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MonaVie

Company type	Private
Industry	Nutrition Food and Beverage
Founded	2005
Headquarters	Salt Lake City, Utah, United States
Area served	United States, Canada, Australia, Brazil, New Zealand, Singapore, Japan, Israel, United Kingdom, Austria, Hong Kong, Hungary, India, Korea, Malaysia, Mexico, Poland, Portugal, Taiwan, Thailand
Key people	Dallin Larsen, Henry Marsh, Dell Brown, Randy Larsen, Jeff Cohen, Rob Ferguson, Kale Carlie, Jeff Graham
Products	Açai berry juice: MonaVie Original Blend, MonaVie Original Gel Packs, MonaVie Kosher Blend, MonaVie Active Blend, MonaVie Active Gel Packs, MonaVie Pulse Blend, MonaVie Pulse Gel Packs, MonaVie (M)mūn Blend, E
Number of employees	450
Website	MonaVie.com

MonaVie is a beverage company distributing products made from blended fruit juice concentrates with freeze-dried açaí powder and purée through a multi-level marketing (MLM) business model. MonaVie has been the subject of controversy, as health benefit claims for its products have not been scientifically confirmed or approved by regulatory authorities, its CEO was previously involved in false health claims of another beverage, the business plan is similar to a pyramid scheme, and very few distributors actually make a profit.

Company overview

MonaVie juice was launched in January 2005 by MLM company Monarch Health Sciences, founded in 2003 as a distributor of diet and weight loss supplements. Also in 2005, the executives of Monarch founded MonaVie LLC/MonaVie Inc., a privately-held MLM company based in Salt Lake City, Utah. The newly formed company took over the bottling, distribution, and marketing of MonaVie juice products. Both Monarch Health Sciences and MonaVie, Inc. were founded by Dallin Larsen, who graduated from Brigham Young University with a B.S. degree in finance. Larsen previously held senior executive positions with the MLM companies Dynamic Essentials and Usana. According to company sources, MonaVie juice was developed by Ralph E. Carson, now the company's Chief Science Officer. MonaVie also owns and operates a charity organization, the MORE Project.

Other company officers:

• Dallin Larsen, Chairman and CEO
• Henry Marsh, Vice Chairman
• Dell Brown, President, Chief Operations Officer
• Devin D. Thorpe, Chief Financial Officer (2008-2011)
• Jeff Graham, Senior Vice President

In September 2009, MonaVie, Inc. was ranked eighteenth on Inc. magazine's 500/5000 ranking of the fastest-growing private companies (based on claimed revenue from 2005 to 2008) in the United States (#1 in Food & Beverage category; #3 in revenue) However, as a privately-held company, MonaVie isn't required to publish financial data, making such claims difficult to judge. In June 2009, MonaVie CEO Dallin Larsen was one of eight Utah business owners to receive the Entrepreneur of the Year in the Utah Region award from accounting firm Ernst & Young. In November 2009, Mr. Larsen was announced as the National Entrepreneur of the Year for Emerging Markets, by Ernst & Young.

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.

Product overview

The MonaVie product line includes bottled juices, MonaVie Original, Active, Kosher, Pulse, and (M)mūn in addition to gel pack versions of these products an energy drink, and most recently snack bars E. The original MonaVie juice is a blend of 19 fruit juices in unpublicized proportions, including white grape, apple, acerola, aronia, purple grape, cranberry, passion fruit, prune, kiwifruit, blueberry, wolfberry, camu camu, pomegranate, lychee fruit, pear, banana, cupuaçu, bilberry and açai.

A patent application for Opti-Acaí, a primary product ingredient for MonaVie juices, was submitted to the World Intellectual Property Organization in 2004 by developers Alexander G. Schauss and Kenneth A. Murdock. and approved by the U.S. Patent Office on July 21, 2009.

Product research and physiological context

An analysis conducted by contract laboratory Chromadex indicated that MonaVie contained low levels of the antioxidant vitamin, vitamin C, and phytochemicals such as anthocyanins and phenolics associated with antioxidant activity in vitro.

Despite promotion by MonaVie of the juice having key polyphenol antioxidants from açai and other fruits in the blend, there remains no physiological evidence that any fruit polyphenols have such actions in vivo or that oxygen radical absorbance capacity (ORAC) has any relevance in the human body. On the contrary, research indicates that although polyphenols are good antioxidants in vitro, antioxidant effects in vivo are probably negligible or absent. 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 following digestion. Unlike controlled test tube conditions, the fate of polyphenols in vivo shows they are poorly conserved (less than 5% retained hours after consumption), with most of what is absorbed existing as chemically-modified metabolites destined for rapid excretion.

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. Monavie Active may cause fluctuations in blood clotting (prothrombin time) in patients treated with warfarin or other coumadin blood thinners; avoidance of this combination has therefore been recommended.

Distributor earnings

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

According to an article published in Newsweek, reporting on MonaVie's 2007 income disclosure statement, "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 Newsweek reported were mostly discounts on sales to themselves. According to a top recruiter, the dropout rate in 2008 was around 70%. 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; approximately 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 2008 income disclosure statement. According to a 2011 article published by 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 7 distributors earned an average of $3.4 million a year.

According to the 2009 Income Disclosure Statement approximately 87% of the people that signed a distributor agreement between July 2008 and June 2009 were not counted as distributors as they didn't satisfy the 4 criteria (sign agreement, sponsor at least one person, receive at least one non-retail bonus, and has been active in the bonus period). Of the remaining 13% that were recognized as distributors for further calculations, 50% earned an average annual paycheck of $1213. And 35% earned an average paycheck of $1817. Less than 2% of the 13% (or less than a quarter of a percent) of the people who signed the distributor agreement earned an average annual paycheck of $29,310 or more.

Criticism

Nutritional value disputed

Physician Andrew Weil and nutritionist Jonny Bowden claim that the nutritional and health benefits of MonaVie juice are not proven and that the product is exorbitantly priced relative to more cost-effective conventional polyphenol-rich foods, such as blueberries, raspberries, and pomegranates. According to Men’s Journal, a nutritional analysis conducted by ChromaDex, an independent contract testing laboratory, 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.

Misleading advertising and health claims

Bowden, Newsweek correspondent Tony Dokoupil, and Palm Beach Post reporter Carolyn Susman 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. Dokoupil noted that “the FDA warned MonaVie about medicinal claims on its Web site” in reference to the Food and Drug Administration's action against MonaVie distributor Kevin Vokes in July 2007. According to an FDA Warning Letter, Vokes had promoted MonaVie as a drug in violation of the Federal Food, Drug, and Cosmetic Act by claiming that it was effective for treating inflammation, high cholesterol, and muscle and joint pain. The FDA was ultimately satisfied with the company's response after the claims on the offending website had been greatly dialed down. In a 2008 article in Forbes magazine, reporters Emily Lambert and Klaus Kneale described MonaVie as a pyramid scheme and noted that a MonaVie video testimonial by distributor Louis "Lou" B. Niles implied that the product could cure cancer.

Company executives have repeatedly acknowledged ongoing problems with MonaVie distributors making unlawful claims that the juice can treat and prevent diseases. A Newsweek article published August 2, 2008, noted that CEO Dallin Larsen "realizes that his sales team can get him in hot water with the Feds", and in reference to the company's ability to investigate distributors suspected of making false claims, Larsen commented that "it’s next to impossible; like herding cats." A November 4, 2008 statement from the company noted: "many distributors, perhaps unwittingly, have engaged in methods of advertising that are in violation of MonaVie’s policies. Such actions put our business and yours at an unnecessary risk." In a May 14, 2009 Bloomberg News article, MonaVie executive vice-president and cofounder Randy Larsen was quoted saying that "the company is struggling with independent distributors who promote the juice as a miracle drug."

Dallin Larsen and Dynamic Essentials/Royal Tongan Limu

MonaVie CEO and founder Dallin Larsen was previously 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. In 2001, Larsen became vice president of sales for Dynamic Essentials in Lake Mary, Florida, which sold a fruit juice called Royal Tongan Limu, where he claimed to have increased revenue 300 percent. But in 2002, during Larsen’s tenure, the FDA issued a letter to Dynamic Essentials warning that claims on the company’s website that the juice could "treat various diseases such as cancer, arthritis, and attention deficit disorder" were in violation of federal law. Dynamic Essentials sometime after that ceased operation. In October 2003, the FDA said it witnessed the voluntary destruction of 90,000 bottles of Royal Tongan Limu.

Pyramid scheme allegations

In spring of 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, Forbes magazine reporters Emily Lambert and Klaus Kneale noted:

“TEAM is one step ahead of all these juice selling schemes. It is a pyramid atop a pyramid. It is selling motivational aids to help MonaVie vendors move the juice. But wait. If you can't earn back the $258 you've spent on the motivational lectures by selling $39 juice bottles, you could earn it back in another way—getting people to buy $258 motivational lectures. If you're good, you flog the lectures to other people, who sell them to yet others. Everybody gets rich. Everybody, that is, except the last round of buyers. That's the theory, anyway. The reality is that a mere 1% of Team members make any money from involvement with the firm.”

Regarding pyramid scheme issues, Lambert and Kneale elaborated:

”In a 1979 regulatory action involving , the Federal Trade Commission attempted to draw lines between legitimate and fraudulent pyramids. The ones that are legit focus on getting revenue from consumer goods sold to retail customers. The FTC did not, however, define ‘retail’ in that case. That leaves plenty of wiggle room for guys like Orrin Woodward; he counts the vast majority of people in his pyramid, who seemingly try but fail to make money, as retail customers.”

Litigation

The company, its executives, and various senior distributors were involved in five lawsuits between 2007 and 2009. MonaVie was the plaintiff in trademark infringement suits against rival companies Fruitology (2007) and Amazon Thunder (2007) and was the defendant in false advertising suits filed by Amway (2008), Imagenetix (2008), and Oprah Winfrey/Mehmet Oz (2009).

On July 11, 2007, Monarch Health Sciences, the company that launched MonaVie, filed a lawsuit with the federal district court in Utah against rival açaí juice manufacturer Amazon Thunder, alleging that owner/founder Todd Reum had made “harmful, false, and defamatory statements" about MonaVie which "purportedly injured Monarch’s reputation”. The suit sought $75,000 in damages. On November 15, 2007, the Utah district court ruled to dismiss the case against Reum.

On November 8, 2007, MonaVie, Inc. filed a trademark infringement suit against Fruitology, a rival acai beverage (Fruitavie) manufacturer, in Utah District Court. MonaVie voluntarily dismissed the suit on March 20, 2008.

On March 17, 2008 MonaVie preemptively filed a lawsuit with the Utah district court asking for a ruling as to whether Quixtar Inc. and Amway Corp. had been over-reaching the boundaries of its non-compete agreements and address whether or not such agreements are enforceable for independent distributors.

On March 18, 2008, Quixtar North America filed a multi-count federal court complaint against the MonaVie company and 16 of its distributors (John Brigham Hart, Lita Hart, Jason Lyons, Carrie Lyons, Lou Niles, Farid Zarif, and 10 anonymous defendants) for unfair competition. The complaint alleged that MonaVie competed unfairly by making false claims about its products. According to a company press release, MonaVie filed to dismiss the Amway/Quixtar lawsuit on April 15, 2008. On November 12, 2008, MonaVie et al. filed a lawsuit in the Colorado District Court against Quixtar

On May 5, 2008, the MonaVie company, its board of directors, and several of its senior distributors were sued by Imagenetix, Inc. for $2.75 billion over trademark infringement arising from false claims that Monavie Active juice contained the ingredient Celadrin. The case was settled out of court and the lawsuit was dropped on May 20, 2008. On June 2, 2008 Imagenetix announced that it had entered into a new business relationship with MonaVie, the terms of which were not disclosed.

An August 20, 2009 article in the Chicago Sun-Times reported that television celebrities Oprah Winfrey and Dr. Mehmet Oz filed suit against 40 companies that are either selling açaí or related products, with their name endorsements on them." According to their complaint, such companies are "fabricating quotes or 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." MonaVie Inc. was one of the companies named as a defendant in the lawsuit. Winfrey’s website elaborated 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 December 2010 a class action lawsuit was filed against Monavie in the Circuit Court of Miller County, Arkansas. The suit alleges that Monavie and its distributors, through the use of false and misleading advertising implying potential health benefits of the products, had engaged in civil conspiracy, fraud, negligence, unjust enrichment, and violation of the Arkansas Deceptive Trade Practices Act. On October 4, 2011, Monavie was issued a protective order by Arkansas Circuit Court judge Joe E. Miller, barring destruction or alteration of all advertising and documents (including e-mails, websites, and blog entries) relevant to the case. The court further mandated that the document preservation order be distributed by Monavie to each of its employees and distributors.

References

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36. http://media.monavie.com/pdf/us/compensation_plan_en.pdf Retrieved July 13, 2009.
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48. ^ Mark Bieganskion (August 20, 2009). "Oprah Winfrey and Dr. Oz suing over 'false' açaí berry endorsement claims". Chicago Sun-Times. Retrieved 2009-08-20.
49. "MonaVie Files to Dismiss Quixtar Lawsuit". eMediaWire. April 16, 2008. Retrieved 2008-12-12.
50. "Trademark Suit Against MonaVie Dropped", May 20, 2008
51. "Imagenetix Enters into Business Relationship with MonaVie"
52. Tom Harvey (August 22, 2009). "Oprah sues Utah companies over false endorsements". Salt Lake Tribune. Retrieved 2010-11-17.
53. "Class Action Complaint: Oliver v Monavie -- In the Circuit Court of Miller County, Arkansas (Case number CV-2010-644-1)" (PDF). Monavie LLC. Retrieved November 9, 2011.
54. "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)" (PDF). Monavie LLC. Retrieved November 9, 2011.

External links

• Official website
• Dunning, Brian. "Skeptoid #86: MonaVie and Other "Superfruit" Juices". Skeptoid.

• Multi-level marketing companies based in Utah
• Companies established in 2005