Royal Numico Sells Unicity -MLM Watch Dog

Report From CEO Numico Below Ed. Notes!

Ed. Note: When Royal Numico (RN) bought Rexall and Enrich, many distributors went nuts with joy. I went ho-hum. When RN announced the merger of the two I said, those europeans were "dumb as a rock."

In the U.S. almost all vertical integration by a manufacturer buying an MLM has gone bad. They don't understand the Psychology of a Network Marketing company.

Changes International and Twin Labs is one of the best examples. Twin Labs bought Changes - it was running along ok... Twin Labs decided to move it to N.Y. ! Distributors spoke with staff in Fl. and walked with their distributorships! They were bonded to the Florida staff!

The dumbest thing RN did, was to try to combine two Network Marketing companies with two different cultures and two different compensation pay plans. Double Nuts!

Rod

Friday November 8 2002

Q3 results 2002

Interview with Jan Bennink, Royal Numico, President and CEO

NUMICO - strategy and Q3 results

A new strategy

And what are you going to do with the businesses that aren't performing?

There are two things we are going to do and that's to divest those ones which I am not able to get to the high quadrant and I think from our own point of view I will not be able to deliver those. In some other businesses I will find a way to dissolve them and find other strategic partners for them.

So today has seen significant announcements. So what should investors take away from this?

Take away three words, focus, fix and drive. Focus. Focus on a clear strategy, specialised nutrition, high growth high margin. Focus on three key businesses - Baby Food, Clinical Nutrition and GNC, and an organisation which is focused to make sure that what we said we will deliver. The fixing part, we will divest Rexall. We will dissolve and find a good way and a good home for Unicity and we'll divest businesses which are non-core in Europe. We will make sure, we'll fix the supply chain and we will fix our working capital. The third word, drive. And what are we going to drive? We're going to drive our short-term, making sure that we don't lose sight of our current business. And there will be a focus on supply chain in the US and Europe and we're going to make sure that the projects , in terms of Baby Food and Clinical and GNC, the key projects and the low-hanging fruit are being taken care of as fast as we can. To make sure we also deliver short-term results. Focus, fix and drive.

You're disposing of Rexall Sundown and reviewing your options for Unicity. Why?

Rexall Sundown has nothing to do with whether the business is something that can be fixed. The underlying market of the vitamins is strong. This is more to do with what we as a company can do and can deliver. I think the management focus has to be on making sure that the assets which are performing continue to perform, and I'm talking about Baby and Clinical, which need attention, and I am talking here about GNC, which needs attention, and unfortunately I cannot do it all at the same time. So that goes therefore, to the decision to take or to dissolve or to divest Rexall Sundown, in the case of Unicity dissolve it. Why do we take the decision? Because I don't think we can handle it and think we do our shareholders a disfavour by trying to fix everything. We just have to cut our losses and make sure that we run with the ones we know are going to be winners.

Why are you exiting VMS Europe and what is the timeframe you envisage. And are there any potential buyers for Vitamex?

Why are we exiting VMS Europe? I think its the same reason as I just explained for Rexall and to a lesser extent Unicity. It is because we don't have the time to fix this. Ed Note: Why did you break it in the first place? It's interesting. It's an interesting market. We need time and the time I don't have. So that's why I'm exiting. Are we talking with potential buyers? Again the same question there. It is too early to talk to buyers. We decided yesterday, are we selling Vitamex? Yes we're selling Vitamex. When, to whom? I don't answer this. I don't know how much time we need for this. I would say that since it's an interesting business I think we can move fast on this one and by fast you know I don't want to make an over-statement but I think that in the next six months we can make headway on this one.

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