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First Sell $1.5 Billion in Wellness Products. Then Find Out How They Work

First Sell $1.5 Billion in Wellness Products. Then Find Out How They Work

(Bloomberg Businessweek) -- “Snake oil.”

My husband, an orthopedic surgeon, scoffed as I rubbed a few drops of lavender extract onto my wrist from a $30 vial. I, too, am a skeptic of alternative medicine, but ahead of a trip to Japan, I was prepared to try anything to combat my typically terrible jet lag. The essential oils from DoTerra International had shown up in my Instagram feed as plant-based ­solutions for almost any modern discomfort. What did I have to lose?

Two weeks later we landed in Tokyo, and for the first time in my life I slept soundly upon landing. The lavender was a success. Less so was my test of Balance, a frankincense-­based DoTerra blend. I mistakenly used it for midday energy, but it’s actually supposed to promote relaxation. Luckily, it had no effect at all.

Since starting in 2008, DoTerra has become the most influential purveyor in a fast-­growing essential oils industry ­valued at $5.1 billion in 2017 and projected to reach $25 billion by 2024, according to Verify Markets. That’s largely because of its use of multilevel marketing, a ­commission format that rewards ­nonsalaried “wellness advocates” for selling the company’s products—a side hustle often carried out over social media.

Last year the company exceeded $1.5 billion in annual sales, a benchmark that its closest competitor, Young Living, has also hit. Now, DoTerra is looking to broaden its reach with a handful of wellness clinics across the country; the first Prime Meridian Health outpost opened in October in St. George, Utah, and 20 more will pop up across the U.S. by the end of 2019.

First Sell $1.5 Billion in Wellness Products. Then Find Out How They Work

Not yet sold on essential oils? Here’s the 101: They’re distillates of volatile aromatic compounds, which give flowers, fruits, and tree bark their distinctive scents. “Brands like DoTerra have gone a long way in bringing essential oils to a much broader audience,” says Dr. Yufang Lin, an intern­ist with the Cleveland Clinic Wellness Institute who uses ­aromatherapy in her medical practice.

But do they work? Lin says they can. Limited studies show that lavender minimizes anxiety, and peppermint supports digestion, for instance. For many other botanicals, she says, “long-spanning traditional use tells us that at least these herbs are safe to use.” Not exactly a ringing endorsement.

There just isn’t a lot of research out there. And risks—­including how tea tree oil can have a neurotoxic effect on children or how basil and sage can stimulate uterine contractions in pregnant women—resurface now and again. “It’s a full-time job to stay on top of it all,” says Aimee Raupp, head of Chinese medicine at the Well, New York’s holistic health club. Both she and Lin emphasize the importance of professional oversight when using essential oils.

First Sell $1.5 Billion in Wellness Products. Then Find Out How They Work

In an effort to demystify its products and put some hard science behind its hard sells, DoTerra in January hired hospital administrator and infectious disease specialist Dr. Russell Osguthorpe as chief medical officer. He oversees an advisory committee that runs clinical trials in partnership with several universities. “DoTerra sells 100 different essential oils, but there aren’t clinical studies in human beings that tell us how to use them,” he says. “Our goal is to learn what the right doses are and how often you should be taking them—because we don’t even know that basic information.”

If they prove to have placebo effects, Osguthorpe says, DoTerra will leave publication rights up to its partner institutions. “We’re doing research to advance the field, not our business,” he explains.

This would establish a new level of transparency for the brand. Currently the company doesn’t allow the U.S. Department of Agriculture to certify its products as organic. Instead, it operates by its own purity standard. “Basically, we’d have to give away our trade secrets to get certified,” says Kirk Jowers, an executive vice president. “We don’t want our competitors going to our farmers and starting bidding wars.”

Until more studies come out, the company is pushing forward with new products—and its Prime Meridian clinics. The third such practice will soon open; patients will pay $99 per month for unlimited access to board-certified medical doctors and osteopaths who specialize in preventive, integrative care.

“Acupuncture, massage, essential oils—we’ll offer anything that can help treat the patient in a better way,” Osguthorpe says. “But the doctors are not going to be salespeople.”

To contact the editor responsible for this story: Chris Rovzar at crovzar@bloomberg.net, James Gaddy

©2019 Bloomberg L.P.