed had saved his life. In 1988, Relìv was joined by Dr. Carl W. Hastings, a noted food researcher who had developed the Weight Watchers Instant Formulas for Mead Johnson. Hastings was named the head of the company’s newly founded Scientific Advisory Board and vice-president of product research, development, and manufacturing. He set up the Relìv research labs to create a new line of nutritional supplements, and within a few years new products were being launched regularly.
Looking for an effective means to distribute his products, Montgomery decided against traditional health food stores. Instead, he adopted a chapter from Amway and other companies that used multilevel marketing systems. Relìv sought out individuals who for a small training fee became sales representatives. Most were people who had actually used Relìv products, believed in them, and recommended them to friends and acquaintances. Montgomery believed that this personal, one-on-one sales approach was key to Relìv’s later success. “These are the type of products that would just sit and gather dust” [on store shelves], he told Marketing News TM. “You have to have word-of-mouth—somebody telling you why this is unique.” Relìv representatives earned sales commissions which increased in percentage as they passed certain volume milestones. In addition, distributors received commissions from sales made by representatives that they had brought into the company. The Relìv distribution program was the way Montgomery realized his dream of providing freedom and financial security on a broad scale. However, by the end of the 1990s nearly 90 percent of Relìv distributors sold the firm’s products to supplement earnings from their regular full-time jobs.
Expansion and Disaster in the 1990s
Until 1991, Relìv limited its marketing and sales operations to the United States. In February of that year, the company, through its subsidiary Relìv World Corporation, formed a joint venture in Australia which resulted in the founding of Relìv Australia Pty, Ltd. Later that spring, Relìv World bought out its Australian partners. In 1992, Relìv expanded further, first in April to New Zealand and in June to Canada, opening wholly-owned subsidiaries in both countries. The company launched subsidiaries in Mexico and the United Kingdom in 1993 and 1995, respectively. Despite high hopes for its foreign branches, however, the lion’s share of Relìv’s sales—around 90 percent—continued to be made in the United States. Reflecting its worldwide presence, the firm changed its name to Relìv International, Inc. in 1992.
Relìv took another big step in March 1993 when its shares began trading on the American Stock Exchange’s Emerging Company Marketplace. The company had been publicly owned since its inception in the mid-1980s but only on a small scale, and most shareholders were in Illinois. The early 1990s were a boom time for Relìv. Its annual sales increased 1,400 percent while profits jumped 1,500 percent between 1990 and 1992. Its 1992 profits totaled $3.3 million, helped by Relìv’s network of over 52,000 distributors.
In the wake of the firm’s successes, management salaries increased by as much as 90 percent. CEO Robert Montgomery saw his pay climb from $85,135 to $116,688, while his bonuses shot from $402,117 to $808,643. The increases drew heat from Relìv shareholders, many of whom felt management was milking the company of hard-earned profits. Various shareholder groups, on the other hand, pointed out that at a time of runaway executive compensation Relìv’s pay raises were based almost wholly on performance. Montgomery, they said, deserved every cent because it was a result of the good job he had done.
In August 1993, Relìv completed work on a state-of-the-art manufacturing facility that would enable the company not only to produce and package its own products but also to initiate a new, potentially lucrative sideline—contract manufacturing for other companies. “Our in-house research and food science teams can provide interested companies with a full range of technical services, including new product research and development, ingredient sourcing, packaging design, and regulatory compliance,” Carl Hastings told Beverage World. However, in October, just two months after the $1 million, 12,000-square-foot plant went into operation, it was virtually destroyed when the flooded Mississippi River burst the Monarch Levee and sent a five foot wall of water smashing into Relìv’s corporate headquarters, filling it with up to 11 feet of water. After the waters receded, all that was left were the walls. It was a bitterly ironic turn—after hoping to provide contract manufacturing for other companies, Relìv itself was forced to turn to other companies to produce its products. A year later, Relìv had still not returned to the wrecked property, and executives said the company might never do so. The federal flood insurance which had covered the facilities—private flood insurance was prohibitively expensive, Montgomery later told Relìv’s shareholders—amounted to only about $500,000. Unless Congress passed legislation then under consideration, raising coverage to $2.4 million, Relìv said it would not rebuild on the Mississippi’s flood plain.
Relìv saw its sales rise in the year of the flood, climbing 35 percent to $43.6 million. Its net income, on the other hand, fell to about half its 1992 level to $1.65 million, due in part to $1.4 million in flood losses. Inevitably following such a catastrophic occurrence, Relìv’s stock price also suffered, dropping from about $13 to less than $3 in June 1994. These costs were compounded by other difficulties. The monetary crisis in Mexico hurt business, while unseasonably cold weather in the Northeast and the Los Angeles earthquake made it difficult for Relìv representatives to call on potential customers. These misfortunes, however, were followed by a period of intense product development. The year 1994 saw the development of Relìv Innergize! sports drink; the following year the company introduced two new weight management products, Relìv Cellebrate and Relìv Celleboost.
Since our founding in 1988, Relìv International has become a key player in advancing and simplifying nutrition for people around the world. As consumers become savvier about the vital role nutrition plays in health and well being, they’re looking for nutritional solutions that blend easily into their everyday lives. At Rellv, providing these solutions is our worldwide mission. That’s why we’ve focused our efforts on the development of essential nutritional supplements and functional foods—foods specifically designed to enhance performance, protect against disease, and relieve discomfort. And at Rellv, we are committed to creating products that bring the life-enhancing benefits of soy, herbs, antioxi-dants, and other botanicals to the daily diet—without sacrificing taste or convenience.
Ultimately, Relìv elected to rebuild its damaged manufacturing facilities in Chesterfield, Missouri. In June 1995, the company resumed its own production after nearly two years of farming it out to other firms. By 1996, Relìv had recovered almost completely from the effects of the 1993 flood. That year, it moved its shares from the AMEX to the NASDAQ. The firm continued to bring new products to market, including Relìv Arthaffect, a powdered nutritional supplement whose regular use was supposed to promote joint function, fight degenerative joint disease, and relieve many of the symptoms of arthritis. The company was awarded patents for two of its most popular products, Cellebrate and FibRestore. Along with Relìv Classic—Theodore Kalgoris’s original formula—and Relìv Innergize!, the firm now held four patents. According to Relìv’s 1997 annual report, the company had net sales of $40.7 million, 30 percent above 1995. While sales fell in Australia and New Zealand, they were strong in the United States and surged to a increase of 250 percent in Canada. Encouraged by its very first profits from its contract production business, in 1997 Relìv went ahead with plans to triple the size of its plant, from 46,000 to 136,000 square feet. By 1998, Relìv had approximately 40,000 distributors throughout the world and a thriving development program.
In January 1999, Relìv was the recipient of a warning letter from the Food and Drug Administration (FDA) that notified the firm about irregularities in the labeling of Relìv Arthaffect, the nutritional supplement being marketed as a arthritis relief agent. The FDA told the company that, based on the therapeutic claims made on its labeling, Arthaffect would have to be defined as a drug under federal regulations. Relìv had claimed that the product contained a protein “proven to help fight degenerative joint conditions.” The FDA pointed out that there was in fact no evidence that Arthaffect or its ingredients were effective or even generally safe. As an unapproved new drug, the FDA would be forced to ban the product from commerce until Relìv had submitted a new drug application and Arthaffect had passed the rigorous new drug tests administered by the federal government—procedures which frequently took ten years of more. The FDA also warned that the labeling failed to include adequate directions for Arthaffect’s use. Relìv was told to correct its labeling or risk an injunction against Arthaffect sales or its seizure by the federal government, and the company complied.
By 1999, Relìv’s contract production was in full swing. It reported 1998 contract sales of $6.2 million from just $163,000 the previous year. Nonetheless, the labor and building costs needed to realize those sales cut deeply into revenues, and the company suffered an 89 percent drop in profits during the first quarter of 1999. Contract sales continued to grow however, accounting for one-half of Relìv’s revenues from January to June 1999. A positive side-effect of the new direction was that Relìv was able to begin packaging its own product using equipment purchased for contract customer specifications—for example, putting its nutritional drink powders into single serving pouches for the first time.
Further Expansion in the 2000s
As the new century began, Relìv redoubled its international expansion efforts. In January 2000, it opened an office in Medellin, Columbia, which it planned as a base for making inroads for Relìv products in other Andean Pact nations. Less than two years later, however, Relìv shut down its South American branch, citing disappointing sales figures and the unstable political situation in Colombia. More successful was the launch of Philippine operations in October 2000. By 2002, the Philippines was responsible for 5 percent of Relìv’s annual sales, almost as much as Australia, New Zealand, Canada, and the United Kingdom combined. As the new century began, sales in both Mexico and the United Kingdom also hit healthy levels.
By 2000, Relìv had begun to see most of its contract manufacturing as a drain on profits and started cutting back on contracting as a source of income. Initially, Relìv had planned to specialize in smaller packaging jobs, for example, 3-inch by 5-inch foil pouches. By 1999, however, the lion’s share of Relìv’s contracts were for 40- to 50-pound bags for agricultural clients. By June 2000, Relìv had only one contract customer left, Metrix USA. As a result of phasing out the contract jobs, Relìv’s net sales dropped by 15 percent in 1999 and another 12 percent in 2000.
Despite the growth of Relìv’s core U.S. market, 2000 was a year of losses for the company, thanks primarily to the start-up cost of its Philippine operation and high operating costs in Mexico brought on by that country’s unstable economy. On the positive side, Relìv launched a major product development offensive it called “Relìv 2000.” Begun in January, the program resulted in four new products: a new, improved Relìv Ultrim-Plus; Now for Kids, the company’s first nutritional supplement specifically formulated for children; a general supplement, Relìv SoySense; and FibRestore, another weight-loss aid. In May 2000, the firm entered the anti-aging market with a new line, Relìv ReversAge, skincare products that stimulated the production of enzymes to delay the effects of aging on the skin.
- American Life Investors is founded.
- Robert L. Montgomery meets Theodore P. Kalgoris and begins using his nutritional supplement.
- Relìv Inc. is incorporated.
- Relìv enters Australia and, the following year, New Zealand.
- The company changes its name to Relìv International, Inc.
- Relìv opens a branch in Mexico.
- Relìv UK is founded.
- The company is warned by the FDA of misleading information on its labeling of Relìv Arthaffect.
- The company launches “Relìv 2000,” a major product development program.
Relìv’s distributor network grew by a remarkable 23 percent in 2002. To integrate the newcomers smoothly, the company developed its first training CD that included video classes, information about compensation and products, and pertinent links to the Relìv Web site. Supplementing these efforts, the company inaugurated a series of regional meetings intended to reach potential distributors and to disseminate information to existing sellers. Relìv began staging a large international conference in the summer for its distributors from all over the world. The influx of new sales people showed itself in the record numbers on Relìv’s bottom line. Its net profit in 2002 had increased eightfold from 2001, reaching $2.5 million. Revenues were up almost 20 percent to $53 million. Most of Relìv’s growth happened in the United States, where sales increased by 30 percent; however, smaller markets, such as Canada, Mexico, and the Philippines, had their share of growth too. Its market successes translated into a strong performance for Relìv’s stock, whose value increased some 4,000 percent in 2002.
Relìv, Inc.; Relìv World Corporation; Relìv NOW de Mexico S.A. de R.L. de C.V.; Relìv Australia Pty, Ltd.; Relìv New Zealand Ltd.; Relìv Canada Company; Relìv Europe, Inc.; Relìv Philippines, Inc.
“Arthaffect Reaches US Market for Arthritis Support, But Efficacy Data Is Limited,” Nutraceuticals International, January 1997.
“Disappointing Earnings in 1999 for Many US Nutrition Companies,” Nutraceuticals International, April 1, 2000.
Dwyer, Joe, III, “Half of Relìv Profits Soaked up by Summer’s Flood,” St. Louis Business Journal, April 25, 1994, p. 44A.
Holyoke, Larry, “Relìv Mixes Up $15 Million in New Business,” St. Louis Business Journal, August 30, 1999.
Manor, Robert, “Health Firms Muscle Their Way to Top of Sales Chart,” St. Louis Post-Dispatch, May 9, 1994, p. 25.
“Quake, Cold, Flood Slash Relìv’s Profits,” St. Louis Post-Dispatch, May 13, 1994, p. F3.
Salter, Jim, “Multilevel Marketing Goes Mainstream,” Marketing News TM, September 1, 1997, p. 1.
“Strong Earnings Growth at Relìv,” Nutraceuticals International, June 2002.
“Strong Foreign Sales Bolster Relìv,” Nutraceuticals International, September 2002.
“Strong U.S. Sales Continue for Relìv International,” PR Newswire, December 23, 1996.
Stroud, Jerri, “Relìv May Not Reopen Flood-Damaged Plant,” St. Louis Post-Dispatch, June 2, 1994, p. C1.
——, “The High Roe; Relìv Ousts Ralston on Best Return,” St. Louis Post-Dispatch, May 9, 1994, p. 22.
“substance Fights Joint Problems,” Food Ingredient News, November 1, 1996.
Wilkerson, John, “Relìv Turns around Losses, Drops Contract Operations,” St. Louis Business Journal, June 5, 2000, p. 9.
—Gerald E. Brennan
"Relìv International, Inc.." International Directory of Company Histories. . Encyclopedia.com. (November 15, 2018). https://www.encyclopedia.com/books/politics-and-business-magazines/reliv-international-inc
"Relìv International, Inc.." International Directory of Company Histories. . Retrieved November 15, 2018 from Encyclopedia.com: https://www.encyclopedia.com/books/politics-and-business-magazines/reliv-international-inc
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