Nutritious Growth: New Technology Fueling Success at Melaleuca

Shares

East Idaho Business Magazine | Lacey Larson |

There are plenty of successful companies that were founded in Idaho, but only a very small handful can also call themselves successful across the globe.

Founded in 1985, Melaleuca manufactures over 350 products ranging from vitamin supplements for children and adults to hygienic products to household cleaners to health foods like energy bars and drink mixes, all of which aim for natural wellness and environmental responsibility.

Melaleuca has evolved to become a wellness company in the United States, and in countries as far away as Japan, China, Australia and New Zealand, Germany, the Netherlands and the United Kingdom. It’s also one of the largest employers in Eastern Idaho, ranking up with Idaho National Laboratory, Idaho Falls School District 91 and Eastern Idaho Regional Medical Center.

vitalityIn September of 2012, a patent was granted to Melaleuca for Oligo, a new technology developed by scientists here in Eastern Idaho. Originally introduced in August 2008 at a national convention in Minneapolis, Minnesota, Oligo increases the benefits and effectiveness that Melaleuca’s vitamin and mineral supplements can have on the body.

“Oligo is a major breakthrough in nutrition science that gives Melaleuca a huge competitive advantage in the field of nutrition,” said Frank VanderSloot, CEO of Melaleuca.

The science that makes Oligo work is how the minerals are bound to organic compounds. Instead of using traditional mineral forms like is found in other supplements that could potentially cause digestion of the mineral to generate free radicals, Oligo binds the minerals with amino acids and oligofructose. This mimics the way that fruits and vegetables bind minerals. This allows the minerals in many of Melaleuca’s supplements to be better absorbed into your body and do the work that they’re meant to in order to keep you healthy. In comparison, a Melaleuca supplement bound with Oligo is ten times more absorbable than a typical multivitamin you’d find on a store shelf.

The new technology has created a huge buzz among Melaleuca customers; since its introduction in 2008, supplements with Oligo have become the fastest selling and most popular product, with over 400 million dollars sold. No other wellness company in the world makes a product like Oligo, and with the newly-acquired patent, Melaleuca is likely to remain the only company who makes and sells products with Oligo for many years.

“The patent protects our technology from our competitors and allows us to build infrastructure to manufacture, house, and distribute this product from here in Idaho,” said VanderSloot. “It means hundreds of new jobs will be coming to Idaho.”

Oligo’s breakthrough science has supercharged Melaleuca’s ability to compete with other companies in the health and wellness industry. As demands for Oligo continues to grow, Melaleuca must grow to meet that demand. In December of 2012, Melaleuca made another big unveiling; this time of a new home office, which collects the majority of Melaleuca’s operations to work underneath one roof.

The new facility is planned to be 371,000 square feet and will cover 43 acres of the 195-acre campus, located just off of Exit 113 on I-15. The large size of the new facility enables Melaleuca to house all of its operations from their various locations in Idaho Falls to one central place. Everything from marketing to accounting to administration to research and development will be moved into the facility, which will also contain a video studio for promotional videos, a 17,000 square foot events center, and a 500-person call center. Employees can also take full advantage of services such as a gym, restaurant, and concierge service center. In the future, manufacturing will also join the operations that currently take place on the campus. Come spring of 2014, Melaleuca’s 3,300-plus employees will converge into one location for the first time in years.

Melaleuca has actually called several different buildings home; right now, operations run from buildings in south Idaho Falls up to Rexburg. Typically, the company will purchase and renovate an older building to house its operations, including buildings that were formerly Penny’s or Ziggy’s Hardware. This method is not only a money-saver, but it’s breathed new life into buildings that were unoccupied or even abandoned. Building a new facility from the ground up is a step in a new direction for Melaleuca, but it does not alter the company’s philosophy on frugality in any way. Melaleuca will pay cash for the new facility.

“My father taught me to always stay out of debt. We don’t buy or build anything until we can afford to pay cash for it,” said VanderSloot. “As a company, we’ve been frugal in our business decisions. We’ve been fortunate to be able to operate without any debt. We own all of our facilities and manufacturing plants along with our equipment, computers, and furniture. We feel that that protects us from any financial problems in the future.”

Another note on this project is the role of Bonneville County. As a benefit to other businesses looking to develop near Exit 113, the sewer system from Shelley has been expanded closer to I-15, thanks to Melaleuca’s donation of over 2.3 million dollars to the Eastern Idaho Regional Waste Water Authority Public Improvement Project. More businesses are now taking an interest in the location; for example, the new Love’s Travel Stop located across the freeway. “We worked together with Melaleuca to come up with a solution to open up an area of the country [for development], and we’ve started to see tremendous interest and tremendous growth,” said Roger Christensen, Bonneville County Commissioner. “This is a classic example of what a public/private partnership should look like.”

The expansion not only promises a new space for Melaleuca’s current work force, but lots of room for a new group of employees. VanderSloot said that the expansion will give light to hundreds of new jobs for Melaleuca and for other companies that choose to grow near I-15.

“We’ve had many opportunities and offers from other cities to relocate in other states. But the work ethic here in Idaho Falls and the business-friendly atmosphere in south-east Idaho and Bonneville County make a huge difference for bringing healthy businesses here and keeping healthy businesses here,” said VanderSloot.

Along with developing health and wellness products that are in high demand, Melaleuca’s innovative business model has spurred growth in 26 of the last 27 years. When the company was founded in 1985, Melaleuca launched an innovative business model called “consumer-direct marketing.” Melaleuca offers a business opportunity to those who refer customers to Melaleuca. Those who are not familiar with Melaleuca could confuse Melaleuca’s business model with multilevel marketing, but in many ways, consumer direct marketing is the opposite of multilevel marketing. In multi-level marketing distributors are required to purchase product directly from the company and then resell it. Once criticism of multilevel marketing is that it exposes potential business builders to financial risks in that if they are not able to resell their inventory they can occur loss of their investment.

In Melaleuca’s model, marketing executives simply refer customers to Melaleuca. They do not purchase and resell product. Therefore, there are no multiple levels of distribution and no multilevel marketing activities. No one invests in inventory and there is no way for people to lose money, making consumer direct marketing a much safer investment and a much more popular model than multilevel marketing.

Melaleuca’s consumer-direct marketing model has become more successful than the multi-level marketing model as it now has more revenues in the United States than any of the MLM companies, including Amway, Nu Skin, Shaklee, and Herbalife.

Melaleuca is keeping good pace in a race to the top of prosperous wellness companies, but it’s also one of the companies that keeps the economy of eastern Idaho going strong. They’re living proof that companies that were grown in Idaho can thrive both locally and worldwide.