5 Things We’ve Learned About The Booming Essential Oils Business

Image courtesy of Young Living

If you’re on Facebook, there’s a good chance that — between friends trying to sell you LuLaRoe leggings and whatever it is that Rodan + Fields is — you’re also seeing regular posts about essential oils and their various purported uses, from making you or your home smell nice to somehow miraculously (but not actually) curing diseases. Regardless of the pitch, the underlying message is the same thing: Buy, buy, buy. And these smelly oils are now a big business..

For its current issue, The New Yorker took a deep dive into the world of essential oils sales and, specifically, the two biggest multi-level-marketing companies that convince your Facebook friends to sell them: Young Living and doTerra.

The full essay is worth taking the time to read, but here are a few highlights.

1. Yes, you really are hearing about essential oils more now than you used to.

Young Living was founded in 1994, by a man named Gary Young. (So the company name isn’t only an appeal to youth.)

Between 2007 and 2017, though, Young Living has seen tenfold growth, the New Yorker explains. And then there’s the competition: doTerra launched in 2008, when several former Young Living executives got together to form a new company.

By 2012, doTerra was about the same size as Young Living, with millions of distributors — largely women — signed up to sell each product. In 2015, doTerra claimed it had passed $1 billion in sales.

2. The founder has an… interesting history.

The New Yorker devotes several paragraphs to explaining Young’s backstory, and it’s quite a tale.

He attributes recovery from a severe spinal injury in his early 20s to a 253-day regimen of drinking “nothing but water and lemon juice.”

Following his recovery, he opened a health center in Washington state in 1982. That clinic included birthing services; one of the children he delivered there, his daughter, died after being submerged for an hour in a whirlpool bath.

The next year, Young claimed he could detect cancer with a blood test; he was then arrested for practicing medicine without a license and pled guilty to a misdemeanor charge.

He then opened another clinic, this time in Tijuana. A reporter sent in a blood sample taken from a cat, posing as a patient; representatives for the clinic told him “his” blood “showed signs of aggressive cancer and liver dysfunction” (the cat had neither) and recommended the clinic’s detox program — for a cool $2,000 per week.

From there, Young eventually became fascinated by oils and began planting fields full of peppermint, tansy, and lavender in Idaho. In 1994, he and his third wife launched Young Living.

In 2000, Young opened another clinic, this time in Utah, that administered “alternative therapies” to patients facing a whole host of medical issues, including heart disease and cancer. One of the doctors on staff there had recently had his medical license reinstated after pleading guilty to manslaughter for providing a fatal overdose of a drug to one of his patients — who never actually had the cancer she said she did — a decade earlier.

Young also had challenges reining in spending as the company grew, former employees told the New Yorker, building replicas of a Wild West town and a medieval castle, at which he suited up in armor and competed in jousting tournaments as “Sir Gary.”

The company’s former COO (one of the eventual doTerra founders) also told the New Yorker he was alarmed when he saw a video of Young, whose “only medical degree is a doctorate in naturopathy from an unaccredited school,” performing gallbladder surgery and administering essential oils by IV at his Ecuador clinic.

That COO was eventually fired; an email Young send him read, “Satan exercised dominion over you to the point where you started thinking that you had knowledge and ability greater than anyone else, including me, the creator of the company.”

3. The folks at the bottom don’t make money.

There’s no denying the companies make money, but the thing about a multi-level-marketing business is that while generally, the people at the top of the pyramid do quite well, it’s pretty much only the folks at the top who do well.

One Young Living user and seller the New Yorker profiled said she encouraged herself by saying, among other things, “I went from making zero dollars a month to over zero dollars a month,” which is not exactly a ringing endorsement of riches.

The Distributor level, Young Living’s lowest rank, comprises about 94% of the company’s members. The Royal Crown Diamond tier — the level, bluntly, that makes bank — accounts for less than 0.1% of participants.

Distributors have to buy about $100 worth of merchandise per month in order to receive commissions on their Young Living sales, according ton the New Yorker, and 94% of the company’s two million active members made less than $1 each in all of 2016.

Related: John Oliver wants you to go tell five friends why multi-level marketing stinks

That makes quite a pyramid — but of course, pyramid schemes are illegal.

“You have the two legs of your pyramid,” a doTerra employee explained to the New Yorker’s reporter. “I mean, not a pyramid, but, you know, it has a triangular shape.”

4. It’s a massive global supply chain.

When the New Yorker reporter toured doTerra’s headquarters, she glimpsed an entire warehouse “full of fifty-gallon barrels” of oils from all over the world: Bulgaria, Oman, nations in the Horn of Africa.

As recently as last month, Young Living got busted for the Department of Justice for importing products from endangered plants that were harvested without permission.

The plea agreement said that the company and its contractors harvested 86 tons of rosewood in Peru over a four-year period, distilling it down to just under 1,900 liters of oil, which sold for between $3.5 and $9 million.

An expert told the New Yorker that if demand — specifically, for frankincense — keeps up and isn’t properly managed, “we risk causing an ecological crash of a rare and endangered ecosystem.”

5. It’s hard to police false or unsubstantiated claims.

The Food and Drug Administration is, of course, tasked with stopping companies from making completely unsubstantiated claims about their products. You can’t launch an ad saying, “Our pill cures cancer!” if you have not in fact run clinical studies proving that your pill cures cancer; the FDA goes after companies for that sort of thing all the time.

In traditional retail, it’s comparatively simple to train new employees how to toe the company line with customers. In multi-level, work-from-home, distributed networks like Young Living and doTerra, though, it’s a lot harder. The front-line salespeople are mostly just regular folks working their own social networks, online and off. And that means that one of them might perhaps tweet something like a listing for, “oils that could help prevent your contracting the Ebola virus,” as one vendor did.

The FDA showed up at doTerra’s headquarters over that one, the company’s chief medical officer told the New Yorker. In the wake of that, the company has put in a 50-person compliance team to scour social media for “noncompliant” language and has begin issuing educational materials to its “Wellness Advocates.” Which is great, except that there’s no requirement or guarantee that anyone will ever actually look at or use the materials.