Herbalife Serves Nearly Eight Million U.S. Customers, Nielsen Survey Indicates

LOS ANGELESThe results of a Nielsen survey disclosed Tuesday undermine allegations that Herbalife Ltd. operates an untenable pyramid scheme with few customers outside its massive distributor base.  

Herbalife said the results indicate it has 7.9 million customers in the United States, which include 550,000 distributors as of the end of the first quarter of 2013.

According to a survey of 10,525 consumers, 3.3% of the general population reported purchasing Herbalife products within the past three months, the global nutrition and weight management company announced. The survey had a margin of error of +/- 0.96%. 

This survey, conducted by one of the worlds most respected research organizations, confirms what we at Herbalife already know to be true: that Herbalifes products have a broad consumer base here in the U.S. nearly 8 million in the last three months and that the majority of individuals that purchase Herbalife products do so for personal consumption," said Michael O. Johnson, Herbalife's chairman and CEO, in a statement.

Herbalife executives have acknowledged they don't track retail sales outside the company's distribution network. The Nielsen survey is helpful to Herbalife as it defends itself from claims that it runs a multi-level marketing business that is bound to collapse.

William Ackman, a billionaire hedge-fund manager with Pershing Square Capital, has shorted Herbalife shares in a $1 billion bet against the company. Other financiers, including billionaire Carl Icahn, have placed their faithand fundsin Herbalife. As of late February, Icahn, Icahn Enterprises Holding L.P. and related entities held roughly 13.6% of Herbalife's outstanding shares.

We believe the results of this study substantiate our belief that many of those who attack our model lack a clear understanding of the direct selling industry, and Herbalife in particular," Johnson said.

The Nielsen survey was conducted during April and May 2013. It also found the following:

·        Past three month purchasers reported buying Herbalife products at a mean rate of every 2.2 months.

·        Ninety five percent of past three month Herbalife purchasers bought weight management products.

In related news, Herbalife announced naming an executive to help advance the company's commitment to market research. Monica Wood has been named Vice President, Consumer & Distributor Insights.