'We have retained a cult-like following even as we have gone mass market'

Lifeway Foods CEO: ‘We want to be to kefir what Hershey's is to chocolate'

By Elaine Watson contact

- Last updated on GMT

Lifeway Foods CEO Julie Smolyansky (right) with her brother and CFO Edward Smolyansky
Lifeway Foods CEO Julie Smolyansky (right) with her brother and CFO Edward Smolyansky

Related tags: Kefir, Fermentation

When Julie Smolyansky became president and CEO of kefir market leader Lifeway Foods in 2002 after the sudden death of her father (its founder), the stock went into freefall as investors feared the 27-year old wasn’t ready to run a public company. They were wrong. 

Today, Smolyansky sits at the helm of a rapidly-growing business with global ambitions (net sales surged 22% to $119m in 2014 vs $10.7m in 2001, the year before she took over) with a brand that completely dominates the market (Lifeway has a 95%+ share of kefir sales in the US).

It’s also bang on trend. Fermented foods are hot property right now, from kombucha to tempeh, while consumers in multiple markets are now getting their heads around the fact that bacteria can be a good thing.

(All Lifeway products contain seven to ten billion CFUs of 12 live and active kefir cultures per cup, creating a tangy-tasting low-fat, high-protein product with the consistency of drinkable yogurt that is claimed to be 99% lactose-free as the milk sugars are broken down in the fermentation process.)

Meanwhile – regulatory issues in Europe notwithstanding – there is a growing body of evidence to support the health benefits of probiotics (live microorganisms that, when administered in adequate amounts, confer a health benefit on the host) she said.

“It’s like the science is finally catching up with 2,000 years of story-telling.”

New facility in Wisconsin will give Lifeway the capacity to get to $500m in sales

So when it comes to unlocking the potential of her brand, and the kefir market as a whole, she’s still just scratching the surface, Smolyansky told FoodNavigator-USA.

Lifeway kefir
Julie Smolyansky: “It’s like the science is finally catching up with 2,000 years of story-telling.”

“We’ve just bought a new facility in Wisconsin that will give us the capacity to get to $500m in sales, so that gives you an idea of our immediate ambitions. But market penetration of kefir is still relatively small so there is so much potential to grow.”

‘The food industry is being flipped on its head right now’

And while kefir is still a relatively niche product in the US, awareness is growing rapidly, and it is now sold in Walmart and Target as well as Whole Foods and Sprouts, appealing to  foodies, yogurt fans and health enthusiasts, but increasingly to anyone interested in trying to eat more healthily, she said.

Lifeway frozen kefir
Julie Smolyansky: "The food industry is being flipped on its head right now and people want access to healthy food everywhere they go, whether it’s to a baseball game or to a movie theater."

“Today everyone is health conscious to some degree. The food industry is being flipped on its head right now and people want access to healthy food everywhere they go, whether it’s to a baseball game or to a movie theater.

“We want to be ​[to kefir] what Hershey's is to chocolate or Tropicana is to orange juice.”

‘If you start eating it at six months old you’re a consumer for life’

And to date, she’s done a pretty impressive job, introducing several successful brand extensions since taking the helm that have expanded the occasions/dayparts in which kefir is consumed (frozen desserts, cheese, single-serve shots) and most notably, in the case of the ProBugs sub-brand, added a completely new set of consumers to the kefir category: kids.

“ProBugs ​[kefir in a pouch, launched in 2007] has been our most successful launch because it has brought completely new users into the market. Kefir is tart and tangy and still relatively new for the American taste palate, so if you are trying to introduce it to a 40-year old for the first time, it can be a challenge, whereas if you start eating it at six months old you’re a consumer for life.”

The brand was so successful that ProBugs Blast followed – a 100ml kefir shot designed for snacking and targeted at the tween market - along with ProBugs ‘push-up’ frozen kefir.

‘Millennials want to know that your brand stands for something’

But will Lifeway lose its cool image if it becomes a billion dollar brand available in every store?

Julie Smolyansky CEO Lifeway Foods
Julie Smolyansky: "We are really lucky because we have retained a cult-like following even as we have gone mass market.”

The key is keeping your integrity, said Smolyansky, who noted that Millennials in particular “want to know that your brand stands for something, that there are people behind the brand that care, and that you are socially responsible. We are really lucky because we have retained a cult-like following even as we have gone mass market.”

And while Lifeway is a publicly listed company, the Smolyansky family still holds a controlling stake in the business, added Smolyansky, who has just struck a deal to start manufacturing kefir in Ireland to supply the European market, and now supplies product to Mexico, Canada, Hong Kong, Kuwait and the Caribbean, and sees strong potential in scores of other markets from Columbia to the UK.

By this stage in their development most companies are completely diluted. We’ve done things conservatively, but we’ve stayed profitable and we haven’t lost control of the business.”

Lawsuits: ‘It can feel like extortion’

As to what keeps her awake at night, everything from operational challenges to litigation (like many manufacturers, Lifeway has been sued over its use of the term ‘evaporated cane juice’), says Smolyansky.

If you are on the receiving end, “it can feel like extortion​”, she added, but says she has come to accept that such lawsuits are “just a cost of doing business​”.

And her advice to other entrepreneurs and food business leaders?

“Love what you do, because it’s such hard work. For me, it’s purely a labor of love. If I didn’t love what I do, I just wouldn’t be able to do it.”

Smolyansky will be speaking at Food Vision USA​ in Chicago on October 27-29. Have you signed up yet?

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ProBugs push-ups Lifeway Foods
New Lifeway Products at Expo West 2015
New products introduced at Expo West in March 2015

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2 comments

Apparently Fuddster was a comic actor

Posted by Douglas N. Daft,

She's a honey.

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General Manager, Chiquita Fruit Solutions

Posted by Maurice "Mo" Moragne,

This is a wonderful product and shows the continuing trend of true innovation taking place outside of the multi-nationals.
Well done!

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