MonaVie

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MonaVie
Type Private
Industry Nutrition Food and Beverage
Founded 2005
Headquarters Salt Lake City, Utah, United States
Area served International
Key people Dallin Larsen - founder and chairman,
Henry Marsh - founder and vice-chairman[1]
Maurício Bellora - CEO[2]
Products Fruit juice beverages and supplements
Employees 450 (from 2009)[3]
Website www.monavie.com

MonaVie manufactures and distributes products made from blended fruit and vegetable juice concentrates, powders and purées through a multi-level marketing (MLM) business model. MonaVie has been the subject of several controversies, notably: health claims for its products have not been scientifically confirmed or approved by regulatory authorities,[4][5][6][7][8] its chairman was previously involved in false health claims concerning another beverage company,[9][10][11][12] its business plan resembles a pyramid scheme,[11][13] and few of its distributors make a profit.[11][13][14][15]

Company overview

Dallin Larsen, who held senior executive positions with the MLM companies Dynamic Essentials and USANA, founded Monarch Health Sciences in 2003 as a distributor of diet and weight loss supplements. Monarch Health Sciences launched MonaVie juice in January 2005, and the same year founded MonaVie LLC/MonaVie Inc., a privately held MLM company based in South Jordan, Utah. The newly formed company took over the bottling, distribution, and marketing of MonaVie juice products.[9][16] MonaVie also owns and operates a charity organization, the MORE Project.[17]

MonaVie products are sold by non-employee distributors who are eligible to receive commissions based on product sales. Individual distributors are encouraged to build their own sales networks by recruiting new distributors to sell the products (referred to in multilevel marketing parlance as a "downline"); the recruiter can, in theory, receive additional commissions based on sales by their downlines.[11][18]

Products

MonaVie produces a variety of blended bottled fruit juices, carbonated energy drinks, dietary supplements and dieting products.[19] MonaVie Kosher, one of the company's juice products, is certified as kosher according to Jewish dietary laws by the Orthodox Union of North America and the Chief Rabbinate of Israel.[20]

Product research and physiological context

An analysis conducted by contract laboratory ChromaDex indicated that MonaVie contained low levels of antioxidant vitamin C and of phytochemicals such as anthocyanins and phenolics associated with antioxidant activity in test tubes.[6]

Despite MonaVie promotion of the juice having key polyphenol antioxidants from açai and other fruits in the blend,[21] there remains no physiological evidence that any fruit polyphenols have such actions in humans or that oxygen radical absorbance capacity (ORAC) has any relevance in the human body.[22] Research shows that although polyphenols are good antioxidants in vitro, antioxidant effects in vivo are probably negligible or absent.[23][24] As interpreted by the U.S. Food and Drug Administration (FDA), Linus Pauling Institute and European Food Safety Authority, dietary polyphenols have little or no direct antioxidant food value after digestion.[23][25][26][27] Unlike controlled test tube conditions, most polyphenols are not absorbed following digestion, and what is absorbed is metabolized and excreted.[24][24]

Interactions and adverse effects

A clinical case report showed an association between MonaVie ingestion throughout pregnancy and prenatal closure of the ductus arteriosus resulting in cardiac hypertrophy and dysfunction (pulmonary hypertension) at birth.[28] MonaVie Active may cause fluctuations in blood clotting (prothrombin time) in patients treated with warfarin or other coumadin blood thinners; the case report recommends avoiding this combination.[29]

Distributor earnings

Around 14% of distributors make a profit, according to MonaVie Executive VP Henry Marsh quoted from a 2009 Deseret News article.[15]

A Newsweek article, reporting on MonaVie's 2007 Income disclosure statement, stated "fewer than 1% qualified for commissions and of those, only 10% made more than $100 a week." More than 90% were counted as wholesale customers, whose earnings were mostly discounts on sales to themselves. According to a top recruiter, the dropout rate in 2008 was around 70%.[11] An article published in the Hartford Courant, reported that about 45% of the company's distributors earned an annualized average check of less than $1,600, and 37% took home about $2,000; roughly 2% earned an annualized average check of more than $29,000, and just 7 out of 80,000 distributors (<0.01%) took home more than $3 million, according to the MonaVie 208 Income Disclosure statement[14][30] According to a 2011 article in the Salt Lake City Tribune, 85% of Monavie's distributors earned commission checks in 2009 averaging $35 a week or less, while the company's top seven distributors earned an average of $3.4 million a year.[31]

Criticism

Nutritional value

Physician Andrew Weil and nutritionist Jonny Bowden claim that the nutritional and health benefits of MonaVie juice are unproven and that the product is overpriced relative to more cost-effective conventional polyphenol-rich foods. Weil and Bowden also criticized the product for being sold through multi-level marketing.[4][5] A Men’s Journal nutritional analysis showed that MonaVie Active juice "tested extremely low in anthocyanins and phenolics" and that "even apple juice (which also tested poorly) has more phenolics". The report also noted that "MonaVie’s vitamin C level was 5 times lower than that of Welch’s Grape Juice", a product priced at a fraction of the cost of MonaVie for the same serving volume.[6] Ralph Carson, the original developer of MonaVie and the company’s chief science officer cautioned that the juice was "expensive flavored water" and that “any claims made are purely hypothetical, unsubstantiated and, quite frankly, bogus." Carson added that he did not know how much açai was in the product.[9]

Misleading advertising and health claims

Bowden,[5] Newsweek correspondent Tony Dokoupil,[11] Palm Beach Post reporter Carolyn Susman,[7] and Salt Lake City Tribune correspondent Tom Harvey[9] commented on the use of misleading promotional testimonials by MonaVie distributors in which the product was said to prevent and treat a variety of medical conditions. Harvey also stated that MonaVie's rise, based on odds "stacked against low-level distributors who poured in the billions of dollars that fueled the company's spectacular growth," raised questions about the foundations of other companies in Utah's nutritional supplement industry. In 2007, the Food and Drug Administration issued an FDA Warning Letter to MonaVie distributor Kevin Vokes, for violations of the Federal Food, Drug and Cosmetic Act relating to online promotional material claiming that MonaVie was an effective treatment for inflammation, high cholesterol, and muscle and joint pain.[8] The FDA considered the issue resolved after therapeutic claims on the offending website were scaled down.[7][11] In a 2008 Forbes magazine article, reporters Emily Lambert and Klaus Kneale described MonaVie as a pyramid scheme, referencing a video testimonial by distributor Louis "Lou" B. Niles that implied the product could cure cancer.[13]

Company executives have repeatedly acknowledged ongoing problems with MonaVie distributors making unlawful claims that the juice can treat and prevent diseases. In a 2008 Newsweek article, CEO Dallin Larsen stated that "his sales team can get him in hot water with the Feds", and that it was "next to impossible" for the company to investigate distributors suspected of making false claims.[11] Later in 2008, the company issued a statement acknowledging that many of its distributors, "perhaps unwittingly," violated its advertising policies.[32] In a 2009 Bloomberg News article, MonaVie executive vice-president and cofounder Randy Larsen stated that "the company is struggling with independent distributors who promote the juice as a miracle drug."[33]

Dallin Larsen and Dynamic Essentials/Royal Tongan Limu

MonaVie CEO and founder Dallin Larsen was a senior executive with an MLM company that sold a similar juice product prior to being shut down by the FDA for illegal business practices.[9][11] In 2001, Larsen became vice president of sales for Dynamic Essentials, a Florida-based company selling a fruit juice called Royal Tongan Limu,[10][11] where Larsen claimed to have increased revenue 300%. In 2002, during Larsen’s tenure, the FDA warned Dynamic Essentials that claims on the company’s website that the juice could "treat various diseases such as cancer, arthritis, and attention deficit disorder" were illegal.[12] Dynamic Essentials ceased operating soon after. In 2003, the FDA saw the voluntary destruction of 90,000 bottles of Royal Tongan Limu.[9]

Pyramid scheme allegations

In 2008, Larsen formed a business partnership with former Amway distributor (Quixtar in the US) Orrin Woodward, founder of an Amway distributor sales network company known as TEAM. Woodward subsequently became a distributor and speaker for MonaVie, mixing his TEAM organization structure and distributor sales tools (e.g. sales brochures, audio/video recordings, etc.) concept with MonaVie's compensation plan. In 2008, a Forbes magazine article described MonaVie as a pyramid scheme, and TEAM as "a pyramid atop a pyramid," in which MonaVie vendors were sold motivational lectures, using a multi-level model, which were purported to help them increase their sales of MonaVie's products. The article proposes that this system takes advantage of ambiguities in the Federal Trade Commission's regulation of pyramid schemes, and that only 1% of members make any money from their involvement with the company.[13]

Litigation

The company, its executives, and various senior distributors have been part of significant lawsuits since the company's founding. MonaVie was the defendant in a false-advertising/trademark infringement suit against Imagenetix, Inc (2008),[34] a multi-issue legal battle with Quixtar/Amway (2008),[10][35] a false advertising suit by Oprah Winfrey and Mehmet Oz (2009),[36][37] and a copyright infringement suit against Zrii (2010).[38] Also, MonaVie filed several suits against former sales representatives for breach of contract.[39]

Trademark infringement and false advertising cases

In 2008, Imagenetix, Inc. sued the MonaVie company, its board of directors, and several of its senior distributors for $2.75 billion over trademark infringement alleging that Monavie Active juice contained the ingredient Celadrin.[34][40][41] The case was settled out of court and the lawsuit was dropped.[42] Soon after, Imagenetix announced that it had entered into a new business relationship with MonaVie, the terms of which were not disclosed.[43]

In 2010, MonaVie sued Zrii, a competing multilevel marketing drink company, claiming that Zrii copied its distributor compensation plan. MonaVie sought an injunction to prevent Zrii from continuing to use the plan, force the destruction of all the existing copies of the plan, and claim damages.[38]

In 2009, television celebrities Oprah Winfrey and Dr. Mehmet Oz filed lawsuits against 40 companies who sold açaí or related products. The parties alleged that the companies had fabricated quotes "falsely purporting to speak in Dr. Oz's and/or Ms. Winfrey's voice about specific brands and products that neither of them has endorsed."[36] MonaVie was one of the defendants.[37] Winfrey’s website stated that “consumers should be aware that neither Oprah Winfrey nor Dr. Oz are associated with nor do they endorse any açaí berry product, company or online solicitation of such products, including MonaVie juice products."

In 2010, a class action lawsuit was filed against MonaVie in the Circuit Court of Miller County, Arkansas, alleging that MonaVie and its distributors, through the use of false and misleading advertising had engaged in civil conspiracy and other criminal activities.[44][45][46]

Dispute with Amway

In 2008 Quixtar, a sister company of Amway, filed a multi-count federal court complaint against the MonaVie company and 16 of its top-level distributors who had previously worked with Amway. The complaint alleged that MonaVie competed unfairly by making false claims about its products, and that the former distributors had violated their contracts with Amway.[10][35][40] Shortly after, MonaVie filed a lawsuit with the Utah district court asking for a ruling as to whether Quixtar had been over-reaching the boundaries of its non-compete agreements and to address whether or not such agreements are enforceable for independent distributors.[35][47] MonaVie filed to dismiss the Amway/Quixtar lawsuit.[48] Later in 2008, MonaVie et al. filed a lawsuit in the Colorado District Court against Quixtar[49] Amway and MonaVie settled in 2010 before trial.[35]

Lawsuits with former distributors

In 2012 the company sought legal action against several distributors for attempting to recruit MonaVie distributors to competing multilevel marketing companies in breach of contract with MonaVie.[39][50]

References

  1. ^ "MonaVie Executive Team". Retrieved 2008-12-19. [dead link]
  2. ^ "Exclusive Interview With New MonaVie CEO Mauricio Bellora". Obtainer Online. 21 May 2013. Retrieved 21 March 2014. 
  3. ^ Inc. Magazine profile
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  5. ^ a b c Bowden J (2008-06-11). "New Rules: No More Claiming Mona Vie Cures Cancer!". The Huffington Post. Retrieved 2012-04-21. 
  6. ^ a b c Jamie Beckman (December 4, 2008). "Superjuices on Trial". Men’s Journal. Retrieved 2008-12-12. 
  7. ^ a b c Carolyn Susman (July 16, 2008). "On Health: FDA checks product claims on the Web". Palm Beach Post. Archived from the original on 2011-07-15. 
  8. ^ a b Jennifer A. Thomas (July 6, 2007). "FDA warning letter to MonaVie distributor Kevin A. Vokes". FDA Center for Food Safety and Applied Nutrition Division of Enforcement. Retrieved 2008-08-24. 
  9. ^ a b c d e f Harvey, Tom (December 10, 2011). "Utah juice companies offer few prospects". Salt Lake Tribune. Retrieved January 10, 2012. 
  10. ^ a b c d "Quixtar Inc. Plaintiff, vs. MonaVie, Inc., MonaVie LLC, John Brigham and Lita Hart, Jason and Carrie Lyons, Lou Niles, Farid Zarif, John Does 1-10,". United States District Court for the District of Utah, Central Division. March 18, 2008. Retrieved 2008-08-24. 
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  12. ^ a b "NBTY, Inc. to Pay $2 Million Penalty For Alleged Violations of FTC Order". U.S. Federal Trade Commission. October 12, 2005. Retrieved 2009-10-21. 
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  27. ^ EFSA Panel on Dietetic Products, Nutrition and Allergies (2010). "Scientific Opinion on the substantiation of health claims related to various food(s)/food constituent(s) and protection of cells from premature aging, antioxidant activity, antioxidant content and antioxidant properties, and protection of DNA, proteins and lipids from oxidative damage pursuant to Article 13(1) of Regulation (EC) No 1924/20061" (pdf). EFSA Journal 8 (2): 1489 (1–63). 
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  30. ^ Link PDF Retrieved July 13, 2009.
  31. ^ "State of supplements: Elusive wealth, strong lure". 
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  33. ^ Adriana Brasileiro (May 14, 2009). "‘Superfood’ Promoted on Oprah’s Site Robs Amazon Poor of Staple". Bloomberg News. Retrieved 2009-06-06. 
  34. ^ a b Mitchell, Lesley (17 May 2008). "Suit against Utah firm claims false advertising". Salt Lake Tribune. Retrieved 24 October 2013. 
  35. ^ a b c d Harvey, Tom (2 November 2010). "MonaVie, Amway settle nasty legal disputes". Salt Lake Tribune. Retrieved 24 October 2013. 
  36. ^ a b Mark Bieganskion (August 20, 2009). "Oprah Winfrey and Dr. Oz suing over 'false' açaí berry endorsement claims". Chicago Sun-Times. Retrieved 2009-08-20. 
  37. ^ a b Tom Harvey (August 22, 2009). "Oprah sues Utah companies over false endorsements". Salt Lake Tribune. Retrieved 2010-11-17. 
  38. ^ a b Harvey, Tom (18 June 2010). "MonaVie alleges Zrii copied its pay plan". The Salt Lake Tribune. Retrieved 25 October 2013. 
  39. ^ a b Harvey, Tom (1 August 2012). "Judge won’t stop ex-MonaVie distributor’s postings". Salt Lake Tribune. Retrieved 24 October 2013. 
  40. ^ a b Laura Hancock, "MonaVie Sued for 2.75B", Deseret News, May 16, 2008
  41. ^ "Imagenetix, Inc. vs. Monavie LLC et al.". United States District Court for the Southern District of California. May 5, 2008. Retrieved 2008-09-20. 
  42. ^ "Trademark Suit Against MonaVie Dropped", May 20, 2008
  43. ^ "Imagenetix Enters into Business Relationship with MonaVie"
  44. ^ Nuyten, Ted (30 October 2011). "Class Action Lawsuit Filed Against MonaVie in Arkansas – USA". Business for Home. Retrieved 25 October 2013. 
  45. ^ "Class Action Complaint: Oliver v Monavie -- In the Circuit Court of Miller County, Arkansas (Case number CV-2010-644-1)". Monavie LLC. Retrieved November 9, 2011. 
  46. ^ "Protective Order to Preserve Documents During Pending Litigation: Oliver et al. v Monavie -- In the Circuit Court of Miller County, Arkansas (Case number CV-2010-644-1)". Monavie LLC. Retrieved November 9, 2011. 
  47. ^ "MonaVie LLC vs. Quixtar, Inc./Amway Corp". United States District Court for the District of Utah, Central Division. March 17, 2008. Retrieved 2008-09-16. 
  48. ^ "MonaVie Files to Dismiss Quixtar Lawsuit". eMediaWire. April 16, 2008. Retrieved 2008-12-12. [dead link]
  49. ^ "Mona Vie, Inc. et al. v. Quixtar Inc. [Case# 1:2008cv02464". United States District Court for the District of Colorado. November 12, 2008. Retrieved 2008-12-12. 
  50. ^ Nuyten, Ted (7 August 2012). "MonaVie Suffers Setback In Lawsuit Against Ex-distributor Joe Licciardi". Business for Home. Retrieved 25 October 2013. 

External links