Lifeway Foods (NASDAQ:LWAY) reported record second-quarter net sales of $66.9 million, up 24.1% from the prior-year period, as higher volumes of its flagship kefir products and high-protein Farmer Cheese supported growth.
President and Chief Executive Officer Julie Smolyansky said the quarter marked the company’s 27th consecutive period of year-over-year net sales growth. Sales also exceeded the company’s prior quarterly record, set in the first quarter, by $3.9 million.
Sales Growth Continues, While Input Costs Pressure Margins
Lifeway’s second-quarter gross margin was 19.5%, with elevated milk prices cited as the primary headwind. The company also experienced temporary increases in resin costs for packaging and oil-related transportation costs associated with the conflict in the Middle East.
Smolyansky said Lifeway expects the additional resin and transportation pressures to subside as conditions normalize, though elevated dairy costs are expected to remain a headwind during the third quarter.
Second-quarter selling, general and administrative expenses represented 18.4% of net sales, compared with 17.6% a year earlier, reflecting brand-building and consumer-acquisition investments. On a year-to-date basis, SG&A fell 100 basis points as a percentage of sales to 17.8%, according to the company.
Lifeway reported second-quarter net income of $0.1 million, or $0.01 per basic and diluted share. Smolyansky said milk inflation compressed near-term profitability, but the company remained profitable while continuing to fund growth initiatives.
Retail Distribution Expands Across Product Lines
The company highlighted new and expanded retail distribution for products including Muscle Mates, Farmer Cheese and Kefir Butter.
- Muscle Mates, a beverage containing creatine, protein and probiotics, is available in nearly 800 Walmart locations.
- Kroger added Muscle Mates during the month, while Harris Teeter added the product along with a limited-edition kefir offering during the summer.
- Wegmans is scheduled to add Muscle Mates in September.
- Busch’s is adding the full Muscle Mates lineup and all three Lifeway Kefir Butter varieties.
- Farmer Cheese is now available nationwide at Walmart and is expected to arrive in about 450 Target stores during the fall.
- Target carries Lifeway Kefir Butter, while Meijer plans to add it in about 270 stores in the fall. Big Y added the butter during the month.
Smolyansky said the new placements broaden Lifeway’s reach and create additional opportunities to deepen relationships with major retailers. The company is focusing on replenishment and product velocity as it works to convert distribution gains into repeat purchases.
Marketing Push Targets Consumer Trial and Repeat Purchases
Lifeway used National Kefir Day and its 40th anniversary to conduct consumer activations in New York, Chicago, Miami and Los Angeles. The events included sampling, custom smoothies, merchandise and talent appearances. U.S. soccer player Rose Lavelle attended a VIP preview at the company’s New York anniversary event, where Cannons performed.
The company also cited activations tied to Lollapalooza and a frozen fruit and kefir ice cream social-media trend that it said generated more than 50 million views. Smolyansky said Lifeway is expanding creator relationships and producing content designed to direct consumer interest toward retail purchases.
“The objective was bigger than a one-day celebration,” Smolyansky said of the anniversary effort. “Honor four decades of category leadership, introduce new consumers to Lifeway, drive trial, and turn cultural attention into retail demand.”
Capacity Expansion Remains on Track
Lifeway said its Waukesha facility expansion remains on track for completion in early 2027. The company expects the project to increase production capacity, improve operating efficiency and provide greater flexibility to support demand from retail and food-service customers.
The company is also expanding food-service distribution through Sysco on the East Coast, supporting customers including college dining halls and frozen-yogurt concepts. Smolyansky said the channel expansion can create product trial outside traditional grocery aisles and introduce Lifeway products in additional consumption occasions.
Looking ahead, Smolyansky said the company’s priorities include attracting new consumers, gaining shelf space, increasing product velocity and converting current consumer interest into repeat buying. She said Lifeway continues to see demand supported by consumer interest in protein, digestive health and functional nutrition, including among GLP-1 users seeking nutrient-dense foods.
About Lifeway Foods (NASDAQ:LWAY)
Lifeway Foods, Inc (NASDAQ: LWAY) is a Chicago-based food company specializing in probiotic-rich cultured dairy products. Established in 1986 by Michael Smolyansky, the company pioneered the introduction of kefir to the U.S. market. Under the leadership of CEO Julie Smolyansky, who succeeded her father in 2002, Lifeway has grown from a single product operation into a diversified portfolio of fermented foods and beverages aimed at promoting digestive health and wellness.
The company’s flagship product is kefir, a cultured milk beverage naturally rich in probiotics, vitamins and minerals.
