XanGo LLC, a Lehi direct seller of a mangosteen-based juice, on Thursday terminated several workers as part of what it called a "strategic reallocation process."

A XanGo official declined to specify how many workers were terminated, why the cuts occurred and whether this was the first time the privately-held company has downsized its work force after five straight years of consistent growth.

Bob Freeze, vice president of public relations for XanGo, described the cuts as a "reallocation of resources, and not a layoff."

But one employee with XanGo disagreed with the characterization, saying he himself was laid off on Thursday morning and believes there were at least 35 others terminated that same day.

"This is very much a lay-off. I'd like to know where they're reallocating me," said the former employee who spoke to the Daily Herald on condition of anonymity. He said he was one of several workers escorted out of the XanGo corporate office in Lehi after a 15-minute meeting with senior management on Thursday morning.

"There were three people in my department who were laid off, and one of them had been there for three years," he said. "According to the security guard who escorted us out, there were at least 35 people laid off."

The former employee said the layoffs occurred after Kent Wood, president of XanGo, sent out a companywide e-mail on Thursday morning saying he has had to make "tough decisions" after meeting with senior executives in the past few weeks.

Freeze said the company was "reallocating corporate resources to align with its continued global expansion and provide premium service to its growing international markets."

"As a result of an evaluation of changing global needs, XanGo is implementing a strategic reallocation process that will enable us to deploy personnel and financial resources to assertively advance our service commitment in every one of our 23 international markets," Freeze said in an e-mailed statement Thursday. "This reallocation will impact a small number of employees at our Lehi headquarters, but will position us to continue to support the vibrant growth that has characterized the first few years of our company's history."

The cuts come in the wake of what the company CEO Aaron Garrity described as phenomenal international growth last year, which includes a gain of 10,000 international distributors, and the opening of new markets worldwide like that of Malaysia, where XanGo chalked up more than $1 million in revenue within the first month of doing business in the Asian country. That same year, XanGo also hired 353 employees, introduced XanGo.TV and expanded its 300,000-square-foot distribution center in Spanish Fork.

The former employee said he believes the layoffs were due to slowing sales in the U.S. market. Both the U.S. and Canada are XanGo's biggest markets, accounting for more than 50 percent of total sales.

"Since the new year began, things have started getting more and more tight. Last week, the senior executives asked managers where they could cut budgets. This week, it's personnel cuts. But XanGo still has many markets like Germany and Mexico where it's growing and doing exceptionally well," the former employee said.

"Because XanGo only has one product, and the company has based all of its growth in the past five years on that one product, some people speculate that the product lifecycle of its mangosteen juice is starting on a downward trajectory," he said. "The remedy would be to come out with new product lines like the new cosmetics line that's being launched this November."

XanGo also faces growing competition from more than two dozen rivals that sell fruit juices, powdered drinks and vitamin fizz tablets. That includes Tahitian Noni International Inc., which owns Pure Fruit Technologies, a Las Vegas company that markets exotic fruit beverages including MangoXan, a mangosteen-based drink. Not only does Pure Fruit underprice XanGo on MangoXan juice in health food stores, its parent, Tahitian Noni, also sold $2 billion worth of Noni juice in its first 10 years by 2006, according to an Associated Press report last month.

But Freeze maintains XanGo has "experienced magnificent growth domestically and internationally in its first five years of business. As we now approach a million distributors worldwide, a major part of our ongoing success will be dependent on improving XanGo's premium service to our growing global network of independent distributors."

Founded in 2002 with just six workers, XanGo now has 700 employees including 650 in Utah, and nearly 750,000 distributors worldwide.