Lifeway Foods, Inc.

What they do

Lifeway manufactures and markets drinkable kefir and other cultured dairy products, primarily under the Lifeway, Fresh Made and GlenOaks Farms brands, and also supplies private label customers. It operates manufacturing and distribution sites in Morton Grove, Illinois; Waukesha, Wisconsin; Philadelphia, Pennsylvania; and a warehouse in Niles, Illinois. In 2025, roughly 95% of revenue came from products made at its own facilities, with about 5% from domestic and Ireland-based co-packers.

Revenue drivers

• Drinkable Kefir (excluding ProBugs) — The core business: $181.4 million in 2025 net sales, or 85% of the total, up from $153.5 million (82%) in 2024. Sold in organic and non-organic sizes, flavors and milk types.
• Cheese — European-style soft cheeses including farmer cheese, white cheese and Sweet Kiss; $16.6 million in 2025, or 8% of net sales, up from $14.6 million in 2024.
• Cream and other — Primarily cream, a byproduct of kefir production; $8.7 million in 2025, or 4% of net sales, roughly flat versus $8.3 million in 2024.
• Drinkable Yogurt, ProBugs and Other dairy — Smaller lines: drinkable yogurt ($2.3 million, 1%), ProBugs children's kefir ($2.2 million, 1%) and other dairy such as Fresh Made butter and sour cream ($1.3 million, 1%) in 2025. Both yogurt and ProBugs declined from 2024 levels.

Recent performance

Second-quarter 2026 net sales were a record $66.9 million, up 24.1% year over year and $3.9 million above the prior record of $63.0 million set in Q1 2026. First-half 2026 net sales reached $129.9 million, up 29.9% year over year and about 61% of full-year 2025 net sales. Gross margin fell to 19.5% in Q2 2026 from 28.6% a year earlier on elevated milk prices, higher resin costs and oil-related transportation costs; year-to-date gross margin was 23.4% versus 26.4%. Q2 net income was $0.1 million, or $0.01 per diluted share, versus $4.3 million, or $0.28, a year earlier; first-half net income was $4.8 million, or $0.31 per diluted share. Full-year 2025 net sales were $212.5 million with net income of $13.9 million and diluted EPS of $0.89.

Strategy

Management continues to extend the Lifeway brand beyond core drinkable kefir into fresh categories and channels including convenience, foodservice, club and drug. It is investing in marketing and brand awareness, with SG&A at 18.4% of net sales in Q2 2026 and 17.8% year to date. The company is completing a Waukesha, Wisconsin expansion targeted for early 2027, which it calls transformative for capacity. Product innovation, flavors, packaging and new configurations remain ongoing priorities, with R&D handled largely by existing staff and facilities rather than a dedicated department.

Risks

• Milk and input cost pressure — Elevated milk prices, plus higher resin and oil-related transportation costs, cut Q2 2026 gross margin to 19.5% from 28.6%, and management calls this the primary margin headwind.
• Competition for shelf space — Kefir faces limited direct competition but competes with spoonable and drinkable yogurt and non-dairy probiotic products, and Lifeway names Danone, General Mills, Chobani, Hain Celestial, Horizon and Nestle as better-resourced competitors.
• Concentration in one product — Drinkable kefir other than ProBugs was 85% of 2025 net sales, so any shift in kefir demand or pricing has an outsized effect on total results; smaller lines such as drinkable yogurt and ProBugs declined year over year.
• Takeover and stockholder-related uncertainty — The 10-K lists the impact of proposals to acquire the Company or actions taken by stockholders, including those related to a possible acquisition, among the risks that could affect results.

Outlook

Management describes the current margin pressure as temporary and expects gross margin and profitability to fully recover in 2027, helped by pricing actions, a positive conventional milk cost outlook for 2027 and operational efficiencies from ongoing investments. It cites the Waukesha expansion, targeted for completion in early 2027, along with new retail and foodservice distribution, as positioning the company to serve growing demand. No specific revenue or earnings guidance figures are provided in the excerpts.