Lifeway Foods, Inc. (NASDAQ:LWAY) Q4 2023 Earnings Call Transcript

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An example, as we have discussed previously, is our initiative to capitalize on heightened consumer interest in soft cheese products by further investing in Lifeway Farmer Cheese. Over the past few years, including in 2023, our Farmer Cheese has seen increased demand from customers and retailers. Additionally, our Farmer Cheese is a logical, healthy upgrade to the blended cottage cheese recipes that have emerged and buzzed throughout social media in 2023. We have strategically activated media to drive engagement and have begun to increase cheese production and invest in more efficient production to match the increased demand. I will now touch on some marketing and advertising updates. In the winter, we staffed up our field marketing teams and continued our experience-based marketing with numerous events.

Recently, Lifeway Kefir and Farmer Cheese were featured alongside cravings mixes at a brunch hosted by Chrissy Teigen during Natural Products Expo West. We’re looking forward to Coachella next month, where Lifeway products will be featured at Camp Poosh activations with. We also have a packed spring and summer with participation at music festivals, yoga events, and much more. We believe these in-person experiences will allow us to connect with our consumers on a deeper level during their wellness journeys. We have continued increasing our investments in targeted advertising to our consumers who shop online and use retail websites for their product discovery. We further expanded these programs in Q1 of 2024 in an effort to capture healthy New Year’s intentions.

We advertise consistently on retailer e-commerce sites and generally e-commerce platforms such as Instacart to acquire new customers, while basket size introduces adjacent Lifeway offerings and build loyalty. Our e-commerce efforts are supported by search, display, social, and influencer advertising to educate those unfamiliar with kefir and stimulate demand. We also partner with dietitians and experts for local news segments, where we are able to highlight our brand attributes and demonstrate how versatile Lifeway products are in smoothies, recipes, and on the go. We employ a wide range of marketing tactics with public relations to support the growth of the kefir category and Lifeway-specific products and initiatives. In January 2024, we ran a large in-store promotion across many retailers, placing Lifeway-branded products on visible end caps and creating new temporary refrigerated spaces to showcase our items.

These interruptive placements help to expose new customers to the Lifeway brand and create kefir customers from customers who do not typically shop our section. Our online, in-person, and in-store efforts are all coordinated to drive trial and boost retention rates. Now I’ll touch on some distribution update. As we announced last quarter, we started working with a foodservice partner to begin stacking single-serve Lifeway Kefir at some airport and travel retail locations. This is a great opportunity to gain exposure to traveling customers seeking healthy food from around the country. Farmer Cheese orders also began shipping in Q4 to Cub Foods, a Midwest-based grocery chain. We are excited by this development as we continue to drive awareness of our Farmer Cheese.

We believe there are plenty of incremental distribution opportunities for the brand in the future. Our relationships with our key retail partners remain very strong, and we maintain a constant dialogue with them as we seek incremental distribution opportunities that make sense for each of our great products, including our top-performing kefir flavors, ProBugs, and Farmer Cheese. We have recently seen incremental placement on Lifeway products at Publix, Gelson’s, Kroger, and others. Before closing the call, I would like once again to thank the Lifeway team for their incredible efforts in 2023. We have broken multiple company sales records throughout this year and delivered greatly enhanced profitability throughout the year, and that’s a testament to the efforts of our team.

We have the right people in place to deliver exceptional results once more in 2024. I am so excited to carry this momentum into the year ahead and continue our mission to deliver best-in-class probiotic and nutritious food to our health-conscious consumers. With that, thank you very much for listening to this call today and your interest in Lifeway Foods. We look forward to updating you on our progress and momentum on our first-quarter 2024 call. Have a nice day.

End of Q&A:

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