Lifeway Foods, Inc. (NASDAQ:LWAY) Q3 2023 Earnings Call Transcript

While we remain focused on growing our core kefir sales, as we announced in August, we have recently mapped a strategy to capitalize on current consumer interest by further investing in Lifeway Farmer Cheese. Lifeway Farmer Cheese is a premium cultured soft cheese and a highly sought-after favorite in many specialty stores Our Farmer Cheese has been a cult favorite since its introduction and shows strong sales relative to distribution. It’s available nationwide. As we described on our call last quarter, one of this year’s surprise trend has been the emergence of cottage cheese recipes on TikTok and Instagram. Our Farmer Cheese is versatile, has smooth blended texture that consumers are looking for and we believe it would be a logical fit for many of those blended cottage cheese recipes.

We are currently running a series of Farmer Cheese marketing campaigns to capture the attention of those seeking a probiotic upgrade to their cottage cheese recipes. Outside of this year’s social media buzz, over the past few years, our Farmer Cheese has drawn heightened interest from consumers and retailers organically. We are acting to meet this new demand. We have initiated plans to increase cheese production, invest in technology to improve production time by more than half and implement new automation and efficiency plans to ensure the brand is equipped for future demand and distribution opportunities. Additionally, we are seeing continued progress with our guava low fat kefir and our new organic whole milk product. We will continue to test and develop new flavors and offerings in an effort to satisfy our consumers with differentiated assortment.

I will now touch on some of the marketing and advertising updates where our focus remains dedicated to driving increased consumer trial. Lifeway has invested heavily in advertising to consumers who are using grocery pickup and delivery options. We will be expanding our efforts with additional marketing programs in Q1 to catch new customers as they set their healthy intentions for the New Year. We have also been advertising digitally on Instacart, where we have seen great success in driving trial and introducing consumers to additional varieties of Lifeway products. Coincidentally, I was recently at the FORTUNE Most Powerful Women Summit, where I had the opportunity to meet some of Instacart’s amazing leadership team. I was pleased to hear that they are already familiar with Lifeway from our appearance on their company leader board week after week.

Additionally, this summer, we continued our experience-based marketing focusing on places like New York City, where we embarked upon a yoga series with kefir sampling program in Bryant Park, a pop-up with SHOWFIELDS, sampling our products in Brooklyn and various other activation. With the warm season having ended, we are pleased to report the pop-up store success. To keep the momentum, we have staffed up with new field marketing team members and are looking forward to a winter season full of events, including the Magnificent Mile Lights Festival in Chicago, where Lifeway will have a holiday float again this year. As we look forward, we continue to partner with our target social media influencers, including celebrity chefs and nutrition experts with notable presence on TikTok, Instagram or Pinterest to suggest healthy ingredient plus recipes and snack ideas incorporating our healthy Lifeway offerings.

We are spending meaningful dollars on our social media advertising and we continue to realize a positive impact on our web traffic and social following from those digital campaigns, which we have also partnered with in-store programs to incentivize retention rates and increase brand exposure. Now I will touch on some distribution updates. Since our last call, I’m pleased to report we have gained a couple of new distribution. First, I’m pleased to announce that we are working with a new food service partner that will be stocking our single-serve Lifeway Kefir at select airport retail and travel retail locations. This exposure will help the brand find new customers as they look for healthy options while traveling. We also recently received notice of new Farmer Cheese distribution coming to Cub Foods, a Midwest-based grocery chain.