GO
Loading...

Is MonaVie Endorsement Risky?

Last week, Indy driver Tomas Schecktergot a much needed boost from MonaVie, a multi-level marketing brand whose main selling point is its fruit drink highlighted by the much talked about acai berry.

The sponsorship enabled Scheckter, whose career has been marked by inconsistency, to compete in this weekend's Indy 500. But it also contributed to a huge bump in fan support for the 29-year-old driver.

Tomas Schecter
Source: Business Wire
Tomas Schecter


Why did this happen?

Because unlike most consumer products sold by Fortune 500 companies, MonaVie isn't just purchased, it can be sold by anyone. The beverage is housed in wine bottles and is only sold through a network of distributors, whose goal is to build the biggest tree they can in the name of racking up commissions.

So Scheckter's performance in this weekend's Indy 500 is important to these people because it can only lead to more awareness.

But as teams and individuals get more desperate for sponsorship in this environment, it seems like they are willing to accept any deal that comes along. Many of these new relationships, including Scheckter's with Monavie, come with plenty of strings attached.

I'm not going to get into the whole scientific debateof whether acai is good or bad or whether MonaVie has the right percentage distribution of fruits. We'll leave that to the message boards.

What Scheckter should be most concerned about is the numbers game.

Stories of people working from home and making millions are the ones that prevail, but the potential to make money on multi-level marketing companies is very limited.

That's the case with MonaVie.

First of all, anyone can become a distributor as long as they buy the product. But, according to one former MonaVie distributor I spoke with, the people that usually make money are those who have come from previous network marketing backgrounds or people who got in on the ground floor when the company launched in 2005.

The company freely admits the longshot odds. Its 2008 income disclosure statement reveals that 82 percent of distributors make an average of $2,032 or less.

When you consider that it costs approximately $1,800 to buy the required one case (four bottles) a month to take part in commissions, it's all a wash.

When you see that only 3.3 percent of people who distributed MonaVie in 2008 made more than $10,000, you can understand where there's a risk to Scheckter.

Unrealistic expectations of selling this stuff are especially causing tension these days.

I've met overzealous sellers who can no longer have conversations with their friends because they are so focused on getting them into their commission line. They often try to make conversation seem more natural by working in how the drink made them feel better in some way.

If Scheckter's performance and exposure leads to more people trying to distribute MonaVie, the odds game can now fall on him.

The other hard part to rationalize about this drink is that while the company says that the acai comes from the remote parts of the Amazon, there's never been any scarcity.

Strangely, I've never talked to a distributor who doesn't drink the product themselves and, perhaps more telling, I've never ran into a person who raved about it who also didn't sell it. Part of that might be because they believe in it, but part of it is that they have trouble selling the actual drink to consumers who aren't distributors.

I don't fault Tomas Scheckter for taking the deal with MonaVie. He wanted to drive in the Indy 500 and he wasn't doing so without the investment. But in attaching his name with the large percentage of people who aren't experiencing the returns they had hoped for, I hope he knows what comes with the logo on his car.

Great Car Special Reports On CNBC.com Including:

Questions? Comments? SportsBiz@cnbc.com

Featured