4 Entrepreneurship Lessons From Lifeway’s Julie Smolyansky

Julie Smolyansky was a CEO before she was an entrepreneur. But in running Lifeway Foods for more than two decades, she’s had to be as entrepreneurial as any food startup scrambling to keep a company on the rails and build a lasting business legacy. And in the process of navigating business setbacks and a series of product failures, she’s learned some important lessons.

Smolyansky took over as president and CEO of Chicago-based Lifeway, a maker of kefir and farmer cheese, in 2002 after the sudden death of her father, who founded the company. Since then, she has guided Lifeway through ups and downs that have included a long and gradual rise in sales as awareness of kefir’s benefits grew, a major hit to revenues during the dawn of the plant-based era, some experimental but ultimately unsuccessful new product initiatives, and a huge uptick in consumer interest in Lifeway and kefir during and since the COVID-19 pandemic.

At the moment, Smolyanksy is riding high as a CEO. Lifeway just reported its 19th straight quarter of year-over-year growth with net sales up by more than 25% for the second quarter, following record annual sales for 2023 of more than $141 million, a 19% increase over 2022 sales, and 51% more than in 2019.

Lifeway has put plant-based products behind it after much experimentation in the marketplace and is taking advantage of a dairy resurgence among American consumers, who also are increasingly attracted by the robust probiotic bacteria counts in Lifeway products.

What has she learned over the course of 20-plus years of business building? Here are four key insights that can help startups reach the next level where Lifeway now resides.

1) Know when to move on. Several years ago, when plant-based dairy alternatives were penetrating the yogurt case and Beyond Meat and Impossible Foods were heralding their alt-meats, Smolyansky ordered some plant-based, probiotic alternative product lines for Lifeway.

“You have to try to innovate for your consumer,” she says. “It’s your obligation. Yes, our business was dairy, but the marketplace was asking for nondairy alternatives. And we needed to be where they were at.”

So, over the course of a few years, Lifeway introduced Plantiful, a kefir alternative made with pea protein; Elixir, a sparkling beverage; and oat- and mushroom-based kefir drinks.

Plantiful was “really delicious,” Smolyansky says. But in part, Plantiful got caught in the downdraft when a startup brand called Ripple introduced pea protein–based yogurt and then pulled it from the market for admitted quality issues. Smolyanksy says Ripple’s disastrous first round with plant-based yogurt badly wounded Plantiful.

“It tarnished pea protein,” Smolyansky says. “There has to be an anchor for the category, and pea protein for dairy hasn’t been able to find success. There’s a taste profile that people aren’t liking. From an allergen sense, it’s perfect, and from an intellectual standpoint, it makes sense to have worked. But consumers didn’t take to pea protein as a dairy alternative.

“All of our plant-based new offerings failed,” Smolyansky says. “That ended up being a big setback, really challenging. But we had to try.”

The investments in plant-based products introduced a period where Lifeway sales fell to below $100 million, from a previous high of $120 million, a downturn also greased by internal leadership reorganization and the fact that competitors, including private label brands, were introducing kefir products.

We increased capacity for our dairy products, optimized our equipment and machinery, and moved toward more automation.

Julie Smolyansky

president and CEO, Lifeway Foods

2) Don’t ignore your core. Part of the failure of plant-based products was wrapped into a hopeful trend for Lifeway: consumers’ re-embrace of dairy products, and their simultaneously growing interest in probiotic foods with beneficial bacteria to support gut health.

“The pendulum swung back, and it was forceful,” Smolyansky says. “COVID happened, and people went back to essentials, what they know works, and brands they grew up with and trusted. They went back to what was comforting. So we increased capacity for our dairy products, optimized our equipment and machinery, and moved toward more automation.”

Smolyansky says she is now following through on a strategic plan she introduced five years ago, right before COVID disruptions and plant-based flameouts began battering the company. It’s called Lifeway 2.0, a road map for strengthening the company’s main product lines and extending its brand in sensible ways. “Now, I’m getting a start on ‘Lifeway 3.0’ or at least ‘Lifeway 2.5,’” she says.

3) Trust in your best ideas. Lifeway is just now getting to the point where it’s investing in modern manufacturing equipment that will enable a significant scaling up of its production of ProBugs, a pouched kefir product for kids that the company has been selling for nearly 20 years. The sub-brand was one of the first in the U.S. market to use pouches, a packaging format that since has taken over the baby- and toddler-food section of the grocery store, but Smolyansky could only nurse it along for several years.

“People thought I was crazy because ProBugs started out so expensive,” Smolyansky says. “But I knew we were on to something, and I knew the marketplace needed to mature. I know that parents would downgrade their TV or not buy a new house, but they’ll buy the highest quality [product] for their kids if they think it’s going to improve their health. We’re there now,” she said, noting that Lifeway is moving ProBugs into the mass market and expanding its previous footprint, which was mainly in Whole Foods Market stores and other retailers with a better-for-you emphasis.

4) Be you. A major part of the entrepreneurial spark comes when individuals follow their own inspiration and ideas. A key to creating a legacy, Smolyansky says, is persisting in this self-belief and acting on it.

“I know what I’m good at and what I’m bad at,” she says, citing her passion for the business, and a marketing bent, as personal strengths and her understanding of finances as an area of weakness.

Smolyansky counts trendspotting as another strength, partly crediting insights gleaned from Malcolm Gladwell’s seminal book, The Tipping Point. “For example, I brought [online] influencers to Lifeway before they were called influencers,” she says. “I thought, ‘Where would folks consuming Lifeway be hanging out online?’ They were important people to bring onto our bus to be ambassadors and evangelize for the product and the brand.”

Such vigilance also helped Smolyansky notice early on a trend that turned out to be very important for the company: the spike in social media interest in cottage cheese a couple of years ago. Lifeway long has sold a similar product, smooth farmer cheese, and harnessing the internet-fueled phenomenon has helped Lifeway capitalize on an emerging marketplace trend.

In her public appearances, social media posts, and in other venues, Smolyansky also freely shares her personality, business insights, and personal stories, which, as someone with a Ukrainian Jewish background, include her concerns about the ongoing conflicts in Ukraine and Israel. (Her parents emigrated from Ukraine to the United States when she was just a year old.)

It’s an approach even beginning entrepreneurs should embrace, she says. “It’s important to share the story of the company and the brand. It resonates and humanizes the brand and who’s behind it. People are curious. And resilience is something that’s inspiring to many people. I’ve learned that you have to persevere and adapt to whatever the situation is, and keep your head up, keep moving forward.

“I look at every challenge as an opportunity, and with every card dealt to me, it’s, ‘How am I going to play that card to my best advantage?’”ft