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With the natural
and organic sections in grocery stores growing and appealing more to shoppers, Lifeway Foods is positioned for growth by making deals
for shelf space for the kefir products with most of the nation’s major grocery chains
Consumer Goods
Dairy Products
(LWAY-NASDAQ)
Lifeway Foods Inc.
6431 West Oakton
Morton Grove, IL 60053
Phone: 847-967-1010
Julie Smolyansky
President and CEO
Interview conducted by:
Lynn Fosse, Senior Editor
CEOCFOinterviews.com
Published - November 24, 2006
BIO:
JULIE SMOLYANSKY
President and CEO, Lifeway Foods
Julie Smolyansky has been the Director of Sales and Marketing for Lifeway Foods since
September 1997. However, because she is also the daughter of Lifeway founder Michael
Smolyansky, one could say Julie has actually been with this successful Chicago company
from the very start. She has vivid memories of being an early "guinea pig,"
sampling new flavors and formulations, and traveling to food shows across the country to
help her dad as he built his business into the only U.S. company ever taken public by a
Russian immigrant.
Working with her father to build on his successes and take Lifeway into the next
generation is now Julie's focus. In her official position at Lifeway, Julie has begun
working toward her ultimate goal to take Lifeway's kefir products from niche to mainstream
with a new marketing, advertising, and public relations campaign that has been directly
responsible for the growth of Lifeway Foods in the last 3 years. Under Julie's marketing
plan, Lifeway has seen an increase in sales of over 4 million dollars, or approximately
70%.
Most recently, Julie helped to develop the new Lifeway Organic line of kefir products. The
organic line, to be introduced in the spring and summer of 2001, offers yet another kefir
alternative for health conscious consumers and rounds out Lifeway's product offerings to
include choices for people of every lifestyle and taste.
Her success is the result of good genes and solid training right here in Illinois. Julie
is a graduate of the University of Illinois (B.A., 1996), where she studied effects of
advertising and cultural influences. She has presented research at the American
Psychological Association's Annual Meeting, and has spoken at Nutracon's annual anti-Aging
Nutraceutical conference.
Company Profile:
Lifeway, recently named Fortune Small Business' 94th Fastest Growing Small Business for
the third straight year, is America's leading supplier of the cultured dairy product known
as kefir. Lifeway offers 12 different flavors of its Kefir beverage, Organic Kefir and
SoyTreat (a soy based kefir), and a new line of organic childrens kefir drinks called,
ProBugs(TM). Lifeway also produces a line of products marketed in U.S. Hispanic
communities, called La Fruta Drinkable Yogurt (yogurt drinks distinct from kefir). In
addition to its line of Kefir products, the company produces a variety of cheese products
and recently introduced a line of organic pudding called It's Pudding.
CEOCFO: Ms.
Smolyansky, what was your vision when you took over as CEO and how has that developed?
Ms. Smolyansky: “My vision was to
expand distribution of our Kefir products, continue to innovate and build upon my father’s
dream, and to increase shareholder value.”
CEOCFO:
How have you been doing that?
Ms. Smolyansky: “We have been expanding
distribution and continuing to build on the dream of Lifeway Foods’ founder Michael
Smolyansky, who is also my father, through product innovation and packaging changes. They
include bringing the packaging up to date with what is going on in the beverage and
natural food industry, as well as some ingredient innovations and new product development.
We also have increased our marketing and advertising strategies.”
CEOCFO: Please give us an example of a newer
product or changes in your products offering.
Ms. Smolyansky: “A new product from
Lifeway Foods is our new children’s kefir that is all organic; it has new innovative
packaging and has not been used in the US yet. It is sort of like a Capri Sun package,
with the straw sipping component already attached to it. Therefore, there is no fumbling
with the straw and it also has a valve to keep the product from spilling out and although
it is great for children, moms and dads love it as they can use it for snacks.”
CEOCFO:
What is kefir and who is using it in general?
Ms. Smolyansky: “Kefir is like a
drinkable yogurt, but it has more vitamins and culture and more probiotics than pretty
much any other cultured dairy products. The users are many of the shoppers at Whole Foods
Market Inc. (Nasdaq: WFMI) and Wild Oats Markets, Inc. (Nasdaq: OATS), and our products
have been there for many years. Therefore, the natural food world has already been aware
of our products. In addition, we have been pushing it and marketing it to mass market to
everyday users, health conscious individuals and children, and people that have learned
about the many health benefits.”
CEOCFO:
You have recently announced a new distribution to the mainstream, will you tell us about
that?
Ms. Smolyansky: “Ralph’s Grocery
stores (owned by Kroger) on the west coast, but mainly in southern California and ACME
Grocery (owned by Albertson’s), which is a chain in the Philadelphia and tri-state
area, have both agreed to pick up our line. About 400 stores have agreed to take up the
product, so we have had tremendous success. Not only are our products currently
distributed at Whole Foods Market and Wild Oats Markets, but we are also sold at many of
the other mass-market chains such as The Kroger Co. (NYSE: KR), Publix (Publix Asset
Management Company), Safeway Inc. (NYSE: SWY) and Albertson’s LLC, all throughout the
country. Many of those mass-market chains are chains that have added a store within a
storefront by including a natural and organic section in their grocery store to appeal to
the shoppers that are using natural and organic foods. That sector continues to grow and
expand and is definitely an industry trend.”
CEOCFO:
What is your competition like and how do you stand out?
Ms. Smolyansky: “We really do not have
competition per se; we just acquired our only competitor Helios Nutrition Limited and we
just made that acquisition in the summer. In kefir there is no competition anymore; we now
operate both brands and control both brands. Aside from that, I would say that our
competition would be other cultured dairy products or other beverages. However, as
probiotics continues to gain distribution and awareness in people’s minds, they are
coming on board. We have a superior product, with 10 live active cultures and no other
cultured dairy products have all of cultures that we have. Therefore, we beat our
competition by making a high-quality product.”
CEOCFO:
Are you involved in teaching people about probiotics as well as your product?
Ms. Smolyansky: “For example, in
Chicago, where we are based out of, we have a big billboard that we have had for a few
months; it is the most highly sought after billboard in the city and it is right on the
expressway where the junction is the closest to the highway and the lowest to the ground.
In the billboard, it reads “We’re probiotics, are you?” and there are
bottles of kefir pictured in the billboard. We do a lot of print advertising in
publications like Shape Magazine and Health Magazine. We do radio advertising and we are
always promoting probiotics. We were the first company to write probiotic on our labeling
of our products. We are definitely doing our part in terms of educating our consumers
about the benefits of probiotics and I think it is just going to continue to grow, and the
awareness of probiotics is going to continue to grow. I recently joined the board of the
International Probiotic Association and I am doing my part in the industry.”
CEOCFO:
You have other products that are not kefir; will you tell us about them and do you see any
becoming a bigger part of your business?
Ms. Smolyansky: “We have expanded our
business into other products that are not probiotic, but we still remain in the natural
and/or organic and/or perishable dairy product lines. We made the acquisition of a natural
cream cheese company, which is a perishable product that works with the distribution of
our existing products. We able to just put it into our distribution system. We recently
launched an organic pudding line, ‘It’s Pudding!™’, which is not a
probiotic, but it fits nicely into our portfolio of products and the distribution system.
We look for products that will be symbiotic with our product and our distribution system.
We try to increase shareholder value and expand our product lineup so we are not just a
one-product company.”
CEOCFO:
Is product expansion mostly by acquisition or do you also develop your own products?
Ms. Smolyansky: “It is both. The
pudding line we developed and the cream cheese we acquired. Mostly other products that we
have in the pipeline are probiotic so that is really our focus; the dairy, probiotic area.”
CEOCFO:
Your 3rd Quarter results were out recently showing a good 3rd
Quarter and you’ve been named to Fortune’s small business fastest growing
companies for the last two years; will you tell us about the financial picture of the
company and how do you continue?
Ms. Smolyansky: “We are a highly
profitable company and we continue to show good results and continue to work on reducing
our costs, while increasing our distribution. We are in a growth stage and we will do
whatever it takes to continue our growth at this point and make sure that we capitalize on
the interest in probiotics and organic and natural dairy products. We are investing and
reinvesting in the company and the marketing and into our sales force. We are building a
strong team to go out and sell more kefir and with that, the financials will continue to
get stronger and stronger.”
CEOCFO:
In closing, why should investors be interested and what should people know about Lifeway
that may not jump off the page?
Ms. Smolyansky: “We have been in
business for 20 years so we are not a start-up. We have 20 years of financial record to
show our strength in the industry. We have been public for 18 years. We continue to show
strong results every quarter. We have never had a losing quarter; we have always increased
our sales and revenues. We continue to increase our value, whereby increasing our cost of
goods, by increase our volume of buying in raw materials at lower prices. We have a lot of
great things going for us because of the business we are in, which is the organic and
natural food industries and that alone, continues to grow. There is much interest in the
category. Aside from that, within the industry, we are selling a cultured diary product,
which is probiotic, there is a lot of buzz around probioticis, and awareness is only just
starting. We are just at the beginning of the probiotic growth and exposure. Most
recently, the Today’s Show and Fox and Friends both featured our products, both Kefir
and ProBugs™, within the same week, three weeks ago. Two weeks ago, Oprah had one of
her expert doctors, Dr. Mehmet Oz, he was talking about the benefits of probiotics, and
while he could not mention Lifeway or Kefir specifically, he did go into prescribing some
of the benefits of probiotics. We all know that when Oprah gets on something, it really
takes off. I think that because we are both in an organic and natural industry as well as
within that industry, it is highly sought after and just at the beginning of consumption
here in the United States.
When I took over 4 years ago when my father passed away, I was 27 years old, while maybe I
was inexperienced in business, I clearly have demonstrated the ability to grow the company
and make the changes that were necessary. I actually believe that because of my age, I am
very close to my target market and I can relate to what that market is interested
in and what they are shopping for and most of my friends have young children, which is
where probiotics are received. I talk to my friends and try to find out what they would
like for their children. Therefore, I think it serves the company well to have a young
managing group that is in-touch with our core users. Aside from that, another product that
we manufacture is our Hispanic drinkable yogurt and as they all know, the Hispanic market
continues to boom here in the states and especially in certain key cities where Hispanics
are the majority of the population. In most Latin countries, they use drinkable yogurt as
a staple; there are 60 brands of drinkable yogurt in Mexico, and so we are offering a
product that meets the demand of the population as well. We have a couple of great thing
going for us. We continue to innovate; we launched a pomegranate-flavored kefir, which is
the first and only cultured dairy product flavored with pomegranate. That has become one
of our number one sellers. We continue to innovate and create new products that are
interesting and appealing to influencers and trend makers of our country. We are
experiencing a lot new flavors that are not in existence yet. We are very motivated and
excited. My brother is the CFO of the company and between my brother and I we are
thrilled, excited and passionate about the company and what we do. We have shown that we
can be trusted and grow our business.”
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