Looking for a great business opportunity? Step right up, ladies and gentlemen, and join the XanGo team. Pronounced zang-go, this powerful elixir comes from the mangosteen, a fruit grown in the jungles of Thailand. The juice is anti-inflammatory! Antidepressant! Antitumor! Now you too can be a distributor of this incredible formula for a one-time fee of just $35 plus $100 for the first four bottles. Not one of those claims has been conclusively proved, but similarly worded pitches--made in e-mails or other direct solicitations to independent marketers have helped XanGo pass $200 million in sales in 2005. The four-year-old company is just the latest big player in the country's $23.5 billion dietary-supplement trade--much of it based here in an arid stretch of Utah called the Wasatch Front.
More than 100 supplement companies dot the terrain alongside I-15 snaking through Salt Lake City, Utah, generating $4 billion in annual sales--four times the revenue of the state's more famous ski trade. The herbal health business is so prevalent in this area that it has been nicknamed Cellulose Valley, after the primary component of green plants.
Why Utah? For one thing, the dry air is ideal for storing precious powders. For another, politicians like Senator Orrin Hatch have helped create a fertile regulatory climate. Then there's the long-standing environment of support for the products. Many Utah supplement companies are owned or operated by members of the Church of Jesus Christ of Latter-day Saints (LDS). In the 1800s, LDS founder Joseph Smith blamed traditional medicine for his brother's death and his own traumatic leg surgery. Early Mormon writings praised the "plants and roots, which God had prepared to remove the cause of diseases." In the 1940s, Mormon herbalist John Christopher preached about natural healing. A few decades later, three Utah companies--Nature's Herbs, Nature's Way and Nature's Sunshine--began selling his formulas.
But it's Utah's entrepreneurial attitude that perhaps accounts most of all for the boom. A large portion of supplements is sold through multilevel marketing, commonly known as MLM--or person-to-person sales. The trade publication Nutrition Business Journal estimates that $7.7 billion in supplements was sold in U.S. vitamin stores last year, $6 billion by food markets and big-box outlets and $4.2 billion via MLM distribution. "It's a substantial figure," says journal editor Grant Ferrier. "Roughly 20% of all sales come from MLM, and Utah is the stronghold."
One reason for Utah's MLM success seems again to stem from the church. Nature's Sunshine became the first to go that route back in 1975, and Mormons--trained in door-to-door evangelism through compulsory missions--proved natural salespeople. "The church provides a network--a real plus factor for MLM companies," says Rory Mahony, general manager of Nature's Way, which sells through health-food and vitamin shops. Under direct-sales plans, independent reps earn commissions for items they sell but also receive payouts by recruiting others to become distributors. The bigger one's network, the better.