US cultured dairy products group Lifeway Foods has been growing apace for a number of years as consumer awareness of kefir and probiotic products rises. From its base in the US, the company has launched a range in the UK and plans to expand in Europe and beyond.
just-food: What are your hopes for the show?
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Smolyansky: Lifeway just launched our frozen kefir in the UK. We’re now sold at Whole Foods, just expanded into Holland & Barrett and Harvey Nichols. Our goal is to continue to expand throughout all of Europe, throughout the UK and eventually the world, frankly. I believe probiotics and kefir can heal the body. I believe it is something important for our global health and wellness, and potentially can reduce healthcare costs and save lives. Things like diarrhoea is the second leading cause of death among child in the developing world. I think there are applications among our products and other probiotics products. But I think Lifeway has a strong brand in the US at about US$100m in revenue and it is the time to take that wonderful brand and make it a household name around the world. To position and lay the foundation for global expansion. We’re looking for customers, distributors, importers. I have also walked the floor, looked at what else is on the market. I already have my product launch for March that I’ve come up with, based on this show, which will be top secret until Expo West.
just-food: When Lifeway announced the first UK listing, in Harvey Nichols, you seemed quite cautious about giving the market too many expectations on much further you could move beyond the UK. Are you now more confident Lifeway can break into the Continent?
Smolyansky: Yes, I am. I have seen a lot of excitement about frozen kefir. The world is aware of yoghurt and kefir drinks. We are the first to have taken kefir, which is widely distributed throughout Europe, created a frozen kefir and disrupted that space. From the last six months, I continue to feel more and more optimistic about global expansion opportunities. I do feel confident that, in time, we will be successful overseas. We have a couple of strategies – from licencing to co-packing – and each market will be different.
just-food: What has been the reaction of UK consumers in testing? Did they understand what kefir is?
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By GlobalDataSmolyansky: Most people have said it’s on their radar. I spent a day speaking just to media and almost everyone had said ‘I have heard of it, I’ve never had it [but] I’ve never seen it in frozen form, this is very interesting.’ The fashionable crowd loves it – it’s fat free, gluten free, GMO-free and under 70 calories a serving. You can’t beat that.
just-food: Have you had talks with any of the major supermarket chains in the UK yet? When should we expect listings with UK multiples?
Smolyansky: Yes, we are in talks. I think in 2014 you’ll see several things coming up.
just-food: Sometimes brand owners that find a niche feel there is a danger in going too mainstream. How do you strike a balance?
Smolyansky: We do it in the United States – we are in Whole Foods but we are also in Wal-Mart. The option for healthy eating, probiotics and products like Lifeway should be available for everybody. To keep it just for one certain group would not really be humane in my opinion. We are providing a solution to help alleviate that global health crisis and it should be available and accessible to everybody. The key is to get it into as many consumers’ hands as possible. Marketing and how you position your brand is key. We’ve continued to maintain a cult-like feeling in the United States while spreading it to the masses.
just-food: What other European markets are you looking at?
Smolyansky: The Nordics are great, Germany is a great market. There are so many. At the end of the day what everyone wants is access to healthy eating and nutritious food. I’m on the UN Global Entrepreneurs Council and we launched a survey to ask the youth of the world to design the world they want to live in. The seventh-biggest desire is access to healthy and nutritious food. No matter where you are, what your economic or education level is, access to healthy and nutritious food is a top priority for people in the world.
just-food: Have you had to modify your marketing in Europe after the health claims rules here affected the messages of other probiotic companies?
Smolyansky: Not really because the United States is going through that as well. It’s very similar. What bothers me is that governments don’t allow manufacturers to empower consumers to make the best health decisions and food choices. Every country, including the UK and Europe, is undergoing these health crises and we are spending so much medicating people for conditions that could be prevented completely by eating healthily.
just-food: If companies make claims, they need to be backed by robust science.
Smolyansky: There’s plenty of snake oils out there and they have ruined it for companies who legitimately have some science behind them. We should be considered a partner in trying to empower people. We look to doctors, nutritionists, dieticians to help relay that message. We will do our best to try to communicate what we can. At the end of the day, we do have a problem with health. It’s ruining economies.
just-food: As a businesswoman, the sweet spot is that, as well as improving people’s health, you can make money at the same time. There is no point getting away from that.
Smolyansky: Absolutely, of course. Any business should be trying to solve a problem. We’ve already been trying to solve the problem of digestion and wellness. We saw that very early on. My dad was pioneer in this space; he was talking about health and wellness when people were taking about calories and dieting.
just-food: Would you make specific moves into the developing world if you think there is a health crisis?
Smolyansky: I would love to. The developing world is in major need of a brand like Lifeway. The health benefits of this is mind-blowing. Over 7,000 research studies in just the last few years have been published talking about the benefits and there’s no denying that probiotics can heal people. Everything from IBS, to Crohn’s disease, to side effects of antibiotics use, all sorts of gastrointestinal issues. The gut has the second-largest amount of neurons after the brain [and] is where the entire immune system is controlled. In developed markets, because of antibiotics use, travel, high stress, other medications, we disrupt our gut. In the developing world, because of unsanitary conditions, they are getting those conditions for different reasons. I am confident probiotics could reduce the issue of diarrhoea. The challenge in that is the distribution model and infrastructure. It’s a great opportunity but distribution would be tough, although there are organisations like the UN that could be a great partner for that.
just-food: Food multinationals like Nestle and Danone are looking more at nutrition to grow their businesses. Could Lifeway have a partnership with companies like that to boost distribution or be better served being part of a multinational?
Smolyansky: The multinationals are so stacked with infrastructure that they are not fast and nimble. What it takes a multinational to accomplish in five years, we can accomplish in one or less. When they launch a new product, it takes them three years to do product development, research, marketing, blah blah blah. It takes us three months. I don’t know if there is a benefit in being a multinational. They are trying to be like us.
just-food: Have you had expressions of interest in Lifeway?
Smolyansky: When you have a US$100m business that’s got 30 years of staying power, that’s not quick a start-up and fail, is a proven concept and continues to grow 20-30% in a category that continues to expand and you own 97% of that category – of course every company is calling, no doubt about that. Of course, Danone is a partner and has been for many years – 20% of our business – but look at the innovation that has come out of Lifeway out of being quick and nimble and being out of the box.
just-food: Where would like to see the business in three to five years?
Smolyansky: I don’t want to say exactly but the goal, in my life, is I’d like to see it as a billion dollar company. We just acquired Golden Guernsey Dairy in Wisconsin. That’s 170,000 sq ft and gives us five times extra capacity so that gives you some idea that we envision in the near term to be half a billion dollar revenue in the US.
just-food: There is still opportunity to go after in the US, then?
Smolyansky: Yoghurts and probiotics and kefir are in their infancy. On our children’s products, the ProBugs in the pouch was launched right in the recession and has only been available to that uspcale market but we are already seeing the recovery in the United States because mass market is finally picking ProBugs up. Our kefir is everywhere but our children’s products are just starting to get the distribution going.
