Lifeway Foods Reports 18.6% Revenue Growth Amidst Margin Pressure from Rising Input Costs
Lifeway Foods (LWAY) reported third-quarter net sales of $67.8 million, an 18.6% increase year-over-year driven by strong demand for branded drinkable kefir. This performance marks the company's 28th consecutive quarter of year-over-year growth. However, profitability was significantly impacted as gross margins fell to 18% from 28.7% in the prior-year period due to sharp increases in milk, resin-based packaging, and transportation costs. To combat these headwinds, management is implementing rolling price increases through early 2027 and investing heavily in capacity expansion. A major facility upgrade at the Waukesha plant is expected to double production speeds by the first quarter of 2027. Despite strong revenue pacing—reaching approximately 93% of the previous full year's total within nine months—the company faces persistent margin pressure as milk costs remain elevated.