Lifeway Foods (NASDAQ:LWAY) executives highlighted record sales, margin expansion, and sharply higher profits in fiscal 2025, citing continued consumer demand for protein-rich and probiotic foods, distribution wins for key products, and ongoing capacity investments.
Record 2025 sales growth, capped by a strong fourth quarter
President and CEO Julie Smolyansky said fiscal 2025 was “a remarkable year” for the company, with “record-breaking growth” and “operational excellence across every dimension of our business.” Lifeway reported full-year net sales of $212.5 million, up 13.7% year-over-year, driven by higher volumes of Lifeway-branded drinkable kefir and growth in Lifeway Farmer Cheese.
In the fourth quarter, Lifeway posted net sales of $55.4 million, up 18% year-over-year, which management attributed to strong volume growth of Lifeway-branded products. Smolyansky said the quarter marked Lifeway’s 25th consecutive quarter of year-over-year net sales growth and that 2026 was “off to a great start.”
Margin expansion and higher profitability
Lifeway reported gross profit margin of 27.4% for the full year, an increase of 140 basis points compared to the prior year. Management attributed the improvement to volume growth in core Lifeway-branded products, manufacturing efficiencies supported by investments in the Waukesha facility, and a favorable impact from conventional milk pricing.
Fourth-quarter gross profit margin was 27.8%, up 250 basis points year-over-year, which Smolyansky characterized as evidence of disciplined execution and the ability to scale profitably.
Selling, general, and administrative expenses were 19.6% of net sales for the full year, “up slightly” from last year due to continued investment in marketing, sales activations, and retail expansion. In the fourth quarter, SG&A was 20.7% of net sales, with the company “leveraging more than 200 basis points year-over-year,” according to management.
Net income for the full year rose to $13.9 million, or $0.91 per basic share and $0.89 per diluted share, compared with $9.0 million, or $0.61 basic and $0.60 diluted, in the prior year. Smolyansky said the result represented 54% net income growth. Fourth-quarter net income was $2.5 million, or $0.17 per basic share and $0.16 per diluted share, compared with a net loss of $0.2 million in the year-ago quarter.
Demand drivers: health and wellness, GLP-1s, and dietary guidelines
Management pointed to what it sees as sustained demand for “protein-rich probiotic functional foods,” with consumers increasingly focused on health and wellness and the role of gut health in overall well-being.
Smolyansky also discussed the “surging” prevalence of Americans using GLP-1s and said active users are “consistently seeking out nutrient-dense foods that support gut health,” which she said positions Lifeway at the intersection of key consumer trends.
In addition, Smolyansky highlighted what she described as validation from the U.S. government, stating that newly released Dietary Guidelines for Americans “specifically name kefir” and emphasize fermented foods and gut health. She also said full-fat dairy was included in the new USDA food pyramid and that kefir was mentioned in supplemental materials, which she called “a tailwind for our business.”
Distribution gains, innovation launches, and a new licensing deal
Smolyansky said Lifeway’s performance continued to be led by its staples, Lifeway Drinkable Kefir and Lifeway Farmer Cheese. She described drinkable kefir as the “bellwether” of the business and said it continues to drive trial and awareness for the broader category.
For Farmer Cheese, Smolyansky said Lifeway expanded distribution to 2,000 Walmart stores nationwide in the fourth quarter, calling it a “game-changing milestone” to increase footprint and trial. She also said the company extended its rotation at Costco in the San Diego region.
On innovation, management cited several 2025 launches and initiatives:
- Probiotic smoothies with collagen, which the company said continue to perform well.
- Muscle Mates, which Smolyansky said “will soon roll out” in grocery stores, fitness centers, and select retailers nationwide, targeting demand for performance-driven functional beverages and the U.S. creatine market.
- Lifeway Kefir Butter, described as a probiotic cultured butter positioned to meet demand for premium butter and renewed interest in dairy fat.
Smolyansky said Lifeway showcased Muscle Mates and Kefir Butter at Expo West and received “extremely enthusiastic” consumer and retail reactions.
The company also announced a new supply agreement and its “first-ever licensing deal and royalty agreement” with Open Farm. Under the partnership, Open Farm will source ingredients from Lifeway for a premium pet food product called GoodGut. Smolyansky said the deal introduces Lifeway to a new category and could grow awareness and revenue “with no extra cost to Lifeway.”
Capacity expansion and 2026–2027 outlook targets
Lifeway said its Waukesha facility expansion is progressing as planned, and the company recently held a ribbon cutting for phase II of its $45 million expansion. Smolyansky said Lifeway is on track to double manufacturing capacity, increase operational efficiencies, expand production hours and staffing, and strengthen the Midwest as a hub for kefir production.
Management said “Phase III,” targeted for completion by the end of 2026, focuses on installing a state-of-the-art cooling system to support fermentation and bottling operations. Smolyansky also said the company has strengthened operations and supply chain teams with new dairy-industry talent.
Looking ahead, Lifeway reiterated its long-term target of $45 million to $50 million in adjusted EBITDA for fiscal year 2027, and Smolyansky said the company is “once again poised to deliver record-breaking sales” in fiscal 2026.
Smolyansky also noted Lifeway’s 40th anniversary, saying the company remains committed to its mission of bringing “best-in-class” probiotic and nutritious foods to customers and that it would provide an update when reporting first-quarter 2026 results.
About Lifeway Foods (NASDAQ:LWAY)
Lifeway Foods, Inc (NASDAQ: LWAY) is a Chicago-based food company specializing in probiotic-rich cultured dairy products. Established in 1986 by Michael Smolyansky, the company pioneered the introduction of kefir to the U.S. market. Under the leadership of CEO Julie Smolyansky, who succeeded her father in 2002, Lifeway has grown from a single product operation into a diversified portfolio of fermented foods and beverages aimed at promoting digestive health and wellness.
The company’s flagship product is kefir, a cultured milk beverage naturally rich in probiotics, vitamins and minerals.
