Lifeway Foods CEO Preps for the Post-Greek Yogurt Boom

(Lifeway Foods CEO Julie Smolyansky is the ninth female executive to be profiled in TheStreet's series highlighting women in business.)

NEW YORK ( TheStreet) -- Julie Smolyansky, CEO of fast-growing Lifeway Foods ( LWAY), says her company is just getting started in taking the dairy and yogurt categories by storm.

The consumer goods company, based in Morton Grove, Ill., specializes in a cultured dairy product known as Kefir, which has its roots as a staple in eastern European countries, but more recently has been widely cited as a part of the growing probiotic trend for its health benefits.

According to a recent report by MarketsandMarkets, the global probiotics market is expected to expand to nearly $33 billion by 2014, up 35% from the end of 2011.

Lifeway's products are sold in stores nationwide, from Whole Foods ( WFM) to Costco ( COST) to Target ( TGT) and Kroger ( KR).

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After emigrating from the former Soviet Union in the mid-1970s, Smolyansky's father started the company 10 years later. Julie worked for her father for only a few years before his sudden death in 2002. She and her younger brother stepped into the CEO and COO positions at ages 27 and 23, respectively.

Julie Smolyansky, now 37, credits the crisis-management skills she learned while working in social services in some of Chicago's toughest urban neighborhoods to helping her and the company through the transition. She proudly says that none of the company's 70 employees at the time chose to depart. Since then, the company has expanded to 340 employees.

Last year, the company's gross sales rose 16% to $89.8 million, according to its fourth-quarter earnings report released last week. When Julie and her brother took over the company, annual sales were just $12 million, she says.

The stock has been on a tear recently. Shares are up 43% this year as of Tuesday's closing price. The stock hit a new 52-week high of $14 on April 2.

Like Anisa Telwar, Smolyansky is also a member of the The Committee of 200, an elite organization comprised of the world's most successful women executives and entrepreneurs.

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TheStreet chose Julie Smolyansky to be its April executive of the month in its women in business series. A conversation with her follows.

For those of us who might be behind the curve, where is the market opportunity for kefir and probiotics?

Smolyansky: Lifeway controls 97% of the Kefir market between a few of our brands, Lifeway Helios and Fresh Made, along with private labels that we do. The market has been growing consistently.

The market is tremendous and our job is to continue to talk about how probiotics can help. The U.S., compared to the global market, is tremendous, but we haven't even scratched the surface in terms of consumption rates. In Europe, for example, the consumption of cultured dairy is 28 cups per person per month, whereas in the U.S. the consumption rates are at 8 per person per year. So we have a tremendous opportunity to capture more of that and continue to tell the story of why probiotics are really beneficial, the impact it has to our health and the impact that it has to the health-care budget.

What we here in the United States do is take a quick fix with a pill. So we have these folks with irritable bowel syndrome or Crohn's disease or ulcers, and we medicate them instead of teaching them the power of food and how it can make us healthy and well. It's a really low-cost solution. With more people seeking out medical and health-care advice, probiotics will be one of those things that are recommended as a daily habit that we should all be using for our immune system.

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Shares of Lifeway Foods are up substantially this year. Is that a result of more awareness of the industry? Is it because of the distribution partnership with Target announced in 2012? What's contributing to investors' interest in Lifeway?

Smolyansky: It's all part of those things. Bottom line, our results have been great. We're growing by 20% in revenue. There's this demand for healthier food choices, we're really starting to make the connection between what we eat and our health, and how that impacts the financial health of the country.

We're seeing people in convenience stores, gas stations and airports, which are the last frontiers of healthy food choices, and we're getting them on board to offer consumers healthy choices because they are demanding it.

The company was started by your father, who passed away suddenly. You jumped into his place. Had you ever run a company before? What was your management experience before stepping into that position?

Smolyansky: No, I had never run a company. I was 27. My brother was 23, and he hadn't run a company. He had just graduated from college. I spent five years working side-by-side with my dad, so I did have that experience. I also had the support of my dad. He did a really good job of pointing out female role models and encouraging me and telling me that I could do it.

I started my career in social services. I was an in-home family counselor in Chicago working with kids who had been taken out of their homes. I had worked in some really tough neighborhoods and navigated that terrain. I had also been a crisis counselor for a sexual assault community group here in Chicago, a rape victim advocate. I honestly think I got a lot of my crisis-management skills from these experiences, which really came in handy when I had to jump in and lead Lifeway overnight.

One thing that I really relate to -- and I think that my dad even saw was that he had a hard time relating to his path of the consumer market -- was young mothers and women. He was a Russian man with a thick Russian accent, so when they heard the message from him, it was a little different. When they hear it from a young woman who's kind of faced with the same challenges that they are -- balancing family life and career in many cases or just trying to put healthy foods on the table -- I will not put anything out into the marketplace that I wouldn't give my own children. I think that's kind of the dominating force with how we think about innovation and looking at new products that we're going to develop.

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What lessons did you have to learn right away when you stepped into this position?

Smolyansky: It's really easy to be overwhelmed by a task of running a company or what that even means or looks like. I took it day by day. I managed one issue at a time. I made sure that my team was on board and I collectively brought them all in together and made sure that they felt comfortable with my leadership. I don't know how comfortable they were, but they all stayed on when they could have decided to jump ship.

What do you think is the hardest part about running a public company, especially as you are still young, relatively speaking?

Smolyansky: The biggest challenge right now is just dealing with all the regulatory issues. Unfortunately, a big part of the day is managing regulatory issues as it relates to stocks. It's definitely gotten harder to do it. It's certainly helped us be a stronger, more efficient company, that's really focused on continuing growth all the time.

The other thing that I struggle with sometimes is that I know what needs to happen for long-term growth like five years, 10 years from now. Shareholders set their sights on the next three months, what's going to happen this quarter or next quarter. They're not really interested in five years from now. They don't really care necessarily, but I do because I'm here for long-term leadership of the company. So that's one of those things that you have to really balance nicely, giving short-term success for shareholders and laying the groundwork for things that need to happen in five to 10 years.

There is a disproportionate number of female CEOs running public companies. Do you think you have a responsibility to be a role model for other women?

Smolyansky: Absolutely. I never took a business class and somehow I have shown success. So I'm always surprised at it myself because I could have gone either way and there are plenty of companies that didn't make it. So I do feel a strong sense of role model, a sense of wanting to be a role model. I also have two daughters myself. I want to really help design the world that I want to leave to them. I think it's absolutely critical and important to the health and safety of every single one of us in our country as well as in the world to make sure that we have strong women in leadership. We know that if women are in leadership roles, then companies are stronger financially, there's a better rate of return on investment, better return on capital, sales and revenues are higher, and they're less likely to be bankrupt.

So this is really important that we bring a certain set of skills to the table that are just not being tapped. Every company should be looking for ways to include more female leadership at the top of their company and continue the pipeline in getting them in to stay on board after having kids, to make sure that we're offering flexibility to both men and women.

Have you read Sheryl Sandberg's Lean In? Thoughts?

Smolyansky: I've read parts of it, but I think it's absolutely true. I think it's important that we do create female titans. I think we need more women in Fortune 500 companies in the CEO position and the C-suite. We have to do that. We have to push that middle management of females up into the C-suite.

What's next for Lifeway?

Smolyansky: We are launching in the U.K. That's our big initiative, so we're launching in London at Harvey Nichols in May. On the horizon, I talked about those long-term goals. I really see Lifeway as being a global brand. That's one thing, but we've also launched a series of other new products just in the last couple of months, offering more of these healthy products for kids. I really see that as a problem for kids and families right now. Those are the big things and looking to just expand our distribution into places that don't normally see them. Hotel minibars would be a huge opportunity for us.

It sounds like you could be an acquisition target at some point.

Smolyansky: I'm young and my brother's young, so I think we still have a lot of things that we can bring to the table at Lifeway that I think we're looking at things out of the box. I think we're doing things that the big companies are only dreaming of doing and we're doing it really quickly and nimbly.

Some companies, it takes them five years to launch anything new. I think they're super late to the table and I think it's been proven. I don't want to name names, but if you look at some of the big companies in the yogurt category, they were blindsided by the success of Greek yogurt and had their market share taken away. So I don't think that just because you're a big company, that that's something of value. It might be the biggest hindrance.

We were one of the first companies and brands on social media. We were on Facebook and Twitter in 2007 when it was only Whole Foods, Comcast ( CMCSA) and Starbucks ( SBUX) on social media. That's been a huge benefit to us. These companies are just now starting to develop their social media strategies.

I think as long as they can continue to provide a really good value to shareholders, there's no reason why we should consider selling at this point. We're being asked by the big companies to help them. So it's been interesting.

-- Written by Laurie Kulikowski in New York.

To contact Laurie Kulikowski, send an email to: Laurie.Kulikowski@thestreet.com.

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