US direct seller taking on European markets
opened its operations in Germany today, one of the world's top five
direct selling markets, reports Dominique Patton.
Germany will become the group's base for continental Europe, a region that it claims offers untapped opportunity.
"The network marketing model is catching on in countries across Europe," said R. Scott Montgomery, senior vice president of worldwide operations for Reliv.
Total network marketing sales in Europe grew 10 per cent in 2004 compared to the prior year, he noted, while overall retail trade fell by 0.3 per cent in the EU 25 from April 2004 to April 2005.
Reliv is already present in the UK and Ireland but Germany, with Europe's biggest population, will become its base for further operations on the European continent. Germany already has a direct selling market worth more than $4 billion.
Reliv, which makes a broad range of vitamin and nutritional supplements, diet management products, soy-based functional foods and sports drink mixes at a facility in St Louis, Missouri, has seen rapid expansion in recent years.
It reported operating profit for 2004 up 21.8 per cent to $8.98 million and a 26 percent increase in net sales to $96.98 million. Sales from its international markets - seven in total - reported net sales growth of 18 per cent in 2004, although the United States is still leading the pack with a 27 per cent growth.
However the European market could prove tougher than other regions. Euromonitor OTC healthcare analyst Kathrin Jungbeck said earlier this year that direct sales still only had a 5.5 per cent share of the vitamins and dietary supplements market in western Europe in 2003.
"The European market is really competitive because it is quite mature and growth is coming from premium branded products," she told NutraIngredinets.com.
"Direct sellers don't have the same reputation as they do in Asia or North America and may not have the same impact as the established names," she added.
Reliv's Germany operations will be headquartered in Dietzenbach, just outside of Frankfurt. The company began accepting product orders and new distributor applications in Germany earlier today.
