Dive Brief:
- Key shareholders at kefir maker Lifeway Foods are seeking the removal of CEO Julie Smolyansky and urging the company to explore "strategic alternatives,"according to a filing with the Securities and Exchange Commission filed on Feb. 21.
- The shareholders at the cultured dairy drink manufacturer pushing for change are Ludmila Smolyansky, whofounded Lifeway, and her son Edward Smolyansky. Julie is their daughter and sister, respectively.
- Ludmila and Edward,who collectively control 38.1% of Lifeway's shares,没有提供进一步的细节why they are seeking change at the Illinois-based company. Edward is currently a board member forLifewayandpreviously served as the company's COO and CFO.Ludmilahasserved as chairperson of the boardsince November 2002.
Dive Insight:
As a small food maker with heavy ownership by the founding family, the outcome over what has suddenly become a very public dispute could hinge on the position of a very well-known dairy giant: Danone.As of last September, Danone owned 22.4% of Lifeway, making it the company's single-largest shareholder.
Danone, should it align withLudmilaand EdwardSmolyansky, would effectively push Lifeway to at least consider a sale since they would hold more than half of the company's stock. It also could provide momentum for the appointment of a new CEO.
Lifeway's kefir and fermented probiotic products would make it a logical acquisition for Danone given its sizable stake and familiarity with the company, or for another large dairy maker that could provide similar support for the smaller company's brands through innovation and marketing. Danone could foldLifewayinto its portfolio of other dairy brands likeActiviaorOikosas well as its plant-based items like Silk and So Delicious.
With amarket capitalization under $100 million, any potential buyer could snap up Lifeway for a minimal amount without disrupting their balance sheet.
虽然生活方式扩展到其他产品recent years, its drinkable kefir offering is responsible for 82% of its sales,a regulatory filing shows.Cheese is a distant second at 11%.
Lifeway has struggled in recent years with declining sales. In 2016, the companyposted sales of $124 million, which have largely trended downward in recent years. For 2020, the last full year Lifeway announced results,sales came in at $102 million.
As a smaller company, Lifeway is more susceptible to volatile swings in commodity prices and it doesn't have the same deep pockets as its larger CPG competitors like Danone, General Mills and Chobani. Folding Lifeway into one of these companies would alleviate these challenges.
Lifeway has attempted to make inroads recently in other better-for-you categories during the pandemic like aplant-based oat lineand the rollout ofadaptogenic functional mushroom beverages. It alsospent $5.8 million in 2021 to purchase GlenOaks Farms, a probiotic drinkable yogurt brand.
In a statement released on March 1 in response to the regulatory filing, Lifeway's independent directors issued their support for Julie Smolyansky and the company's strategy, citing eight consecutive quarters of year-over-year net sales increases. Lifeway has been among the companies in the food space to benefit from the acceleration of consumers turning to healthier offerings during COVID-19.
The release pointed to product innovation and acquisition as platforms to "drive future success," and said that the directors "look forward to continued growth under her leadership."
"We believe the Company is reaching an important inflection point supported by ongoing research around probiotics and their influence on gut health, mental health and immunity," they said.
JulieSmolyanskybecame the youngest female CEO of a publicly held firm when she took overLifewayat the age of 27 in 2002,according to the company's website. Revenue was $12 million when she took the helm.
