Having long been interested in an acquisition, kefir company Lifeway Foods announced it has reached an agreement to purchase California-based GlenOaks Farms Inc. Lifeway CEO Julie Smolyansky said the move comes after the company proved its resilience in the face of the pandemic while also aligning with the strategy for Lifeway’s 2.0 growth plan. Lifeway is expected to purchase the company for $5.8 million in cash by the end of August 2021.
Why Acquire GlenOaks?
GlenOaks was founded in 1984 and has established itself as a legacy brand in the California market through its six-SKU line of lowfat, probiotic drinkable yogurts. The “synergies between the two brands” will allow both Lifeway and GlenOaks to dominate the category at a national level together by capitalizing on Glen Oaks’ loyal following and gradually expanding the product line and its distribution eastward, said Smolyansky.
“Despite massive competition in the space and plenty of new players coming into the drinkable yogurt category, they have been able to fight it out,” explained Smolyansky. “The fact that they have this loyal following, longevity, proof of concept and during COVID, they have been able to maintain the space and continue to operate and deliver products on shelf without hiccups – to us, that means they really are a brand that is built to last.”
From a current perspective, GlenOaks appears to be a relatively small operation with a virtually non-existent social media and marketing strategy. However, Smolyansky believes that, with Lifeway’s resources positioned behind the company, it will be able to scale the business with minimal capital expenditures. In support of this reasoning, Smolyansky also noted that Glen Oaks managed to grow its sales 7% despite the supply chain and transportation issues that have plagued the industry over the past year.
What will this do for Lifeway?
The acquisition of GlenOaks marks a major advancement in Lifeway’s “2.0” growth strategy which was announced in 2018. Smolyansky explained that acquisitions had always been a part of its approach towards diversifying the company’s portfolio and creating additional value for shareholders; however, when the pandemic hit that plan was accelerated. According to Smolyansky, the company continued to increase its core lines but also took a critical look at what SKUs were resonating with customers and which ones weren’t.
Lifeway is now positioned to control the category on the East Coast with the ownership of Philadelphia-based Fresh Made dairy company (acquired in 2009), on the West Coast through Glen Oaks and nationally with its own flagship line of products. Smolyansky said her ultimate goal is to ensure when a consumer leaves the store, they walk out with “either a GlenOaks product, a Lifeway product, or both.”
“We have obviously tried to take space from [GlenOaks], but there is a loyal following that just won’t take a Lifeway brand – they want the local brand,” she continued. “You can fight it out, compete for shelf space, offer promotions and advertise, but it won’t matter. At some point we had to say: they built something, it’s here and it’s not going away. Competing is going to cost more money than taking it and growing it. We decided to partner and find the synergies to make it a collaborative effort to bring users into the category.”
How is Lifeway fueling innovation?
With a seemingly exponential uptick in plant-based product innovations, drawing consumers to the dairy aisle has begun to present more intricate challenges. In order to cater to the dairy-free consumer, Smolyansky announced that Lifeway is launching a new oat milk-based probiotic line and would “expect to see innovation in that space coming out of the GlenOaks brand as well,” once the deal is finalized at the end of the month.
Lifeway originally expanded into the dairy-free probiotic space with its pea-protein based ‘Plantiful’ line in 2019, however, the company has since removed it from the shelves. Smolyansky notes the significant influence both coasts have on food and beverage trends and said she understands in order to remain a top contender in the category launching a plant-based option for consumers was imperative.
Coupled with its plant-based approach and West Coast expansion, Lifeway has also partnered with the immersive Van Gogh Exhibition, offering yoga in the pop-up art exhibits in 22 cities nationwide. Smolyansky said that after the session ends, participants will receive a Lifeway kefir leading to “hundreds of thousands of impressions” and hopefully drawing new consumers into the space while also capitalizing on the increasing demand for live events.