Alticor Blames China For Sales Drop

February 11, 2007
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ADA — Alticor Inc. companies reported annual sales of $6.3 billion in 2006, down from $6.4 billion posted in fiscal 2005. Company officials attributed the decrease in sales to “a period of regulatory uncertainty that chilled sales in China,” which is its largest direct selling market.

“After six straight years of growth, we expected we might be down this year because of the China situation, and we planned for that,” said Alticor Chairman Steve Van Andel.

President Doug DeVos said the company has placed new emphasis on innovation throughout the company, which he expects will result in “better products, new approaches and increased appeal” to consumers in all the company’s markets.

The Amway group posted sales increases in 45 of 55 affiliate markets in 2006, with the most substantial increases in Europe, where sales jumped more than 40 percent. According to the company, the increase was driven by its new Russia and Ukraine markets.

More than 70 percent of Amway sales come from Asia, the company further noted, and sales were strong last year in the Philippines, Malaysia, Thailand and Singapore. Sales in Korea increased 4 percent, while sales in Japan declined.

Amway (China) Co. Ltd. saw annual sales decline 23 percent from 2005, but the company pointed out that China continues to be Amway’s largest individual market. Amway (China) received its direct selling license on Dec. 1 last year. Resolution of the licensing issue gives the company “great optimism,” Van Andel said.

In North America, Quixtar introduced new products and capped a fourth straight year of sales exceeding $1 billion. In 2006, Quixtar initiated its first national TV and print advertising campaign. Quixtar’s SA8 with Bioquest detergent was named by Consumer Reports as “tops” for high-efficiency washers. Additionally, Quixtar again ranked as the No. 1 online retailer in health and beauty sales by Internet Retailer.

Access Business Group had an “outstanding” year in 2006, according to Alticor. Access led the launch of several new products this year for the Amway and Quixtar businesses: Atmosphere air treatment systems were expanded into seven new markets; the core Double X nutritional supplement was redeveloped; the Artistry Dramage 14 skin care system was introduced in China; and a children’s DHA supplement called Brainiums was introduced in the United States and Korea. Access Business Group received both the Operational Excellence and the Global Award for Supply Chain Excellence from the Supply Chain Council. The business unit’s third-party product development, manufacturing and logistics sales for the year totaled $138 million, up 12 percent over the year-end 2005 total.

Alticor has created a new holding company for its non-direct selling companies called Alticor Corporate Enterprises. Two new companies have been made part of Alticor Corporate Enterprises — Gurwitch Products and Fulton Innovation LLC. Gurwitch is a luxury cosmetics and skin care company that develops and markets cosmetics under the brand name Laura Mercier, of the Neiman Marcus Group. Alticor created Fulton Innovation last December to license and market new wireless technologies.

This past August, Alticor upped its majority stake in Interleukin Genetics. In March 2003 Alticor purchased 50.3 percent of the stock in Interleukin and has since been tapping Interleukin’s intellectual property and expertise in genomics to develop “personalized” over-the-counter nutritional and skin-care products.

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