Multi-Pure Business Opportunity

2008 State of the Industry Address
by: Alvin E. Rice, President
Well, once again it’s time to talk about the State of the Industry. In my address today,
I’m going to be throwing out a lot of numbers and percentages. These statistics are
important because they provide insight into industry trends and challenges, but they are
not the most important items that I want to leave you with. The most important things
that you can take away from this address are to (1) recognize that Multi-Pure has been an
industry leader for last the 37 years and continues to be so today, (2) Multi-Pure is
constantly developing and striving towards future goals in both our distributor program
and product performance, and (3) Multi-Pure continues to provide our distributors with
the formula for success and empowers each distributor to control their own destiny.
With that being said, it’s time to jump into the numbers and discuss just what the current
state of our industry is. BUT before we do that, we need to make sure that we establish
and understand exactly which industry we’re in. As my former colleague and long-time
friend, Don MacCrossen, once described it to me, our industry is made-up of two equal
components – (1) the opportunity and (2) the product. They’re like the Siamese twins of
this business; they’re inseparable. You need the opportunity to sell the product and a
high quality product to assist in making the sale. You need both to be successful. You
can’t focus on the product and ignore the opportunity and expect to reach the highest
level of success.
So let’s talk about the first component – the opportunity. Merriam-Webster’s Collegiate
Dictionary defines opportunity as, “a favorable set of circumstances fit for the time with a
good chance to succeed”. In order to understand the opportunity side of our industry, it’s
important to understand what drives the opportunity, which is the same as most things in
the United States – the economy. There are a variety of elements which impact our
current economic state. These elements are measured through a variety of indicators,
probably the most prevalent being the Dow Jones Industrial Average which is monitored
and reported on daily in almost every newspaper across the country.
So what is our current economic state? Well, as this graph of the Dow Jones Industrial
Average illustrates, over the course of the last year we have entered into a state of
economic uncertainty. The truth of this statement is reflected in the daily headlines of
newspapers across the country. Fortunately or unfortunately, depending on the
circumstances, the performance of the stock market also affects other aspects of our
economy. For example, stock market performance has a direct correlation with home
sales. As you can see, sales of both new and existing homes in the United States have
dropped off considerably over the last two to three years. The drop in new home sales
has had a negative effect on appliance sales including drinking water systems that are
installed in new homes. Fortunately, Multi-Pure has been an after-market product for this
segment of the industry. Unfortunately, this drop in home sales also tends to impact the
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number of jobs available to the public. With unemployment rates higher today than they
have been in the last two years, more and more people are looking for opportunities to
earn additional income. Another major contributor that is adding pressure to our current
economic state is the increasing cost of energy. This increased cost of energy can most
easily be observed in our fuel prices. As you can see here, the average price of regular
gas in the U.S. has risen dramatically over the last four years with a total increase of
approximately 114%. Therefore consumers are looking for ways to save money in other
spending habits in order to have money for essentials like gasoline.
And by having a Multi-Pure drinking water system, an individual can save substantial
amounts of money on their drinking water.
Because of the current economic uncertainty and the increased unemployment rates,
people are searching for opportunities to earn additional income. As they search for
alternative sources of income, many of these people are learning about the Direct Sales
industry. Over the last ten years, the direct sales industry has seen a steady year over
year increase in sales, with total sales exceeding $32 billion in 2006. Additionally, as a
result of the increase in unemployment, the number of salespeople within the direct sales
industry has also increased steadily over the last ten years. In 2006, the number of
salespeople exceeded 15 million, which represents approximately a 63% increase since
1997.
You folks have chosen for a variety of different reasons – whether it be additional
income, public health concerns, or environmental awareness –to participate in Multi-
Pure’s network marketing program, which is part of the direct sales industry.
So let’s take a look and see who is participating in the direct sales industry… According
to numbers released by the Direct Sales Association, as of 2006, the direct sales industry
salesforce was approximately 85% female and 15% male. The large percentage of
female involvement can be explained by two main factors – (1) the number of stay-athome
moms and housewives who are looking for part-time flexible work that won’t
interfere with their family commitments and (2) the large number of direct sales
programs with products that specifically lend themselves to the female gender, such as
cosmetics, dietary supplements, scrapbooking, etc. Anything that relates to the home,
especially the kitchen, is highly influenced by the female. Our product is no exception.
Another interesting demographic that the direct sales association released was the
educational background of the salesforce. As you can see from this pie chart, you don’t
have to be college educated to succeed within the direct sales industry.
The educational background covers the entire spectrum with 24% of participants being a
high school graduate or less, 32% having some college, technical or trade school
education, 36% being college graduates and approximately 8% of participants having
postgraduate education. Really, anyone can be a part of the direct sales industry.
One of the biggest benefits of working in direct sales is the ability to set your own
schedule or as many companies promote – it’s the opportunity to be your own boss.
Approximately 90% of the direct salesforce work only part-time, which is defined as less
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than 30 hours per week, while only 10% of the salesforce works full-time. Of the hours
worked, only 46% of the time is actually spent on selling the product or service.
Approximately 20% of the hours are spent on administration and paperwork and 15% is
spent recruiting and sponsoring others.
As part of the direct sales industry, it is important to develop your own sales strategy.
How do you make contact with potential customers? How do you go about selling the
product? Many of you have already developed successful tried and true strategies, but
for those of you who are still looking for answers to these questions, I thought the
following information might prove useful. Approximately 67% of direct sales are done
through person-to-person selling, while only 29% is done in a party plan or group selling
type format. And while many folks here have been successful at hosting water parties or
presenting to groups, don’t lose sight of the fact that over two-thirds of direct sales are
made person-to-person.
These person-to-person sales are done in a variety of different venues. According to the
Direct Sales Association, approximately 75% of direct sales take place face-to-face, of
which 67% of the sales are in the home while 4% each are in the workplace and in
temporary locations (fairs, shows, etc.). The remaining 25% of direct sales that take
place remotely are pretty much split evenly between telephone sales at 12.8% and
internet sales at 11.6%. These numbers are consistent with what we see at Multi-Pure
with only approximately 10% of our total sales taking place over the internet.
So in summarizing the direct sales part of our industry which represents the opportunity,
the Multi-Pure opportunity is in an era most favorable for success. The economic trends
are actually in our favor as people begin to look for additional and alternative sources of
income. It is important that we as a Company, and you as distributors, take advantage of
the current economic situation and the success of the direct sales industry which
continues to grow. The more people you get involved, the more you assure your own
success.
The second part of our industry is where we translate the opportunity and apply it to our
product. If you were going to go into the direct sales industry, you would want the
largest customer base possible, right? ABSOLUTELY! You would want to chose to
market the product in demand by the largest percentage of people. That’s why Multi-
Pure’s products are so great. Our product has 100% of the current population as its
market base. Not everyone uses lipstick. Not everyone drinks beer. Not everyone takes
vitamins. And oddly enough, not everyone wears shoes. BUT everyone drinks water. I
don’t know about you, but I think a product with 100% of the population as its target
market is a desirable feature in choosing a product to represent.
With that being said, I accept the fact that not everyone is necessarily ready to make the
investment for a product that would give them healthy drinking water. However, over
90% of the population drinks water from a municipally treated water supply source. And
according to a recent WQA survey, 55% of the public surveyed were very concerned
about the quality of their tap water. The treatment processes used by municipalities have
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created over 500 disinfection by-products, many of which have been identified as
harmful to human health and others that are continuing to be studied. Historically, a lot
of emphasis has been placed on trihalomethanes, which have specifically been linked to a
variety of cancers – liver, kidney and bladder cancers, and other reproductive problems.
In addition, as you know, virtually every household has become concerned about lead
leaching from household plumbing. Lead contamination has proven to be a major health
concern. Consumer awareness of the health effects cause by lead has continued to
increase as the prevalence of contamination has grown, with lead most recently being
found in the red lipsticks of several major manufacturers as well as toys for children.
Increased consumer awareness regarding the quality of drinking water is indisputable.
This awareness is demonstrated clearly through the increase in bottled water
consumption. The public consumed 56% more gallons of bottled water in 2007 than it
did in 2002. Even with the current state of economic uncertainty, more people today than
ever before are buying bottled water. Five gallon bottled water delivery service has gone
from $5.00 per bottle in 1997 to today’s astronomical rate of $9.49 per bottle, which
equals $1.90 per gallon. This clearly shows that the average consumer does not have any
confidence, faith or trust in the quality of drinking water coming from their tap.
This increase in bottled water usage continues to take place despite the increase in the
cost of bottled water, which has primarily been driven by the increase in the cost of
energy. From 2006 to 2007 alone, the average cost per gallon of bottled water increased
27% from $2.23 per gallon to $2.84 per gallon for the pricey small bottles sold in
supermarkets and convenience stores. This increase in the consumption of bottled water
is what drives the product side of our industry, as has been consistently demonstrated and
proven over the last 37 years. The consumer’s awareness and concern over tap water
encourages them to look for alternatives. Typically, the first thing the consumer will do
is begin buying bottled water because it is the quickest and easiest perceived solution to
their problem. As the consumer’s awareness continues to expand, the cost,
inconvenience and the environmental unfriendliness of bottled water drives them to look
for other alternatives.
Often times, these consumers are lured in by major name players who spend millions of
dollars a year promoting their products. As a result of the afore-mentioned factors, many
consumers end up purchasing either a faucet-mount or pour-through model filter. As the
consumer’s awareness continues to grow, they become frustrated by the product’s limited
performance and expensive on-going maintenance costs of replacement filters and parts.
Each of these consumers is a prospect. They are waiting to be told or shown a better
alternative to their current filter choice. They are looking for something even more
convenient, less bulky and obtrusive, less expensive and something with a higher quality
of water. According to a survey published by Mintel International Group, currently 47%
of the population uses bottled water. This segment of the market leaves endless
customers that don’t have to be convinced about the importance of pure water; they just
have to be shown the path to a better solution.
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Multi-Pure has been fortunate that for the entire 37 years we’ve been in business, we’ve
never had to go out and promote the need for our product or the benefits of drinking pure
water. We directly benefit from the consumer’s awareness generated by all of the media
exposure regarding the dangers of tap water and even more recently, the dangers of
bottled water. The media promotes our product for us. They educate the consumers for
us. The media creates demand for our product each and every day that a story is printed
in the newspaper or airs on your TV or your radio.
All Multi-Pure has had to do is develop and design a product that provides a better
quality of water, more conveniently and less expensively than the alternatives, and allow
our customers, which is you, to participate in this ever-growing industry.
To take full advantage of this opportunity, Multi-Pure had to be the best and we ARE the
best. And now, here’s the beautiful part – you don’t have to take my word for it. You
don’t have to believe anything I say about our products. Just ask yourself, as a customer,
is Multi-Pure the best? YES! But if that’s still not enough, you can look to the 3rd party, independent testing performed by NSF which has been accepted by both government and scientific bodies as being the industry standard. As of today, Multi-Pure continues to remove the widest range of contaminants that have entered into our nation’s water supplies. 37 years after Multi-Pure opened its doors, there are 5,365 products certified under NSF. Of those 5,365, only 1,031 are certified to remove contaminants of health concern. Compare those numbers to just 5 years ago. There were only 3,898 products certified under NSF, of which, only 796 were certified to remove contaminants of health concern. There are approximately 1,500 more products certified today than there were just five years ago. No doubt that several new companies have entered into the marketplace and contributed to those numbers. However, the most important thing to note is that the product most suited to address today’s contaminant concerns is Multi- Pure. Thirty-seven years ago we had the best product and today we continue to stand alone. The Multi-Pure products have been unsurpassed in quality since the day we started to manufacture. Multi-Pure has been the solution to pollution problems of the past, present and future. We were the first to be certified to reduce lead. We were the first to be certified to reduce asbestos. We were the first to be certified to reduce cyst. We were the first to be certified to reduce Chloramine, Toxaphene, Chlordane, PCBs and most recently, we were the first to be certified to remove Arsenic V. Our products have always removed more contaminants than any other product out there. Those “extra” contaminants we’ve removed over the years have typically become the contaminant concerns of tomorrow. For example, Chlordane, Toxaphene, and PCBs have all been identified as endocrine disruptors. The Natural Resources Defense Council has defined endocrine disruptors as a “synthetic chemical that when absorbed into the body either mimics or blocks hormones and disrupts the body’s normal functions. This disruption can happen through altering normal hormone levels, halting or stimulating the production of hormones, or changing the way hormones travel through the body, thus affecting the functions that these hormones control.” Based on a recent
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conference call I had with NSF, the Environmental Protection Agency has identified over
62,000 endocrine disruptors. These are the problems of our future.
More information is available specifically on these contaminants in the packets that have
been provided to you.
In addition to our products keeping up with the current and known contaminant concerns,
we are constantly watching for contaminants of the future. A perfect example of this is
the most recent media blitz on pharmaceuticals being found in drinking water. I have
addressed this subject specifically in each of my State of the Industry addresses for the
last three years. According to an article published by Chemical & Engineering News,
there are over 19.7 tons of active pharmaceutical ingredients introduced into U.S. sewage
systems every year. As you know by now, there are currently no standards or test
procedures established by the Environmental Protection Agency to address these
contaminants, which makes it easy to see why point-of-use drinking water systems are
the final barrier to protecting human health. As one industry insider described the
situation, “the human race is simply participating in a large scale experiment on the
human health effects of pharmaceuticals in drinking water.”
Despite the lack of established standards and test procedures, it has been well
documented by the Environmental Working Group, NSF, WQA, and the Natural
Resources Defense Council that activated carbon is an effective filtration method for
dealing with these emerging contaminants. Multi-Pure drinking water systems, through
our activated carbon block technology, have proven to be more effective in the removal
of contaminants, than any other activated carbon based systems. As industry standards
and testing procedures are established to address the massive concerns surrounding
pharmaceuticals, we fully expect and are confident that Multi-Pure will continue its trailblazing
certification record and meet the challenge before us to be certified to make these
claims.
In summary, the product side of our industry is very well positioned to help you succeed.
Consumer awareness is up. Tap water quality is down. Bottled water consumption is up.
Bottled water prices are up. People are trying to save money. Multi-Pure products
provide the highest quality drinking water available, as evidenced by our extensive
certification listing. Multi-Pure products are the best suited to address today’s
contaminant concerns and Multi-Pure provides pure water that is more convenient and
less expensive. And it gets even better, because Multi-Pure is changing our product
warranty and guarantee. Effective immediately, we are changing our unconditional
money-back guarantee from 30 days to 90 days. If for any reason you or your customer
are not completely satisfied with your Multi-Pure Drinking Water System, Multi-Pure
will refund 100% of the purchase price. Additionally, we are extending our warranty
coverage for housings. Effective immediately, both our stainless steel and plastic
housings will carry a lifetime warranty. The housings will be warranted for use and will
be repaired or replaced at no charge provided that the filter has been replaced at least
once per year.
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