'Healthy Chocolate' looks east

MXI Corp. has sold nearly $1 billion of its Healthy Chocolate products over the past decade.

Executives of the Reno-based company believe, however, that some of the company's greatest growth lies just ahead as it makes a concerted effort to open Asian markets.

Japanese consumers, after all, eat about 50 percent more chocolate than their American counterparts, says Andrew Brooks, chief operating officer of MXI.

But equally important, the Japanese have a long experience with the network marketing that's the cornerstone of MXI's sales effort.

Today, over 260,000 independent distributors in 40 nations market MXI's products under the brand name of Xo ai, a name based upon an ancient cocoa drink of the Mayans. MXI was recently awarded the trademark on the phrase "Healthy Chocolate."

And the number of distributors continues to grow, Brooks says, as the recession lingers.

"We're a way for people to make some extra money," he says. A handful of those distributors have made substantially more than walking-around money as they have recorded income of $1 million or more. The company hosted more than 1,200 of its distributors at a celebration in Reno last May, and it's hosting them again for three days in the spring of 2013.

Those events, supported by a cornucopia of training and marketing materials, help ensure that the far-flung sales force stays in tune with MXI's brand identity, Brooks says.

For all the challenges in managing a network-sales organization, Brooks says the sales model provides the company with a wealth of data about individual consumers.

And the data allows the company to move quickly ensure that its line of products 10, currently follows consumer trends closely.

Along with a cocoa-based, healthy energy drink, MXI's independent distributors share a weight-loss shake, anti-aging capsules and the ever-popular solid, Healthy Chocolate products.

The common theme?

"We're an antioxidant company," says Brooks. The company cites research findings that raw cocoa is the top of foods rich in antioxidants.

Traditional methods of processing cocoa into chocolate products, Brooks says, cook the antioxidants out of cocoa much as a Midwestern housewife boils the nutrition out of fresh green beans.

MXI works with manufacturers who produce its proprietary, cold-processed products.

"Change your chocolate," is the company's marketing mantra.

The company's 45-employee Reno headquarters in South Meadows also serves as its North American distribution center. Six international distribution centers serve customers in Europe, Africa and Asia.

The Asian markets hold the greatest potential for growth, Brooks says, but they also present some of the biggest challenges the company has faced as governments in the region keep high barriers in place to discourage the entry into their markets of companies such as MXI.

But Brooks, who gave up plans to earn master's degree in business at Harvard to be part of the chocolate industry, thinks the MXI team is up to the challenge.

"I like hiring smart people," he says.

At the same time, MXI's executives are battle hard to control overhead costs.

As it undertook five months of negotiation on a new lease of its 75,670-square-foot building at 795 Trademark Drive, for instance, the company teamed with Avison Young industrial brokers Greg Shutt and Chris Fairchild to convince the building owner to undertake major repairs as part of the new lease.

The upshot: The landlord agreed to a new roof, repair of heating and air conditioning systems, and repair of a parking lot and painting.

Analysis by Shutt and Fairchild also armed MXI to negotiate concessions on the building's rent.

MXI Corp. is owned by Brooks and two other family members, including his mother, Jeanette L. Brooks, its co-founder and president.

The Brooks family launched MXI six years ago on the heels of their success with Pure De-lite, which rang up $300 million of sales of low-carbohydrate, sugar-free chocolate through chain-store retail channels.

As the low-carb diet craze cooled, the family moved on to launch MXI in 2005.