Lifeway's Record Sales Growth Cools as Costs Squeeze Profit

The Tip Desk · November 13, 2026 · 3 min read

Third-quarter net sales hit a record $67.8 million, up 18.6%, while net income was $0.3 million, or $0.02 a share.

Lifeway Foods, Inc. (LWAY), the U.S. supplier of kefir and fermented probiotic foods, reported record quarterly net sales of $67.8 million for the third quarter ended September 30, 2026, extending a streak of year-over-year growth to 28 consecutive quarters.

The year-over-year increase of 18.6% was slower than the 24.1% rise recorded in the second quarter, when sales were $66.9 million. The company said the latest gain was primarily driven by higher volumes of branded drinkable kefir.

Profitability moved the other way. Gross profit margin compressed to 18.0% from 19.5% in the prior quarter, which the company attributed primarily to elevated input costs including milk, resin-based packaging, ingredients, and transportation. Net income was $0.3 million, or $0.02 a share, compared with $3.5 million, or $0.23 a share, a year earlier.

Selling, general and administrative expenses were 16.2% of net sales, versus 18.4% in the second quarter, which the company said reflected continued investment in marketing and brand awareness.

For the nine months ended September 30, 2026, net sales were $197.7 million, up 25.8% from a year earlier. That year-to-date pace was slower than the 29.9% increase in first-half net sales of $129.9 million. Nine-month gross profit margin was 21.5%, compared with 23.4% for the six months ended June 30, 2026. Nine-month net income was $5.1 million, or $0.33 a share.

President and Chief Executive Officer Julie Smolyansky said profitability continued to reflect an elevated input-cost environment and that the company expects that cost pressure to persist in the fourth quarter. The 2027 outlook, she said, has not changed. Planned price increases across the portfolio are expected to take effect with distributors and retailers on a rolling basis through the end of the year and into the first quarter of 2027. With those pricing actions and productivity gains from capacity investments, the company expects gross-margin expansion and improved profitability in 2027.

The scale-up of the Waukesha facility, scheduled for completion in early 2027, is expected to eliminate capacity challenges the company has encountered. Smolyansky said Lifeway is well on pace to set a record in annual net sales in 2026. Year-to-date net sales equaled approximately 93% of full-year 2025 net sales of $212.5 million.

Cash and cash equivalents were $6.98 million at September 30, 2026. The company had $11.95 million outstanding on a line of credit and a $12.03 million note payable, compared with no line-of-credit or note balances at year-end 2025. Property, plant and equipment, net, was $67.39 million.

In October, Lifeway was named to Fortune’s 2026 list of the 100 Fastest-Growing Companies at No. 45. The company said the inclusion reflected sustained, volume-led growth and demand for kefir and other cultured dairy products.