Alticor Nears 5 Billion In Sales

    ADA — Alticor Inc. Wednesday reported global sales of $4.9 billion for the fiscal year ending Aug. 31. Sales were up 9 percent over fiscal 2002 annual sales, marking the company’s fourth consecutive year of growth since Amway Corp. was restructured into Alticor four years ago.

    Alticor’s 44-year-old Amway subsidiary continued to perform well in the Asian market, with Amway China, Indonesia, Malaysia, Taiwan and Thailand racking up more sales than ever before, according to the company.

    Quixtar, its Web-based North American subsidiary formed in the fall of 1999, also had a record sales year, exceeding the $1 billion threshold for the first time.

    Independent Business Owners generated a $134 million increase in revenues for Quixtar over the previous fiscal year and additionally generated $58 million sales for Quixtar partner companies, such as, and, among others.  

    Company officials attributed Quixtar’s record level of sales to the introduction of several new health and beauty products this year, including a branded water purifier, energy drink, and a collection of new body care products.

    The company’s nutrition and beauty lines, particularly the Nutrilite and Artistry brands, continued to be driving forces behind both Amway and Quixtar sales.

    The two subsidiaries collectively accounted for more than half of Alticor’s global sales for the year.

    Earlier this year, Amway announced it would invest $120 million more in its manufacturing and distribution operations in China, increasing its current $100 million investment to $220 million.

    The money will be invested in both space and capital equipment, said Alticor Chairman Steve Van Andel.

    “You look at the growth that we’ve had in China and the basic requirement we continue to have there is to manufacture the products we sell,” he said.

    “We also have expanded our distribution side in that we have expanded the number of stores that we have there. In a country as large as China and with the technology they have for distributing product, it is the most efficient way for us to get product out to our sales representatives there.”

    President Doug DeVos said it will take two to three years to complete the expansion.

    New hires are anticipated, as well, but the company can’t estimate as yet how many jobs might be created.

    “With each shop comes the operational folks, but we also have training facilities in most of these shops and some sales representative support. It just depends on the size of the shop, the size of the city and the location.”

    Van Andel noted that Amway has expanded its work force in China on a regular basis since starting operations there.

    Alticor employs more than 11,000 people worldwide and has been recognized as among the largest employers in the United States, China and Korea.

    Amway Corp. also will enter the Ukraine market in November with a distribution operation headquartered in the capital city of Kiev.

    The operation will serve the whole country and will initially have a staff of about 40 to 50 and grow from there, DeVos said.

    Kiev, population 3 million, is a major industrial center located along the Dnipro River that includes companies specializing in electronics, engineering, aviation, food and chemical production.

    “It’s a sizable market with good potential and we’re excited about it,” DeVos said, adding that the offices and distribution operation in Kyiv will garner a lot of support from Amway’s existing European markets.

    Access Business Group, Alticor’s product development, manufacturing and logistics subsidiary, had a banner year, as well.

    Access, a large player in the third party fulfillment industry, saw third-party sales increase by more than 25 percent to $79 million this year.

    Van Andel attributes the increase to the Access sales team’s effort.

    “We have found that as we’ve gone out and marketed our capacity here that it is very competitive with the rest of the world, not only in the service we have to offer but the number of different functions we can offer, as well,” Van Andel said.

    “We’ve been able to land some new accounts and some larger accounts.”

    Another “first” for Alticor in 2003 was its foray into the biotech industry.

    In March, Alticor purchased 50.3 percent of the stock in Interleukin Genetics LLC, a research company based in Waltham, Mass.

    Interleukin’s main focus currently is on prevention and treatment of inflammatory diseases. The company applies functional genomics toward the development of diagnostic and therapeutic products based on genetic factors.

    Alticor intends to tap Interleukin’s intellectual property and expertise in genomics to develop “personalized consumer products.”

    “When we looked at this company and some of the research they’ve done — particularly in nutrition and nutra-genomics — it’s something that we think is at the cutting edge of where nutrition is going to lead,” Van Andel recalled.

    “It’s technology we think we can use to help develop some very specific and customized products that will expand our nutrition line toward custom nutrition. Frankly, we’re in the process of figuring out just how personalized it can be right now.

    “They have some great research and they’ve been doing it for a while, but they have not converted the research specifically into consumer products and that’s kind of the function we’re going through right now.”

    DeVos said in the process of gene expression profiling, scientists can uncover clues as to what diseases a person may be predisposed to and is at risk of contracting at some point in life.

    “With nutrition, you can start to supplement and you can start to address those issues before the disease manifests itself,” he explained. “We think this could be just a huge side. But it’s very early in the game and this research is developing quickly.”

    Van Andel said Interleukin’s research might also have implications for the company’s skin care line.

    The Interleukin Genetics stock acquisition was done under the auspices of Pyxis Innovations, the fourth and least often heard of division of Alticor. So the Pyxis Innovations group is actually the primary Class A shareholder of Interleukin Genetics, said Beto Guajardo, Alticor’s vice president of strategic planning.  

    Pyxis Innovations was formed specifically to develop new products, services and businesses to help grow Alticor’s core business. 

    Guajardo said Alticor doesn’t release separate revenue figures for Pyxis Innovation because its annual revenues are simply absorbed into the core business.    

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