Ludmila and Edward Smolyansky, the largest investors in US kefir producer Lifeway Foods, have filed a consent decree to remove the company’s current board of directors, including CEO Julie Smolyansky.
The shareholders announced today (August 13) the filing of documents with the US Securities and Exchange Commission (SEC), thus launching their “Life Back to Lifeway” campaign.
Ludmila and Edward – mother and brother of CEO Julie – are trying to attract a leader “committed to revitalizing the company with a strategic vision that is in the best interests of its shareholders,” they said in a statement.
The couple added: “Lifeway’s board of directors has overseen significant and repeated failures in corporate governance that have harmed the company and its employees and resulted in poor financial results for shareholders.”
Lifeway also announced its second quarter results today, with net sales increasing 25.3% year-over-year to $49.2 million. The company said the increase was “primarily due to higher volumes of our branded drinking kefir.”
Net income was $3.8 million, compared to $3.2 million a year earlier.
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Nevertheless, Edward Smolyansky, former COO of Lifeway Foods, said today: “Under the leadership of my sister Julie, Lifeway ran on autopilot for far too long and missed critical market opportunities due to a lack of strategic vision. It is time for a new leadership approach that puts growth and innovation above personal agendas.”
Ludmila Smolyansky, co-founder and former chair of Lifeway Foods, added, “This decision was not easy for me, but I am focused on what is best for Lifeway. The company my husband and I founded in 1986 needs a new direction that honors its heritage while securing its future. A new path forward will benefit everyone – our employees, our shareholders and even my daughter Julie.”
Just food has asked Lifeway for comment on the latest status of the feud.
Lifeway Foods was founded in 1986 by Michael Smolyansky and led with the assistance of his wife Ludmila. After Michael’s death in 2002, his children Julie and Edward took over the reins, with Julie serving as CEO and Edward as COO.
However, in March 2022, Ludmila and Edward – who together own nearly 30% of the company – called on Julie Smolyansky to resign and urged Lifeway to pursue “strategic alternatives.”
The problem was said to have been resolved the following August when Lifeway agreed to explore strategic alternatives and find a financial advisor and replacement board member.
However, the family feud has reignited in recent months. Last month, a statement from Ludmila and Edward was issued through Pure Culture Organics, a Lifeway competitor founded by Edward this year, calling for the CEO’s resignation.
The creation of Pure Culture Organics sparked a legal battle between the Smolyanskys. In April, Lifeway filed suit against Pure Culture Organics, claiming the company stole confidential information to create the company. Lifeway dropped the suit in June.
Last month, the kefir maker also hit back at Ludmila and Edward. A statement from Lifeway said: “The conduct of Edward and Ludmila Smolyansky in the recent litigation has repeatedly demonstrated that they do not have Lifeway’s best interests at heart.”
