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Family members of Lifeway Foods CEO Julie Smolyansky are again calling for her and the company’s board of directors to be removed, reviving a long-running dispute.
Brother Edward Smolyansky and mother Ludmila Smolyansky The company filed a consent statement with the U.S. Securities and Exchange Commission this week.The two shareholders allege that LifeWay’s board of directors “repeatedly oversaw significant failures of corporate governance that harmed the business and employees and led to poor financial performance for shareholders.”
Two relatives of the CEO also argued in the lawsuit that Lifeway Foods’ cultured-milk business needs a new approach with new leadership.
In an interview with Food Dive, Edward Smolyansky said kefir producers are lacking real leadership.
“Nobody is actually running the company. It’s on autopilot,” Edwards says. “The board has no idea what’s going on. Julie and her team aren’t there. They don’t understand trends. It’s outdated and woefully underinvested in marketing.”
LifeWay Foods and its CEO did not respond to requests for comment on the SEC filing or Edwards’ comments as of press time.
Michael and Ludmila Smolyansky founded the company nearly 40 years ago. After Michael passed away in 2002, his daughter Julie took over. Becomes CEO He left the company at age 27, and his son, Edward, served as chief operating officer until 2022. Edward is now president of rival kefir company Pure Culture Organics.
Ludmila Smolyansky said the decision to file the letter of intent wasn’t easy, but she is focused on what’s best for LifeWay Foods. “The company that my husband and I started in 1986 needs a new direction that secures its future while honoring its traditions,” she said in a statement. “A new way forward will benefit everyone – our employees, our shareholders and even our daughter, Julie.”
Lifeway believes its current strategy is paying off: In June, the company reported that sales were up 13% year over year and that it expects to post net profit of $160 million in 2023.
In an interview with Food Dive in June, Julie Smolyansky said the pandemic era has brought about a new wave of consumers concerned about gut health, and the company is sticking with it.
The CEO’s brother disagreed, saying Lifeway has “grown at the same rate for the past 20 years.” Edwards said Lifeway’s management failures have caused the company to fall behind other leading brands in the cultured dairy industry, such as Chobani and Ciggies.
“We’re in a quagmire because my sister is interested in paying her and her cronies to sit back and do nothing while leeching off shareholders’ money,” Edwards said. “They have questionable ethics. How can you expect employees to follow you when the people essentially running the company are borderline criminals?”
