Amway's sales drop 7%, extending 3-year decline

By Hank Schultz

- Last updated on GMT

© iStock
© iStock

Related tags Dietary supplements Amway Multi-level marketing

Direct selling giant Amway has reported a third year of declining revenue. Sales in 2016 declined 7% to $8.8 billion, with a big drop in China driving the slide.

Amway, a privately held multi-level marketing company based in Grand Rapids suburb Ada, MI, released its 2016 sales numbers yesterday. The company’s revenues fell by $700 million, but management put a positive spin on the report, noting that it was the smallest decline of the current swoon. Revenues plunged by 12% in 2014 and slipped an additional 8% in 2015. The company’s revenues peaked at $11.8 billion in 2013.

Amway sells a wide array of household and personal care products. It is a major seller of dietary supplements through its NutriLite brand. The company says it has more than 3 million independent distributors worldwide.

Amway said its sales increased in seven of its top 10 markets in 2016.  But like a number of other network marketing companies that sell dietary supplements such as competitors Herbalife and Usana, its biggest market by far is China, and there the company’s troubles continue, as revenues declined for the third straight year.

Chinese market evolving

The market in China is evolving, and it appears that the incredible growth spurt that followed the opening of the economy to private enterprise and direct foreign investment in the late 70s is finally starting to run its course. That is coupled with huge ongoing demographic changes wrought by the country’s long-standing one child policy. As the population itself ages, the market is approaching maturity, but it is still exhibiting growth rates that other industrialized economies can only dream about.  And the potential market for Amway’s products, most of which fall into the discretionary purchase category, continues to expand with China’s middle class forecast to grow to 550 billion by 2020.

"Everyone still says they are disappointed with China because their economic growth is only 6 or 7%,"​ Amway President Doug DeVos was quoted as saying in TheGrand Rapids Press​ (Amway typically releases its news to the hometown paper first). "That's still pretty good. We see a lot of potential there. We are very confident in the market itself and what is Amway China."

Amway does not break out its sales numbers by country. But the company did say its top 10 markets areChina, United States, South Korea, Japan, Thailand, Taiwan, India, Malaysia, Russia and Hong Kong.  The company said it recorded “notable” growth in some of these markets, including the US and South Korea. China was big sore spot, in that it accounts for about one third of the company’s overall global sales. Amway chairman Steve Van Andel said that increasing competition there coupled with foreign currency headwinds masked what he called “positive year overall for Amway.”

Amway does break down sales by product category, though.  For 2016, dietary supplements was again the leading category, accounting for 49% of sales, and representing 3% growth from 2015. Beauty and personal care products came in next, with 25% of overall sales.

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