Morinda Holdings, Inc.

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Morinda Holdings, Inc.

333 West River Park Drive
Provo, Utah 84604-5787
U.S.A.
Telephone: (801) 234-1000
Toll Free: (800) 445-2969
Fax: (801) 234-1001
Web site: http://www.tahitiannoni.com

Private Company
Incorporated: 1995
Employees: 1,164
Sales: $500 million (2005 est.)
NAIC: 311421 Fruit and Vegetable Canning

Morinda Holdings, Inc., is a Provo, Utah-based holding company doing business through subsidiary Tahitian Noni International, Inc., which produces and markets noni juice in distinctive, dark-colored bottles. A one-liter bottle is priced around $40. Other products using noni include high-protein drinks, tea, jam, soft chews, raspberry chocolate cremes, skin care creams, appetite suppressants, a women's multivitamin, herbal extract combinations, and skin, body, and hair care items.

The company also offers health supplements for horses and dogs, as well as apparel, drinkware, and gift items promoting noni juice and the Tahitian Noni International brand. In addition, Morinda operates three restaurants under the Tahitian Noni Café banner in the United States, three units in Japan, and single operations in São Paulo, Brazil, and Munich, Germany. Noni is the hard, knobby, fist-size green fruit of the tropical Indian Mulberry plant, formally known as morinda citrifolia, hence the Morinda company name. For thousands of years natives of the South Pacific have used the tree and its fruit for medicinal purposes. Since its founding in 1996, Tahitian Noni International has popularized noni juice around the world, touting the drink's ability to boost a person's immune system, supply antioxidants, increase energy, and improve physical performance levels.

The company is careful about the health claims its makes, however, having been accused by the attorneys general of several states of violating consumer protections laws, a matter that resulted in a fine and a voluntary compliance agreement. However, celebrities—the likes of Arnold Schwarzenegger, John Travolta, Danny Glover, and football player Terrell Owens—have no such hesitations, and have opined freely about the wonders of noni juice. The vast majority of scientists, on the other hand, have remained skeptical. Morinda does not sell its wares through grocery stores, relying instead on independent distributors and a multilevel marketing plan in the vein of Amway, in which distributors recruit new distributors and share in their commissions. As they move up the sales levels of the organization, their titles change from Coral to Jade to Pearl, and so on, with the highest designation called the Black Pearl. It is a method that has pushed Morinda's annual revenues to the $500 million level in less than a decade. The company maintains manufacturing operations in the United States, Tahiti, Japan, and China, and sales offices in more than 30 countries.

FOUNDER'S TRIP TO TAHITI IN 1993

Food scientist John Wadsworth is credited as the founder of Morinda. He started out at Brigham Young University as a predentistry student, but his enjoyment of a food science course changed his mind and instead he earned a degree in food science and economics. He went to work for nutritional products companies, and according to the Salt Lake Tribune helped to develop products for Utah-based network marketing companies. By 1993 he and a partner, Stephen Story, were running an independent health-food research and development operation, working out of his garage. According to one account, reported by Forbes in 2004, Wadsworth "heard from a neighbor just back from Tahiti about a strange fruit that supposedly performed medical miracles." He located some of the noni juice his neighbor talked about, tried it on a friend with diabetes to no effect, but then gave it for a month to some elderly people suffering from arthritis and was pleased with the results. Believing he had found something that could support a business, Wadsworth searched out a supply of noni fruit, traveling to the island of Nuka Hiva, some 1,000 miles north of Tahiti. Here, according to Forbes, "He and two translators camped in a one-room hut for three days. He finally stumbled upon an entire valley of the stuff on the last day." He told the magazine, "It was a vision that changed my life."

Utah Business offers a different, somewhat less romantic, version of Morinda's heritage. Wadsworth told the publication, four years before his Forbes interview, "I heard there was this fruit in Tahiti called noni that helped relieve the symptoms of diabetes. I was interested in it, and was able to set up a study with a [Type I] diabetic." When the subject failed to respond Wadsworth dismissed noni as a viable health supplement: "The juice tasted horrible, terrible, and I thought it was a joke, so I just put it aside." A short time later, however, he decided to play a joke on a colleague with a head cold, giving him the foul-tasting juice to relieve his symptoms. To Wadsworth's surprise, his colleague reported that the elixir had relieved his arthritis, renewing Wadsworth's interest in noni juice. According to this account, he recruited Story and together they studied the juice, which they learned helped to alleviate arthritis, Type II diabetes, autoimmune deficiencies, and other conditions. Morinda's company information maintains that Wadsworth learned about noni from the work of Dr. Ralph Heinicke, a biochemist once employed by Dole in the mid-1950s to research pineapple enzymes. In the process he discovered the beneficial properties of noni, which he claimed activated an alkaloid he called xeronine, and in turn xeronine allowed for an increased flow of amino acids by opening cell membranes. Because the presence of xeronine was so minute, Heinicke said it was almost undetectable. This explanation had to be taken on faith, something that reputable scientists were not willing to extend to Heinicke. One told Forbes, "Heinicke is in his own universe."

FORMING THE COMPANY IN 1995

According to Utah Business, "After three years of testing, production development and formulating a flavor system to enhance the otherwise daunting taste, Tahitian Noni Juice was ready for distribution." It was also reported that Heinicke helped in the flavor formulation. At any rate, the juice remained barely tolerable to drink, but with health claims in hand, Wadsworth and Story tried to interest health-food-marketing companies but found no takers. "Everybody was laughing at it, saying it would never happen," Wadsworth told Utah Business. Finally their persistence paid off when they were able to convince brothers Kerry and Kim Asay, who together ran a Utah supplements business called Nature's Sunshine Products, Inc., to start a company to distribute noni juice. As they had done with Nature's Sunshine, the Asay brothers looked to implement a multilevel marketing plan to sell the product. In late 1995, Kerry and Kim Asay, Wadsworth, Story, and Kelly Olsen, another network marketing veteran recruited by Wadsworth, formed Morinda and subsidiary Tahitian Noni International.

A Los Angeles bottling plant was engaged to produce noni juice in 1996 and the new company began advertising the product and its perceived benefits. In the first month the company sold $40,000 worth of the juice and by the end of the year sold nearly $6.6 million. The pace continued in 1997 when U.S. sales totaled $10 million. The international market also established itself, contributing another $23 million in revenues.

COMPANY PERSPECTIVES

We are dedicated to improving the lives of our customers by producing the most innovative, highest-quality noni-based products possible.

However, Morinda in its advertising was making medical claims that it could not back up scientifically, leading the attorneys general in Arizona, California, New Jersey, and Texas to file suit against the company, which they claimed was engaged in false advertising and marketing the juice as a drug, rather than a food, without U.S. Food and Drug Administration approval. Morinda settled the matter in August 1998 without admitting any wrongdoing by agreeing to pay $100,000 and refrain from further advertising that alleged healing powers for noni juice. While Morinda became especially circumspect about the claims it made about noni juice, the same could not be said about the network of distributors who pitched the product privately or through their own web sites where noni was portrayed as a cure-all. Many doctors, in fact, believed that noni juice possessed actual medicinal value. For example, Dr. Steven Masley, who conducted research on nutrition and aging in Clearwater, Florida, told the St. Petersburg Times that he thought noni juice might be as beneficial as orange juice or ginseng, and knew patients who used the supplement, but, he added, "Some got better, some got drastically better, some got worse. That's part of the problem—you don't know what to use it for."

While there may have been concerns about the benefits of noni juice within the medical community, Morinda had no doubt that it had a product with global potential and as the 1990s came to a close the product was introduced in Mexico, Japan, and Hong Kong. According to press reports, Morinda recorded revenues of $289 in fiscal 1999.

With business booming, Morinda secured a steady supply of noni fruit in 2000 by striking a deal with the government of French Polynesia, best known for the island of Tahiti, to be the company's exclusive source for the fruit. In addition, Morinda agreed to build a state-of-the-art processing plant, which would open in 2005, as well as a museum. Sales were so strong, growing to $360 million in 2000, that a year later Morinda opened a new 150,000-square-foot headquarters in Provo. The company also was ranked No. 26 by Inc. magazine's 2001 list of the 500 fastest growing private companies in the United States.

Not content merely to sell juice, Morinda began branching out to offer new products, many of which made use of the entire noni plant. Early product launches included a protein drink mix and skin care products, followed in 2003 by the introduction of Tahiti Trim Plan 40, a weight-management program aimed at women over 40, as well as a new line of single-serve, ready-to-drink noni beverages in a variety of flavors. In 2004 Morinda came out with a myriad of products, including a fiber supplement, a seed oil for dry and irritated skin, a noni-based body cleansing tea, a multivitamin, and different concentrated noni fruit extracts blended to promote healthy hearts, mental clarity, calmness and relaxation, and endurance. Also in 2004, Morinda introduced Equine Essentials, a noni-based liquid-based nutritional supplement for horses.

OPENING OF THE FIRST NONI CAFÉ IN 2003

In addition to product development, Morinda looked to expand the Tahitian Noni brand to restaurants. In October 2002, Kelly Olsen first conceived the idea of opening a café on the ground floor of the company's new headquarters in Tokyo. A concept was developed and in March 2003 the first Tahitian Noni Café opened in Tokyo. A second site opened in Fukuoka, Japan, in April 2005, followed later in the year by openings in Provo; São Paulo, Brazil; Nagoya, Japan; Atlanta, Georgia; and Dallas, Texas. In June 2006, a Munich, Germany, café opened.

Morinda also was becoming involved in areas unconnected to the noni plant. In March 2003 it acquired the international marketing rights to Stephen's Gourmet brand of hot cocoas, cider, and wassail. In that same month Morinda added Pure Fruit Technologies, L.L.C., a Las Vegas company that developed and marketed exotic fruit beverages offering health benefits. They included drinks made from the fruit of the mangosteen tree, the goji berry, the gac fruit, and seabuckthorn berries, all hailing from China and surrounding countries. Even further afield, Morinda produced a family film, The Legend of Johnny Lingo, released in 2003. Essentially a 90-sminute product placement vehicle, it was a remake of a 1969 movie that tells the story of a boy washed up on a South Pacific island, where he becomes familiar with the native culture, falls in love—and learns how to make noni juice. While the film managed to achieve a theatrical release, it was panned by the few critics that reviewed it and did little business outside of the Christian and civic groups drummed up by the producers.

KEY DATES

1993:: John Wadsworth begins researching noni fruit.
1995:: Morinda Holdings is founded.
1997:: The company begins selling noni juice.
2001:: A new headquarters opens in Provo.
2003:: The first Tahitian Noni Café opens.
2006:: Record-setting sales and massive restructuring.

After ten years in business, Morinda topped $500 million in revenues in 2005, and worldwide the company's products realized $3 billion in volume. The company also enjoyed record-setting sales in the early months of 2006. Scores of new noni-based products, including a canine supplement and a new line of gourmet foods—teas, jams, and confections—using noni fruit as a base, were introduced in 2006. In addition, the company initiated a restructuring in 2006 to transfer support of the international operations from Provo to the field offices and local markets. As a result, about 130 people were laid off at the Utah headquarters.