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Kefir can compete with Greek yogurt says Lifeway CEO as sales rise

By Jim Cornall+

17-May-2016
Last updated on 17-May-2016 at 11:09 GMT2016-05-17T11:09:04Z

Lifeway saw a 10% increase of net sales in Q1 2016, and is launching new probiotic supplements.
Lifeway saw a 10% increase of net sales in Q1 2016, and is launching new probiotic supplements.

US supplier of kefir cultured dairy products Lifeway Foods is expanding with probiotics supplements, and hopes to take over from the Greek yogurt sector, investors heard at the first quarter earnings conference call.

Last week, the company reported its financial results for the quarter ended March 31, 2016.

Sales up but gross profit down

First quarter of 2016 net sales increased 10.0% to $32.6m from the first quarter of 2015. Gross sales increased 12% driven by higher sales, slightly offset by increased trade promotions and allowances.

Gross profit as a percent of net sales declined to 26.4% from 28.3% in the same period last year.

The company said that the first quarter of 2016 gross margin decline reflects increased manufacturing costs primarily related to the ramp up of the Waukesha, Wisconsin, facility, which continued to expand production volumes during the quarter.

Adding SKUs at Walmart

Julie Smolyansky, CEO of Lifeway Foods, said she was excited by the growing brand awareness and innovative new products.

She pointed to some recent highlights that include five additional SKUs at Walmart; three from the children’s ProBugs line, and two protein kefir items.

Smolyansky said Lifeway is the leading manufacturer and marketer of kefir in the US.

“Based on recent IRI data, over 92% of total US households were spending their kefir dollars on the Lifeway brand,” she said.

New products for children and on-the-go adults coming

She noted that the company was expanding with new products.

“While we have been primarily focused on the development of drinks and food-related probiotic dairy products, we believe that we have a strong opportunity to expand into new product categories behind the strength of the Lifeway brand and our successful history of innovation,” she explained.

“I'm excited to share that we plan to introduce probiotic supplements. Our probiotic supplements, in a pill form, were designed with on-the-go travelers and women in mind. We plan to introduce three SKUs, each formulated with live and active cultures, that help keep digestive and immune systems happy and healthy.

“In addition, our new probiotic chewables for kids are a gentle and effective way to restore and balance the good bacteria in the digestive tract and support healthy immune function in children two years of age and older. Each supplement tablet includes nine probiotics and will be available in strawberry and grape flavors.”

Taking over from Greek yogurt

Smolyansky said that she believes kefir can be the “next biggest food thing,” saying that it could, “take over some of the Greek yogurt space. Greek yogurt is pretty much flat, we want to take and transfer some of those users into kefir users.

“We know that the probiotic categories globally will be doubling in the next five years, so that's a huge market opportunity.”

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