Lifeway’s Julie Smolyansky: A Healthy Start

Julie Smolyansky came into a CEO role under the worst imaginable circumstances. Her Russian-immigrant father, the founder and driving force behind Lifeway Foods, had parlayed a recipe for a fermented milk drink known as kefir into a $12 million dollar business. Then, he died suddenly of a heart attack in 2002, thrusting his daughter into the leadership role. At Michael Smolyansky’s funeral, his 27-year-old successor recalls overhearing her father’s best friend advising his peers, “Sell your stock. The company’s done. There’s no way this girl can run it.” Already motivated to protect her father’s legacy and the livelihoods of Lifeway’s 70 employees, Smolyansky found herself further galvanized by the comment. “It gave me a lot of motivation to prove him wrong,” she recounts. “My parents worked their entire lives to get us to a certain place and I didn’t want to see that fall apart. I had a tremendous sense of ‘Failure is not an option.’” Grief coupled with a sense of urgency about Lifeway compelled Smolyansky to head into the office at 2 a.m. that night. “It was irrational, but I felt protective, that I needed to secure trade secrets or recipes or whatever,” she says. In the days to follow she focused on reassuring her staff and customers and threw herself into the business, working night and day to build on the foundation her father had laid. More than a decade later, it’s safe to say that Smolyansky has succeeded in proving her naysayer wrong. Now boasting $81.4 million in annual net sales, Lifeway enjoys a 97 percent share of the American kefir market and is poised for international expansion. The company’s products—all based around a creamy, probiotic, yogurt-like drink called kefir—are available at supermarkets and health-food markets nationwide, including ShopRite, Costco and Whole Foods. While quick to credit her father for leaving her a debt-free company with a strong market position and stable team, Smolyansky has put her imprint on the company he forged. In her first year as CEO, she steered what proved a pivotal change for the company. “We switched from a 3-by-6 inch sticker to the full-body sleeve label that we have today,” she explains. “We had been waiting for my dad to pull the trigger on that change. He was nervous about it, but I felt that if we were going to compete with the big boys, we needed a packaging that was on par with what’s out there in the marketplace. So we did it and it was a game changer for us.” Lifeway was also an early adopter of social media marketing, which Smolyansky saw as a no-brainer in reaching its target audience of health-conscious consumers. “I looked at it as: We’re a small company with a budget of zero, so this is perfect—it’s free,” she says. “We were on Facebook before they allowed corporations. We would put a page up; they would write, ‘This violates the terms of our services. Take your page down.’ So we would take it down and put another one up. Eventually, they realized [company pages] were a revenue stream.” An explosion of interest in healthy, natural foods over the past decade also fed Lifeway’s growth. In Europe, kefir—which contains beneficial microorganisms called probiotics—is used medicinally to help balance digestive systems. “It’s not surgery; it’s not drugs. It’s just something you can consume every day that’s healthy and will make a major difference to your health,” Smolyansky notes. “I’m really excited about the future because I think that we are, as a society, really waking up to the fact that what we eat impacts our health.” That thinking is now spreading to America, Australia and the UK, a fact not lost on Lifeway’s market-minded CEO. She has already extended Lifeway’s product line to target new customer segments, introducing Greek-style kefir; ProBugs, an organic kefir line aimed at children; ProBugs Bites for infants and BioKefir Shots, a 3.5-ounce package geared at health-conscious consumers looking for a quick way to get their daily dose of probiotics. Last year, the company debuted a frozen kefir, a new concept for the category. Now, the company is moving into the UK market, where it will soon begin selling in four stores in the tony Harvey Nichols chain. “When you own 97 percent of the entire category and you’re at that $100 million level, it’s time to start looking outside of the U.S.,” says Smolyansky, who plans to launch Lifeway in the UK and from there jump into the European markets. “We’re at a place where we are looking at becoming a global brand.” Smolyansky hasn’t run across the man who expressed doubt about her leadership abilities so long ago, but, ironically, his comment continues to motivate her plans for the company. “That statement literally still drives me every day, like nothing else,” she says. EDITOR’S POSTSCRIPT: Shortly after the interview on which this story was based took place, Smolyansky and her life partner Jason Burdeen announced the launch of a new nonprofit, Test400k. The concept was inspired by a recent Human Rights Watch report indicating that 400,000 evidence kits collected after alleged sexual assaults in the U.S. dating back to at least 1979 have been sitting in police storage facilities around the country without processing. Test400k will seek to raise awareness, advocate, engage and support innovation in rapid DNA analysis and to mobilize communities to take action to improve the ways in which law enforcement and the criminal justice system handle the processing of evidence collected from sexual assaults in the U.S.