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Lifeway Foods Earnings: Record Sales, Margin Gains, and 20%+ Q3 Momentum

  • Writer: Hardik Shah
    Hardik Shah
  • Aug 12
  • 3 min read
Lifeway Foods - Product Portfolio
Source: Lifeway Foods Investor Relations site

TLDR


  • Revenue Strength: Q2 net sales reached a record $53.9M, up ~18% on a comparable basis, driven by strong volume growth in kefir and Farmer Cheese.

  • Margin Trends: Gross margin expanded 160 bps YoY to 28.6%, aided by efficiencies and favorable milk pricing.

  • Forward Outlook: Early Q3 sales up 20%+, with highest weekly sales in company history and long-term EBITDA target reaffirmed.


Business Overview


Lifeway Foods, Inc. (Nasdaq: LWAY) is the leading U.S. supplier of kefir and fermented probiotic foods, with a portfolio including drinkable kefir, Farmer Cheese, ProBugs kids’ line, and innovative probiotic smoothies with collagen. Products are sold across the U.S., Mexico, Ireland, South Africa, UAE, and France. The company is recognized for pioneering kefir in the U.S. and was named Processor of the Year by Dairy Foods in July 2025.


Lifeway Foods Earnings


  • Net Sales: $53.9M, up 9.7% YoY and ~18% on a comparable basis (adjusted for a strategic retail exit and distribution change).

  • Gross Margin: 28.6% vs. 27.0% YoY (+160 bps YoY, +460 bps QoQ).

  • SG&A: 17.6% of sales, reflecting continued marketing and distribution investments.

  • Net Income: $4.2M ($0.28/share) vs. $3.8M ($0.26/share) last year.

  • Drivers: Volume-led growth in branded kefir and Farmer Cheese, manufacturing efficiencies, favorable conventional milk costs, and strategic focus on high-margin opportunities.

“We delivered $53.9 million in net sales, our highest quarter ever, with strong, volume-led growth across our core portfolio.” – Julie Smolyansky, CEO

Forward Guidance


  • Expects strongest annual sales in company history for 2025.

  • Reaffirmed FY 2027 Adjusted EBITDA target of $45–$50M.

  • Early Q3 2025 unaudited sales through August 11 reached $26.4M, up >20% YoY.

  • Highest weekly sales ever in July: $5.5M, +66% YoY.


Risks & Opportunities:

  • Opportunities: Rising demand for probiotic, protein-rich foods; growth in collagen market; expansion into club and online channels.

  • Risks: Commodity cost volatility (organic milk), competitive pricing, potential distribution disruptions.


Operational Performance


  • Distribution Gains: Expanded placement in Target (+1,100 new kefir SKUs), Publix, Whole Foods, BJ’s, Costco, Amazon Fresh, and major grocery chains.

  • Production Capacity: $4.5M in capital spending; upgrades at Waukesha plant expected to nearly double production capacity and triple bottling speed.

  • Innovation: First-to-market probiotic smoothies with collagen; Berry Blast flavor won 2025 Good Housekeeping Snack Award.


Market Insights


  • Wellness boom and GLP-1 medication usage driving demand for satiety-promoting, gut-friendly foods.

  • Collagen market projected to exceed $8B globally by 2030, aligning with Lifeway’s innovation pipeline.

  • Retailers expanding probiotic offerings as consumer awareness of gut health grows.


Consumer Behavior & Sentiment


  • Strong trial and repeat rates fueled by TikTok viral testimonials and cultural activations like National Kefir Day and sports sponsorships (NASCAR).

  • Consumers increasingly integrating kefir into daily wellness routines.

  • Younger demographics (ages 16–24) showing high engagement with brand marketing.


Strategic Initiatives


  • Portfolio focus on high-margin, branded products.

  • Expansion into club channels with Costco test in San Diego.

  • Cultural branding efforts to position Lifeway as a lifestyle icon beyond the dairy aisle.


Capital Allocation


  • No dividend; focus on reinvestment in growth capacity and marketing.

  • Healthy balance sheet with $21.2M cash and modest liabilities ($19.6M total).

  • Continued CapEx to support production scale and innovation.


The Bottom Line


Lifeway Foods is delivering record-breaking growth with sustained momentum into Q3, aided by innovation, category leadership, and distribution expansion. Investors should watch:

  1. Execution of national club rollout.

  2. Continued margin improvement amid commodity cost volatility.

  3. Brand’s ability to convert cultural buzz into long-term loyalty.



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