Good morning. Welcome to Lifeway Foods' Fourth Quarter and Full-Year 2023 Conference Call. On the call with me today is Julie Smolyansky, President and Chief Executive Officer. By now, everyone should have access to the press release that went out this morning.
If you have not received the release, it is available on the Investor Relations portion of Lifeway's website atwww.lifewayfoods.com. A recording of this call will be available on the company's website. Before we begin, we would like to remind everyone that the prepared remarks contain forward-looking statements.
The words believe, expect, anticipate, and other similar expressions generally identify forward-looking statements. These statements do not guarantee future performance, and therefore, undue reliance should not be placed on them. Actual results could differ materially from those projected in any forward-looking statements.
Lifeway assumes no obligation to update any forward-looking projections that may be made in today's release or call. All of the forward-looking statements contained herein speak only as of the date of this call. And with that, I'd like to turn the call over to Lifeway's Chief Executive Officer, Julie Smolyansky..
growth capital, cost reduction, and facility improvements. Growth capital spending support new product innovation and enhancements. Cost reduction and facility improvements support manufacturing efficiency, safety, and productivity.
Our CapEx spending is efficient, and we generate a strong return when installing additional tanks as we leverage existing infrastructure to scale the business. As we continue to grow, we continue to repair and modernize our facilities to improve our internal efficiencies.
On that note, I'm happy to share that we are approaching our 10-year anniversary of operations in our Waukesha, Wisconsin facility, where we have continued growing production at a rapid rate. In 2023, we produced over 30 million bottles of kefir in our Waukesha plant, an amazing milestone, and I applaud our team there for their tremendous work.
Overall, this was an outstanding record-breaking year for Lifeway Foods. We delivered our highest-ever top-line results, which consistently grew throughout the year and was accompanied by major improvements in our key profitability metrics.
Our customers are sticking with us, delivering impressive volume growth despite macro pressures that have weighed on the broader industry. We believe this indicates that consumers' focus on healthy, high-quality, and affordable food remains paramount, and our product portfolio is comprised of delicious nutritious foods that check those boxes.
Lifeway's kefir products are tart and tangy and provide customers with probiotics, vitamin D, and protein to help support their gut health, immunity, and mental well-being. The probiotics in kefir support a healthy microbiome, and approximately 80% of immune defenses come from the gut.
Probiotic products such as kefir are the focus of intense research related to the microbiome's role in stress, depression, and anxiety.
We now know that 90% of the body's serotonin come from gut cells and the gut-brain axis, which links the emotional and cognitive centers of the brain with our intestinal function and play a major role in happiness and well-being.
Just a few weeks ago, a recent study published in BMC Madison concludes that kefir shows promise in improving gut health of ICU patients. Our flagship drinkable Lifeway Kefir continues to be a core driver of our business and helps us maintain our long-held dominant position within the US kefir industry, a category we built and continue to expand.
With health and wellness as a tailwind to our consumer preferences, we believe the addressable market for kefir will continue to grow, and so will we. Customers love Lifeway Kefir because it's healthy, delicious, and dynamic in its uses, and selling it is our number-one priority.
The majority of our time and investments will continue to be spent on our core products by way of strategic marketing and incremental distribution opportunities to drive brand awareness and trial.
While we are focused on selling our core kefir, we are also evaluating trends in our space and seeking incremental sales to improve the scope of our products within the market. These insights often lead to product innovations within the drinkable kefir space to satisfy our consumers with differentiated assortments.
For example, our guava low-fat kefir and our organic whole milk products continue to see steady progress. Additionally, we recently introduced organic grass-fed kefir flavors to meet growing consumer demand for grass-fed dairy.
Lastly, within kefir, our latest product, Kefir Plus, is a potent probiotic shot, which we're excited about unveiling at meetings and tradeshows. Part of our constant evaluation and trends and opportunities leads us to pivot towards more sustainable and profitable endeavors.
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..
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