Bloomberg Audio Studios, Podcasts, radio news. You're listening to Bloomberg Business Week with Carol Masser and tim Stenoveek on Bloomberg Radio. I want to bring back Julie Smolanski. She's CEO of Lifewave Foods. She's been on with us in the past. Well, I've spoke to her back in December. The company LifeWay Foods. You might know it if you're a listener, if you're a viewer, or if you've been to a grocery store
because to three hundred fifty million dollar market cap. They make keifer and farm cheese, so you might have seen their products on the shelves. They reported earnings earlier this week, Tuesday, they came out with the numbers. The market reaction was on Wednesday, share surged to hire by more than fourteen
and a half percent. The company reported a forty four percent year every year increase in earnings per share, Net sales up three point three percent year over year, and it was the twenty second quarter of consecutive growth under Julie's leadership. Julie joins us once again from Los Angeles. Julie, there's a lot to talk about. I mentioned that you were on with us back in December to discuss the company rejecting an unsolicited offer, a takeover offer by Denown
North America. What is the status of the back and forth now between the two companies.
Well, we are in.
Court and we are working to defend this hostile takeover. It's a classic David and Goliath story. But you know this, their offer farly undervalues the company, and we're fighting for all shareholders and we know that we're at the tipping point right now. We have, you know, a strong balance sheet and we're not a distressed company. So you know, we feel that the offer is really undervalues us, and we feel that the reason why they think that they can take us over in a hostile manner are the
very contract that we're disputing is invalid. It's against Illinois state law. All shareholders did not agree to it, and uh it gives a minority shareholder control over management and board decisions. So we believe that the Cook County courts will side with us. And this situation is really unprecedented, and you know, we're fighting against the largest B corp
in the world who's behaving like an activist. It's it's unprecedented Uh, and it's not something we typically see in the natural food industry at a time when you know, other companies are being valued at exceptional rates. We just saw Poppy being acquired by Pepsi for a billion two billion dollars. You know, we're in the probiotic space. We have a lot of science behind our product. Uh, in two thousand years of history. This is not a fad,
This is not a trend. This is a two thousand year old staple product that my ancestor is, my great great grandparents, grandmothers, you know, developed and protected and you know, my father brought Keefer to America and he pioneered this and we pioneered this. LifeWay is the premier keyfer company in the world, and so it's no surprise to me
that they want to steal us. But you know, I'm going to make sure that all shareholders benefit from a good value of our company, one that we know and you know we're on targets to strong, continued, strong performance.
Well, I do want to say you sent a message out on social media earlier saying that you would be on our program. A little later, you cause said you were going to defend LifeWay. Kafir against corporate raiders and bullies, and you called it shameful when the largest B corporation in the world behaves like greedy hedge funds. Denone did send us a response to that, a lengthy response. I'm
going to read from it and get your reply. It says, in part, Julie Smolansky's out delegations against denown are false and detached from reality. There's no raid or hostile bid since LifeWay's board decided in November twenty twenty four to reject Denown's highly attractive twenty seven dollars per share acquisition proposals,
depriving LifeWay shareholders of a very significant premium. Denote has been a major shareholder in LifeWay for more than twenty five years and is defending a legally binding shareholder agreement. The statement continues to say, the only greed demonstrated here is by miss Molansky at the expense of LifeWay's public shareholders. How do you respond to that?
I think the language speaks for that's for themselves, for itself.
You know this shareholder agreement is illegal.
Many lawyers have looked at it, as well as Illinois legislators have looked at it and have all agreed it's illegal, improper, and it harms LifeWay, it harms the public at large, It benefits nobody but Danin and it we believe it's void, and the courts will you know, will work through that in the courts. But you know, they themselves are on the record is saying that they're going to make a move, that they're making a move on Keifer in the United States.
They have already christened their hostile takeover by example of their photograph on the front page of their annual report with Activia Keifer. They already have shared their plans and that those plans are to wipe us off the face.
Of the earth and get rid.
Of our brand and take over the space. You know, they're in enable to grow organically on their own, so they do this with This is a standard operating procedure for them, and you can see that by the debacle of their Horizon takeover, their their White Wave takeover, their Wallaby takeover. They have a history of corporate rating and I don't think farmers in America or our community here in America or around the world, you know, is going to benefit from such actions.
And we will continue to defend them and I'm not going to be bullied.
We're speaking with Julie Smolanski, CEO of a Lifewave Food. She's also chairperson the board and president of the company.
Julia, I'm wondering if there is a price that is fair for potentially a merger, would you be open to that if the price was right, and what would it be.
We are open to any offer that makes sense for all shareholders, that values the company in a proper way, in a way that also looks at the potential and the growth. When there is a tipping point right now in food and they know it, which is why they're trying to take this over and steal.
This because they know it. We own ninety five percent.
Of the most hottest global categories in the world. Kiefer is the subject of intense science and research studies all around the world. Just recently a couple of months ago out of Boston, they did a long, long study of over thirty years that followed one hundred and thirty thousand people and found that people who consumed probiotic fermented dairy foods like found in LifeWay Keefer were able to reduce coalon cancer by twenty to thirty percent. This is groundbreaking research.
We also know that Keifer can help prevent ADHD. We've seen research showing that we have seen the mind gout access and the way that Keifer can help reduce stress, depression and anxiety through the vegas nerve. There is a skin gut access. We know that Keifer's beneficial to the skin. This is just science and research back so you know in the GLP one conversation, just to throw that one, and we have a high quality, bioavailable protein product loaded with calcium nutrients that people want.
We only have a couple of minutes left, so a lot of potential. We only have a couple of minutes left. So I want to jump in here. Emily did ask you what the price would be. Remember Danone offered twenty seven dollars per share in their acquisition proposal. They called it highly attractive. What number is fair to you?
I'm not going to name a number.
The board and the you know consultants, the investment bankers and the board will have that determination. But I can tell you you could look at some of the recent transactions and the valuations there and I'll name Poppy Simple Mills, of which LifeWay was an early investor in and we benefited greatly from But take a look at the Simple Mills valuations, take a look at Lesser Evil, take a look at rx bar and these organics. I mean, I can continue to name other companies in MySpace and the
valuations that are there. That is, I am absolutely disagree that they are offering an attractive offer. They're offering an offer that only benefits to non and the again, the contract is illegal.
Let's run a fair process, you know.
I do want to touch a little bit and some of the other points that Denon made in their argument. This idea that compensation they note, accounts for more than potential compensation, rather would account for more than all of life waste net income. How would you respond to that? They say, together with the severance and retention figures.
I mean, I feel that that's the pot calling the cattle black. I would say, take a look at their compensation. I mean I think that you know, there's I mean, I think everyone deserves to be compensated fairly, and my team is no different than their team.
Let's switch gears a little bit. I think we covered this latest and I know this will be ongoing very briefly before we switch gears. When do you anticipate this to be out of the courts and they're there to be a decision?
Oh, I can't predict what the court's timeline is. You know that that's up to the courts.
You think it'll be years though.
I can't. I don't have a crystal.
Bonding o idea. Okay.
I know that we're going to continue to control what we can control, which is continue to build the business.
That's what I'm focused on. Well, let's talking the category.
Let's talk a little bit about that because last time you were on you spoke a lot about farmer cheese and the growing category there. What's the product pipeline look like when you want to branch out from Kiefer.
Yeah, this is really exciting because Farmer's cheese is one of the hottest things happening right now.
It is a kind of a product of the moment.
As you know, cottage shees really became viral recently. We saw this trend and demand for soft on ripened cheese is like cottage cheese. This is sort of like a blended cottage sheeese already, So it's a recipe hack and because.
Of like the high demand.
I mean, you have to be under a rock to see the demand for high quality bioavailable protein is off the charts, and this offers a tremendous amount of protein people. You know, even Bethany Frankel is raving about it and sharing it on her Instagram. She paired it with caviar
on a crisp. Looks great. But you know, there is a sort of a buzz around Farmer's Cheese, so much so that we've already started shipping into fourteen hundred Albertson stores around the country, and we have commitments for another two thousand distribution points for farmers cheese and mass market. This is the first time we're scaling a legacy product. This was product number one and two along with the original Keefer that we launched, So this is a product
we're the number one manufacturers and farmers cheese. So not only are we the category leader of Keifer, but we're also the category leader of farmers Cheese. We're going to see a lot more about this in the coming weeks and months out of LifeWay and on your grocery soource shelf.
Are Americans coming back to dairy because milk, almond milk, all of those trends were very popular. But obviously, you know this is a dairy product.
Absolutely yeah.
Well it's a fermenta dairy, which is not the same as just regular milk. Fermenta dairy offers a tremendous amount of extra benefits. There are peptides that are released when through the fermentation process. Those peptides create a healthy microbiome in your gut. They restore all Keifer helps restore all of.
The good bacteria.
And consumers are starting to learn about the microbiome and the importance of fermented dairy and you know, they are getting going to the shelf and they're recognizing that there are a lot of options on the shelf. But you know,
this is not just a fad or a trend. Keifer Again, it's been around for two thousand years, it's been this the product of intense study for over one hundred years, but it's really just now hitting mass market and people are starting to make the connection and the tipping point that you know, food is medicine or or it's poison. You can use food to heal your body, and that's what LifeWay keifer does. It heals the body, and that's
something that's really special and it's authentic. This is a recipe that was brought by my family to this country, and so it's the it's the original. It's the og of Keifer of probiotics. We were the first to talk about probiotics. And you know, most of the disease in our body, most of our budget in our healthcare is from diseases of lifestyle. Keifer can actually help prevent some
of those diseases of lifestyle. This is an important piece of health that all of us should be integrating from from cradle to senior.
Keefer Life Weykeeper is for everyone.
And you know, it reduces inflammation in the body, which is the cause of almost all disease is because of inflammation and dysbiosis in the gut. And we're learning that and people are starting to understand. And it's available everywhere
from Walmart to Target, to Amazon to Whole Foods. You know, we're in club stores, we're in mass market grocery to ultra premium, and so there is something for everyone, and our goal is to democratize it to make it accessible and available to everyone, not just in America, but we're you know, we ship all over and make sure that as many people have access to life.
Weykeeper.
I'm curious the shares are down about eight point seven percent so far this year. They're still shi if by five dollars of the acquisition price that Danone offered back in November of twenty twenty four, of twenty seven dollars per share. What do you think investors are missing with this story?
Well, I would yeah, I mean, I would take a look at the five year five year history and the trajectory we have brought the company from a dollar fifty to you know, whatever it is today, twenty five dollars. That's twelve hundred percent growth. Our ebitdah has gone from three million dollars to twenty seven dollars, and we are on target to continue to forty five dollars plus in.
Twenty twenty seven.
We've doubled our We've grown our gross profit one hundred percent. We've grown our growth margin by three hundred basis points, more than three hundred basis points. I mean, you know, we are just starting to hit our stride and we have invested in our equipment and capacity. We have great capacity, we have you know, the ability to we have a
strong a strong balance sheet. We have no debt, we have cash in the bank, we have a great team, we have a you know, incredible demand for our product that we manufacture ourselves.
We have access to capital.
We the list goes on.
Ready, the list goes on.
We only have we only have a minute left. And I know, I know Emily has another question. I just do want to point out. I'm looking at the five year chart. It's up eight hundred and seventy two in the last five years. Shares five years ago, we're trading at two dollars and twenty seven cents. That was on June eleventh, twenty twenty. That was the five year low. Up now to twenty two dollars and sixty four cents where shares are now.
Quick questions.
We're a brand that sets the moment, and I was gonna say, we're a brand that meets the moment and a brand on the move.
As you could see.
Speaking of on the move, everyone's talking about inflation. Do you feel like LifeWay Foods is feeling the pressure that you'll have to raise prices just to keep up with competition and keep up with inflation.
I mean, that's something that we've navigated and managed for Over. You know, thirty nine years, we're about to hit our fortieth anniversary. So we've seen these kinds of things in the market and it's something that we're used to. We still have a lot of price elasticity. Again, we are ninety five percent of the key for category, and you know,
if we need to raise prices, we certainly will. We know that when consumers are feeling the pinch in the rest of you know, other categories and things household good items and other things that are essential, they do tend to go back to the grocery store and go.
Back to the essentials like LifeWay brands.
They know, brands they trust, and especially brands that have a functional element that are offering them some benefits like Lifewaykeeper does. So you know, we are battle tested. We've been through so many various elements.
But you know, we've.
Managed a global pandemic, a global supply chain shortage, and a global labor shortage and it really worked our advantage and I have no doubt that the same will be true as we look to the future.
Julie, appreciate you taking the time in joining us once again. Please do come back, don't be a stranger. Keep us up to date on everything happening at the company. Julie Smolanski CEO of Lifewave Foods. She is also chairman of the board as well as president at the company. She joins us from Los Angeles. A reminder, three hundred and fifty million dollar market cap maker of Kiefer Farmer cheese and more.