Lifeway Foods Inc.
CEO's innovations promise further growth
by Josannah Rose Birman
MEDILL Reports - Northwestern University, Chicago
Nov 06, 2008
Got kefir? If Julie Smolyansky, Lifeway Foods Inc. CEO, has
her way, you will soon. With such innovations as a yuppie smoothie bar called
Starfruit and kid-friendly Probugs kefir, this 33-year-old hopes to hook
everyone on probiotic dairy drinks.
Smolyansky took charge of the
From 2003 to 2007 Lifeway’s net income shot up 40 percent
and the average annual sales growth was 22.7 percent, to $38.7 million last
year. In the first half of this year sales rose 21 percent to $22.6 million.
Smolyansky is reaching out aggressively with new products
and chain-store distribution that promise even faster growth in the future. Her
recipe to spread kefir, a probiotic dairy beverage, to the masses is simple:
take a dash of innovation, add a variety of different markets and shake well.
She looks at trends in the food business to see how they can
be applied to Lifeway’s product mix.
“There is a tremendous focus on innovation and new product
development within our company,” Smolyansky said. “I think that is where growth
will always happen and it keeps it fresh.”
A couple of new products are in the works, but Smolyansky
declined to specify them. However, she did disclose that Lifeway is
concentrating on expanding kefir for kids, which now includes the Probugs line
and a minority interest in First Juice Inc., a
"Parents are always looking for healthy options for
their children,” Smolyansky said. “I don’t think there are enough options out
there for healthy children’s eating.”
Howard Halpern, an equity analyst at Taglich Brothers Inc.
who has a speculative-buy rating on Lifeway stock, believes the children’s
segment already has been an integral and growing part of Lifeway’s business.
“It’s been an important piece of their overall strategy,”
Halpern said. “It’s building a young base of customers.”
Lifeway recently expanded distribution to retailers such as
Costco, Wal-Mart and Target. This has become more important during the rough economic
period, Halpern said.
“To be in large chains is another positive,” Halpern said.
“It’s an outlet for consumers to see and try and grow with the product.”
As the economy tightens Halpern is taking a cautious
approach to Lifeway. Right now both dairy and fuel prices have decreased, he
noted, but a rise in these prices, though highly unlikely, could be detrimental
to Lifeway.
“If commodities were to reverse and go up that would be a
warning sign that margins could contract,” Halpern said.
Smolyansky sees the poor economy working to her advantage
because consumers may dine out less and entertain more often at home, so
selling through mammoth retailers like Cotsco will insulate her business.
"That just means that person is going to the grocery
store more often and is more likely to pick up our products," Smolyansky
said.
For Halpern, though, the picture might not be quite as rosy.
“If the economy continues to deteriorate,” Halpern said.
“We’ll just have to wait and see if the consumer is going to pull back.”
Lifeway’s kefir café, Starfruit,
Halpern declined to comment on Starfruit because it is too
recent to gauge its performance.
Smolyansky is not just going to tuck her products away in
“Any possible distribution should be a good thing for their
top line results,” Halpern said.
As a result of expansion,“we are definitely creating new
jobs and will probably hire a handful of people for 2009,” Smolyansky said.
She needs to fill positions in production, marketing and
various other areas.
“They’re still a growing company and if they hire the right
people in the right positions they should be able to take advantage of making
the proper contacts to grow the company at a faster rate,” Halpern said.
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