MonaVie – The purple juice business goes down the drain
The MonaVie Purple Juice Collapse
MonaVie was a multi-level marketing (MLM) company that manufactured and sold fruit juice beverages and supplements. For a time, it was a top player in a growing market—some call a fad, others call “cult-like”—that touted the miraculous health benefits of certain berries and “super” juices.
MonaVie didn’t sell its juice products through retailers. Like all traditional MLMs, it relied on a network of independent distributors who marketed and sold the products and recruited others to follow suit. Multi-level marketing relies on multiple levels of distribution to sustain the business model.
For a few years, it looked like there was no stopping MonaVie’s meteoric rise. In fact, according to an article in Newsweek, MonaVie claimed at one time to be one of the fastest-growing private companies in the world. In 2009, its founder and chairman, Dallin Larsen, was named an Ernst & Young Entrepreneur of the Year.
From the Salt Lake Tribune: “From its start in 2005, MonaVie grew to $854 million in revenue in 2008 and had recruited 1 million distributors, Larsen said at the time.”
How did MonaVie rise and fall so quickly?
Well, first of all, it was the subject of a number of controversies, not the least of which were health claims about its products that were never scientifically verified or OK’s by any regulatory body. What’s more, according to Forbes, MonaVie’s business model resembled a pyramid scheme. Then came all the negative MonaVie reviews that called the business a scam.
In what the Salt Lake Tribune calls “a spectacular failure,” MonaVie’s rise and fall culminated with a default on a $182 million loan and foreclosure in 2015. The company took it the loan in November 2010, the Tribune said, “but, with the company apparently struggling financially, MonaVie in July 2014 announced the retirement of founders Dallin Larsen, Randy Larsen, and Henry Marsh.”
In 2008, during MonaVie’s heyday, Newsweek wrote an article titled: “MonaVie Acai Juice: Cure-All or Marketing Scam?” MonaVie’s pitch was two-fold: better health from drinking its juice (which sold for a whopping $40 a bottle), and income from income from being a distributor.
However, Newsweek reported at the time, “not everyone is drinking the Kool-Aid.”
“Critics call MonaVie a ‘legalized scam’ that benefits only a few kingpin executives,” the Newsweek article states. “The product itself, they say, is an overhyped fruit drink that eludes drug regulation by the Food and Drug Administration by letting its distributors (as opposed to MonaVie itself) make the health promises. … A NEWSWEEK reporter who took the MonaVie daily dose—two ounces, twice a day—for two weeks, didn’t experience the drink’s miraculous benefits, and got headaches.”
According to Wikipedia, one “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.” MonaVie product ingredients were not
What’s more, of all MonaVie distributors at the time, “fewer than 1 percent qualified for commissions and of those, only 10 percent made more than $100 a week,” Newsweek reports. “And the dropout rate, while not disclosed by MonaVie, is around 70 percent, according to a top recruiter.”
The company really came under fire in 2014. In May of that year, “a class-action lawsuit was filed against MonaVie for allegedly deceptively advertising its juices, such as MonaVie Active, MonaVie Essential, MonaVie Pulse,” Truth in Advertising reported. “Among other things, the complaint alleges that the company promises its juices will provide a variety of health benefits—including increased energy and improved joint health—without scientific proof to support such claims. In addition, plaintiffs claim that the company fails to warn consumers that the juices contain ingredients—such as arsenic and lead—that could cause health problems.” The MonaVie pyramid began to crumble.
The unsustainable hype and horrible online MonaVie reviews surrounding the astounding properties of the acai berry and other “super fruits” has led to the demise of several MLMs like MonaVie. Unfortunately, their failures—and the perception that their business models are nothing more than pyramid schemes—tarnish the broader industry of direct sales. Many direct-selling organizations are not MLMs and have solid reputations, sound business models, and viable products lines.
Not all of MonaVie’s problems can be stated in this article. Wikipedia goes into more detail about the issues that eventually brought down this MLM, including poor distributor earnings, poor online reviews, misleading health claims and advertising, pyramid scheme allegations, and litigation.