Sunday, February 22, 2004

Herbal entrepreneur proving that sex sells

Local business reaps millions from supplements

By James McNair
The Cincinnati Enquirer

Steven Warshak, says his sprawling Forest Park call center could use another 300 people to keep pace with the current demand for his herbal products.
FOREST PARK - Neither studmuffin nor studmaker does Steven Warshak appear to be.

Nor, for that matter, does he come across as a savior to the millions of American women who have lost their libido and want it back.

Yet the busy telephone lines at the Berkeley Premium Nutraceuticals sales center suggest Warshak might be the potentate of pills for people who want to, uh, maximize their sexual pleasure. Seven days a week, around the clock, Warshak's order-takers punch in names, addresses and credit card numbers of customers, many responding to a TV ad starring a guy known as Smiling Bob. Bob's pitch goes like this:

This is Bob. Bob is doing well - very well indeed. That's because, not long ago, Bob realized that he needed something better in his life. And what did he get? Why, a big boost in confidence, a little more self-esteem - and a very happy Mrs. at home.

Why is Bob smiling so much? Had you visited the company's Web site last summer, you would have learned that Bob uses an herbal product called Enzyte that gave him bigger erections. Warshak has since dropped that claim. He recently said Enzyte delivers "firmer, fuller, stronger erections."

Whether Enzyte has an inflationary impact or not, Smiling Bob and the companion ad campaign for Avlimil, a year-old product for women, have been effective in driving sales. Founded by Warshak less than three years ago, Berkeley posted $100 million in sales in 2003 and employs about 800 people in Forest Park and Blue Ash. For this year, Warshak is forecasting $260 million in sales.

"If the products weren't as good as they are, we wouldn't be able to have this kind of growth," said Warshak.

But while Enzyte and Avlimil have drawn consumer interest, Berkeley's company also has found its way onto the complaint logs of consumer watchdogs.

As of Friday, the Greater Cincinnati Better Business Bureau and the Ohio Attorney General's Office had received 1,630 complaints about the company's billing practices - but not about the products' effectiveness. Berkeley was formed in January through the consolidation of Warshak's other companies, LifeKey, Warner Health Care, Wagner Pharmaceuticals and Boland Naturals. The BBB said all had unsatisfactory ratings. Ohio Attorney General Jim Petro is investigating them.

"This company is clearly the number one generator of complaints for us," said Leslie Kish, director of operations for the local BBB.

Competitive business

The $18 billion-a-year herbal supplements field is a crowded one. Pharmaceutical companies, herbal supplements manufacturers, street vendors and Internet dealers offer remedies containing herbs, roots, extracts and animal material that help form the basis of folk medicine and alternative healing. For thousands of years, people have been obsessed by aphrodisiacs, love potions and other substances to improve their sex lives.

Warshak, 37, lives in a stately house in Amberley Village with his wife, Carrie, a high-risk-pregnancy surgeon, and their three children, aged 12, 4 and 2. In the 1990s, he built a company called TCI Media that sells sign space at ice rinks and soccer fields across the country to advertisers such as Hershey, Nike and Kraft. But the Lakota High School graduate, who earned a finance degree from Ohio University, aspired for more.

"It just became clear that there was going to be a ceiling," Warshak said. "It could only grow so far, and we got as far as we could go and we started looking for another industry that we could believe in and hopefully grow. So then I spent I guess a year looking into nutraceuticals, naturals and vitamins."

Immersing himself in market research and trade shows, Warshak zoomed in on several categories that held promise. Viagra's effectiveness on male sexual dysfunction convinced him that a product was needed for men who aren't dysfunctional, but who aren't the sexual dynamos they once were.

Garden State Nutritionals, a New Jersey company, devised the formula for Warshak. It included legendary sex-drive boosters from around the world. Warshak dubbed it Enzyte. It hit the market in the spring of 2001.

With a boom.

Warshak's company touted a survey of 100 Enzyte users, 87 percent of whom reported an average increase in erection size of 24 percent. Orders poured in.

Today, Warshak boasts of having 2 million Enzyte users, including those in the 30-day trial period. Jim Wilmink, who has known Warshak since they were in grade school in West Chester, said he wasn't surprised by Berkeley's transition from a basement office to an 800-person enterprise.

"I remember when he was answering the phones himself," said Wilmink, whose company, Insignia Design Associates in Mount Adams, does graphic design work for Berkeley. "It's pretty amazing to watch."

No celebrity pitches

Unlike Viagra and Levitra, Warshak's products offer up no names of celebrity customers. Nor could he come up with names of regular people who would attest to Enzyte's efficacy. Just himself. He said he has used Enzyte for almost three years.

"I'm still all man, nowhere near dysfunction, but nowhere near 18 either," he said.

But Warshak has dropped the claims of Enzyte's enlargement powers.

"When we brought that to new partners who know this industry a lot better than we had, it was clear that unless it was a third-party independent trial, you shouldn't use it," he said.

Warshak began advertising a new product for women a year ago. Avlimil, its Web site says, spurred "enhanced libido, stronger arousal and the potential for more frequent and more satisfying climax." That, according to a undisclosed number of women on a daily regimen "including Avlimil," the site says.

Like Enzyte, Avlimil has turned into a gold mine. Warshak counts 1 million Avlimil users, who pay $100 to $140 for a four-month supply, the same price as Enzyte. Between those two products and several others unrelated to sex, Warshak's telephone reps take 20,000 calls a day, 30 percent of which result in a sale, he said.

"There are times when we've got 300 people on the phone and 400 waiting," he said.

Doubts from experts

Medical experts and consumer advocates shake their heads at that. The U.S. Food and Drug Administration does not regulate herbal supplements, unless they're unsafe or making untruthful claims, and the Federal Trade Commission doesn't have the staff to investigate the endless number of herbals on the market. That leaves it up to consumers to judge the products.

"It's a Wild West," said Dr. Arthur P. Grollman, a professor of pharmacological sciences at the State University of New York at Stony Brook. "It costs nothing to make. They hype them enormously, and the FTC can't begin to keep up with the advertising."

"The real story is that things have a big placebo effect," said Grollman, who has testified before the U.S. Senate on the need for tougher rules on herbal remedies. "If you take it and believe in it, a placebo will work on everything. Your cold is going to feel better, you're going to feel less tired and you'll perform sex better."

Consumers' biggest risk, though, might be giving their credit card numbers to Berkeley.

Most of the complaints were filed by customers who had signed up for an introductory 30-day free supply of Enzyte or Avlimil. In their complaints, they say their credit cards were billed for a second month's supply - before the initial 30 days were up. Protests to the company, many say, go nowhere. But once they reach the BBB or attorney general, Berkeley resolves the complaints.

Joe Mantellav, 59, of Little York, N.Y., said he called to cancel his Enzyte subscription two or three days before his 21-day trial period elapsed. A customer service rep, however, told him his credit card had already been billed for another month's supply - and that it was too late for a refund, he said.

Warshak doesn't duck or play down the criticism.

"We really want to be here for the long haul," he said. "We're not trying to screw people or be misleading. There was a time when we were a bit na‘ve, but we're careful and very conscious, and it's very important to us that the consumer understands what they're getting or what they might not be getting."

Warshak said billing problems are hard to avoid. Because his products call for long-term daily regimens, he said, they are shipped automatically to ensure that customers have an uninterrupted supply. If products aren't shipped until orders are received, deliveries fall behind and regimens are broken, he said. To help put an end to that dilemma, Warshak said he is relying less on outsourced call centers and has invested $4 million in his own telephone systems.

Meanwhile, Berkeley has made Blue Ash a national shipping point for sexual aids. It is also a big national advertiser. Its commercials run on the ESPN, Lifetime and Oxygen networks, among others, and on nationally syndicated AM-radio talk shows. Its print ads appear in magazines such as Men's Health, Oprah, Redbook and Better Homes & Gardens.


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