- change ups
DeVos Says Alticor Is Still The Same Pocketknife
GRAND RAPIDS — Emerging out of what he admitted was the firm’s low profile, Dick DeVos last week sketched a picture of changes at Alticor that seem to perfectly mirror those of the international economy.
DeVos was addressing the Economic Club of Grand Rapids not only about Alticor, but also about the firms it holds: Amway Corp., Access Business Group, Quixtar and Pyxis Innovations, a firm that specializes in out-of-the-box thinking and development.
DeVos noted that since he became president of Amway a decade ago, the firm has transformed itself into Alticor, a fundamentally different operation.
“Our markets have changed,” he said. “Our products, our corporate structure and our governance all have changed.”
But he also said the firm still is committed to “our foundational values of partnership, integrity, personal worth, achievement, personal responsibility and free enterprise.”
He said the change seems to be working. “I’m happy to report that halfway through our fiscal year, our total Alticor sales are up 14 percent — actually they approach 20 percent when adjusted to foreign exchange variations.”
And that’s at the end of a recession year, too.
He likened Alticor to a Swiss Army knife that has had all its parts — “even the little toothpick” — swapped out until nothing original is left. “And the question is: When you’ve changed all the parts, is it still the same pocketknife?”
Answering the question late in his remarks, DeVos said, “When families around the world have the chance to live better lives because of our efforts here … that’s still the American way. We can change our companies, change them 100 percent if we have to, and take our West Michigan legacy to the world.
“My friends,” he said, “it’s still the same pocketknife.”
He listed a host of the changes that have occurred.
Whereas Amway in 1963 was an all-American company making soap for Americans and selling it to them, he said that statement no longer is even remotely true. Instead, he said:
**Alticor does business in 54 countries on every continent except Antarctica.
**Nearly 80 percent of Alticor’s revenues come from overseas, predominantly from Asia.
**The great majority of the three million people selling Alticor products are Asian.
**Of 11,000 Alticor employees worldwide, nearly 60 percent live outside the United States.
**The United States now is merely one of Alticor’s top five markets, the other four being Korea, Japan, China and India.
Another major change he outlined is that soap products now amount to only 11 percent of Alticor’s business, with vitamins and allied products comprising 30 percent of the firm’s products. Meanwhile, he added, the popularity of Artistry brand cosmetic products and the research supporting them have transformed Ada into a global center for Asian skin science.
DeVos said one of the biggest challenges Alticor faced was bringing the Amway business model — a North American stereotype — into the new century in a way that would attract a younger client base.
“We paid attention,” he said, “to how others had tried to reposition veteran brands.” He told the Economic Club how GM learned the hard way that re-engineering Oldsmobile couldn’t create an import-fighting brand. “Olds loyalty was high with longtime owners,” he said, “but they couldn’t reach out to a new generation.”
So, basically, he said what Alticor did was export Amway overseas where it is thriving under its old name, just as it did here in the old century.
“We did an Oldsmobile in reverse,” he said. “We took every good thing we had at Amway and carried that heritage forward into Quixtar — a business model with many new features as well as proven old ones.
“We’re growing. A lot of people have followed us over from Amway to Quixtar — and many others are joining.”
He said the transition has virtually eclipsed Amway in North America while the average age of people joining the new business is 34, 10 years below the former Amway average.
Last year, he said, Quixtar generated $750 million for Alticor’s North American unit, with an added $65 million from Disney and Bass Pro Shop partner sites. As a consequence, he said, while other dot-coms have fizzled, Quixtar ranks in the top 10 in Interactive Week’s list of the Interactive 500.
“And Business 2.0 lists us as the number one online health and beauty site,” DeVos added, “with 20 percent of the $1.45 billion online health and beauty market.”
Curiously, the Access Business Group — a business-to-business supplier — manufactures products in Ada for some competing prestige brands like L’Oreal and Schering.
The capacity at the 200,000-square-foot Ada cosmetics plant became available, he said, when local laws required Alticor to construct manufacturing facilities overseas as part of its Asian ventures.