Hinode’s rise was one of Brazil’s most conspicuous multi-level marketing success stories. Revenue climbed from R$170 million in 2011 to R$2.7 billion in 2018, when its consultant network reached about 850,000 and its conventions filled major venues. ¹ But the same rapid expansion exposed operational strains and intensified debate over how the model worked in practice.

The company’s defenders draw a distinction between legal direct selling and a financial pyramid: in the former, earnings come from sales to end consumers; in the latter, they principally depend on recruiting participants. Hinode denied operating a pyramid scheme, and investigations cited in the reporting did not substantiate the allegation. ² Still, the business model drew criticism from consultants who said they had to buy regularly to preserve bonuses, sometimes leaving them with unsold stock. ¹

Management’s account of the downturn focuses on a business that outgrew its systems. Eduardo Frayha, Hinode’s global vice-president of sales and marketing, said: “We were not structured for this great growth.” ¹ Revenue then fell to R$1.5 billion in 2019, while the network lost 200,000 consultants, according to the report. ¹

Former leaders offer a more critical interpretation. Geraldo Rocha, who spent 12 years with Hinode, said repeated changes to the business plan reduced leaders’ bonuses and made it too costly to remain active; he later joined a competitor. ¹ His experience reflects frustration among some former consultants, though it also formed part of his explanation for moving to another network.

Hinode’s response has been to cut products and franchises, professionalize management, undergo KPMG auditing and refocus on lower-income consumers. Its first third-party distribution partnership, for Gusttavo Lima’s GL fragrances, is intended to bring younger customers and additional income opportunities to an estimated 650,000-person network. “We see it as a great opportunity for our consultants to sell and earn more,” president Sandro Rodrigues said. ¹ The company is now betting that a more disciplined structure can succeed where scale alone did not.