Michael Johnson – CEO Herbalife Management Discusses Q3 2012 Results:
The fundamental change in our business began 10 years ago with the development of Nutrition Clubs in Mexico. This increased our addressable audience by making our products more affordable to more consumers.
Over the last several years, a substantial portion of our growth has come from our distributors around the world moving to daily consumption business methods, built on the creation of lifelong customers consuming Herbalife product everyday.
We believe that these business methods now generate approximately 40% of our volume. With approximately 43,000 nonresidential clubs at the end of the third quarter, Herbalife products are now more accessible to more customers than ever before.
The success that our Distributors are having throughout our 85 markets continues to be driven by the high-touch, frequent-contact business methods that are the hallmark of daily consumption business methods.
Mexico, our oldest daily consumption market, has continued to experience double-digit volume point growth. The sustainable growth in Mexico highlights to us similar results that are possible in many other markets that are continuing their adoption and expansion of direct selling methods.
In 2010, as part of our 10-year planning process, we set an aspirational goal of 10 billion volume points by 2020, basically tripling our volume from our 2009 base. When we discussed the goal, we were cautious to always use the term aspirational because it was just at a stretch.
Every year, we update our 5-year plan and layering in growth we've experienced since late 2009, our aspirational goal of 10 billion volume points by 2020 is now a number we believe we can achieve and a goal we are implementing plans and the infrastructure to support.
The summer was filled with regional extravaganzas, offering the opportunity to spend time with thousands of distributors. This quarter, we saw 22,000 distributors at our 3 EMEA Extravaganzas in Kiev, Ukraine; Barcelona and Istanbul, Turkey. From there, we headed to Macau for events with 12,000 distributors in 12 Asian countries.
Not to be outdone, Mexico held 2 simultaneous extravaganzas, a first for Herbalife. We had 20,000 in Mexico City and 13,000 for Guadalajara.
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