LA Times Business news: Mexicans "Living Large" via Herbalife Nutrition Clubs

Living Large on Diet Aids

Jennifer Szymaszek / For The Times

Husband-and-wife team Enrique Varela and Graciela Mier de Varela of Zacatecas, Mexico, were the top Herbalife distributors in the world last year, racking up network sales topping $100 million. The key to their success: finding ways to sell the company's diet-shake mixes and other wares to relatively poor customers.
Selling loads of costly Herbalife products to Mexico's poor has made a couple fabulously rich. Their 30,000 helpers have the same dream.
By Marla Dickerson and Daniel Yi, Los Angeles Times Staff Writers October 13, 2007

ZACATECAS, MEXICO -- Selling pricey diet-shake mixes in a developing country wouldn't seem like a very smart business idea, but Enrique Varela was despairing.

Eighteen years ago, his animal-feed business was struggling. He was thousands of dollars in debt.


Gisela Anahi Gutierrez, center, delivers a nutritional shake to Enrique Varela, left, at the Herbalife club meeting in Zacatecas. Varela and his wife pioneered the concept of making Herbalife into a social activity through Nutrition Clubs, now 30,000 strong in Mexico.
(Jennifer Szymaszek / For The Times)

Today, he and his wife own a fleet of luxury cars, four ranches and eight houses -- including a custom-built home with an elevator and a cupola-covered hot tub overlooking a golf course in this central Mexican city.

They bought it all with the proceeds from peddling products from Herbalife Ltd., the Century City-based maker of weight-loss aids and nutritional supplements.

Varela and his wife, Graciela Mier de Varela, were the No. 1 Herbalife distributors on the planet last year, with network sales topping $100 million. This year the couple got a check for $1.8 million, the largest bonus in the history of the multilevel marketing company. That's on top of the millions the husband-and-wife team has earned through the army of independent salespeople in their network.

Their powder-pushing prowess helped make Mexico Herbalife's top market last year with $373.2 million in sales, besting the U.S. tally of $338.3 million.

The Varelas' sales empire is all the more stunning considering that they generate most of their business in Mexico, where a $29 canister of the company's signature diet shake mix equals a week's wages for many consumers.

The secret of their success? Sales 101: Know your customers.

"Mexico has a lot more poor people than rich ones," said Varela, now 60. "We had to find a way to reach them."


Antonio Lara, 23, drinks an herbal tea, part of his morning ritual, at the Herbalife Nutrition Club meeting in Zacatecas.
(Jennifer Szymaszek / For The Times)

An ebullient, talkative bantam of a man, Varela said that people come to Herbalife out of "inspiration or desperation."

For him, it was a little of both.

The son of a livestock farmer, Varela studied veterinary medicine. But what he really wanted to be was an entrepreneur. When Mexico's economic crisis of the 1980s slammed his feed business, he needed another enterprise he could start on the cheap.

Stressed and overweight, in 1989 he went to a sales meeting for Herbalife, which was just breaking into the Mexican market. Varela tried the products and started dropping pounds. He felt better. He had found his calling.

Undaunted by his first paycheck -- a measly $43 -- he set about building his network.

"I knew I wanted to bring this good nutrition to people," said Varela, who quaffs an Herbalife shake every morning to start his day.

Graciela joined him in the business. But like many Herbalife distributors, they eventually ran out of friends and family to pitch to. Sales flattened. Strangers didn't like cold calls or the hard sell. Many couldn't afford to purchase an entire canister of the products. But company guidelines forbade distributors from breaking up packages.

So the Varelas bent the rules a little.

To inaugurate a sales office in 2002 in the Mexican city of Durango, they hosted morning nutrition "chats" where people could sample the products on their way to work.

As weeks passed, the same faces started appearing. Strangers became friends. People proved willing to pay a small fee for a single serving so they could hang around to talk.

"Mexicans are very convivial," said 61-year-old Graciela, who has a degree in psychology. "People loved the social aspect."

The idea has been such a hit that Herbalife distributors have replicated it around the world. Mexico alone boasts 30,000 such groups, dubbed Nutrition Clubs.


Top sellers Enrique Varela and Graciela Mier de Varela attend an Herbalife Nutrition Club meeting in an upper-class residence in Zacatecas, Mexico. This year, the couple received a check for $1.8 million, the largest bonus in the history of the multi-level marketing company.
(Jennifer Szymaszek / For The Times)

"They have given us the opportunity . . . to reach a group of people who could not have afforded a traditional monthly program," said Des Walsh, senior vice president of worldwide sales for Herbalife. "There is no question that the concept that they have developed has contributed significantly to growth."


Juana Mata Tenorio, 61, left, and Eucevia Perez Sanchez, 74, drink herbal tea at the Herbalife club meeting.(Jennifer Szymaszek / For The Times)

Fit and energetic, the Varelas boast that they are walking endorsements for Herbalife. Striding is more like it: It's tough keeping up with the kinetic duo.

They began one recent day with a 9 a.m. visit to the Nutrition Club in downtown Zacatecas, the first of a three-stop tour that morning. Laughter and calls of buenos dias floated above the whirl of blenders as about a dozen regulars took their places around a table in a sunny second-floor office for their morning repast. For about $2 each, they received a frothy meal-replacement shake, a cup of energy tea and a shot of clear liquid aloe to aid digestion.

Retiree Nicolas Cruz says he comes six days a week. A kidney dialysis patient, he credited Herbalife products for perking up his appetite and his spirits.

"It has changed my whole character," said Cruz, 60. "I'm no longer depressed."


Alejandro Aguillar receives a facial during the Herbalife Nutrition Club meeting in Zacatecas.(Jennifer Szymaszek / For The Times)

At this and other gatherings, the Varelas are greeted like celebrities by distributors who turn out to be relatives -- hardly a surprise considering that 50 family members, including their two children, are involved in the business.

A gigantic banner with the couple's picture hangs on the wall inside the next club, where the impeccably dressed Varelas mingle with housewives, office workers and retirees.

"A million eyes are on us," Enrique said. "We have to set an example."

In a way, the Varelas are replicating the cult of personality of Herbalife's founder, Mark Hughes, who as a 24-year-old high school dropout in 1980 launched the company in a former wig factory in Beverly Hills.

The handsome, charismatic Hughes was a natural-born showman who plugged his meal-replacement shakes on TV infomercials and at tent-revival-style rallies. Millions knew his slogan: "Lose Weight Now. Ask Me How."

Read the full article at http://www.latimes.com/business/.

marla.dickerson@latimes.com
October 13, 2007