Lifeway grows in Q3 with organic market

By Clarisse Douaud

- Last updated on GMT

Related tags Organic food

Kefir maker Lifeway foods has announced a 26 percent increase in
sales in 3Q 2006 - a leap in revenue brought about in part by its
July acquisition of organic kefir company Helios Nutrition.

Morton Grove, Illinois-based Lifeway has said it achieved sales of $6.6m for the quarter ended September 30. Full results for the quarter have yet to be filed with the Securities and Exchange Commission, but the figures confirm the muscle that buying up Helios has given it in the kefir market. Minnesota-based Helios accounted for approximately $0.9m in sales for the nine weeks since the signing of the purchase agreement on July 31, 2006, of which $0.76m came from the Helios branded kefirs. The remainder was from its fluid milk operations.

This suggest Lifeway's existing offering has also risen, by around $0.2m. Operating profit for the last three reported quarters has been $0.9m, $1.4m and $0.9m.

Lifeway claims to be the country's leading supplier of probiotic dairy product kefir and, since acquiring its top competitor Helios, the only supplier of organic kefir.

Its growth points to an equally steady rise in demand for kefir and probiotic products. Indeed Euromonitor International valued the US fortified/functional dairy market at $1.25bn at retail in 2005, with a compound annual growth rate of 7.8 per cent since 2002.

Yoghurts, while not being the biggest sub category ($153m at retail in 2005), are the fastest growing sub category, with CAGR of 25.8 per cent since 2002.

Kefir is a dairy beverage that contains ten types of probiotic cultures. Regular yogurt usually contains only two or three of these cultures. Probiotics are hailed for their potential to minimize LDL or "bad" cholesterol, as well as for optimal digestive functioning.

While probiotic yoghurts have been a market hit in Europe, they have not been met with the same enthusiasm in the US. Here, consumers haven't been as keen to buy into the "friendly bacteria"​ mantra of probiotics. It is noteworthy that despite a perceived public mistrust for probiotics, Lifeway is still cleaning up in the category.

"…The recent acquisition of our top competitor, Helios Nutrition, has extremely strengthened our position in the rapidly growing natural and organic food industry,"​ said Lifeway CEO Julie Smolyansky.

Lifeway appears to have capitalized not only on the growing popularity of its kefir, but also on the organic foods trend. In 2005, the Organic Trade Association reported a 24 percent increase in sales of organic dairy foods to $2.1b, positioning this segment as the second largest in the $14bn organic foods industry.

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