Back when many American consumers were unfamiliar with probiotic cultures and the cultured dairy beverage kefir, Lifeway Foods, Morton Grove, Ill., was already on its first expansion into a larger production facility to keep up with increasing demand for its kefir lineup.

In 1986, the company started manufacturing in nearby Skokie, Ill. As its product offerings quickly expanded from four flavors of low fat kefirs and one flavor of whole milk kefir, capacity at the Skokie facility was running low. Within a few years, the company’s lineup had grown to today’s selection of 13 low fat, six nonfat, six low fat organic and three whole milk organic kefirs and an additional three whole milk organic kefirs for kids. The growth called for an expansion.

Lifeway moved production of its kefirs to a plant located in nearby Morton Grove in 1999. At the time, the 50,000-square-foot production facility had sufficient space to produce and store the multiple varieties and packaging sizes of Lifeway’s Kefir. However, as the company grew, the Morton Grove facility’s lack of refrigerator space and loading docks became an issue, explains Edward Smolyansky, chief financial and chief operating officer of Lifeway.

“One truck of milk will take up half the loading space, so it started to get extremely inefficient and difficult,” Smolyansky explains.

In 2004, Lifeway purchased a 110,000-square-foot building located blocks away from its Morton Grove production facility. The Niles building provides office space and room for distribution in the form of 50,000 square feet of refrigerated storage space for receiving ingredients as well as storage of finished products.

“The purchase of (the Niles) facility in 2004 was one of the few turning points, or lynchpin events, that without it, we wouldn’t be here today,” Smolyansky says. “I could name a couple of other ones, such as the update of packaging, where basically without that we wouldn’t be here, but we wouldn’t be able to produce as well. Now we have so much refrigeration space and so many docks.”

The company continues to operate the three Illinois facilities, which are all within a mile-and-a-half of each other. Despite being separate, “they all act as one big unit,” Smolyansky says.

The Illinois facilities handle 80 percent of kefir production. In addition, the company has a manufacturing facility in Sauk Center, Minn., which it acquired through its purchase of Helios Nutrition Inc. in 2006, as well as Fresh Made Dairy’s facility in Philadelphia that it acquired last year. The Skokie plant solely focuses on production of the company’s cheese line and a few varieties of cheese also are produced at the Morton Grove facility.

Keys to kefir
Lifeway Kefir has a shelf life of 70 days, and since kefir is a dairy-based beverage, it must be refrigerated. To maintain freshness, Lifeway does not begin manufacturing kefir until an order is placed, Smolyansky explains.

“Many times the product is made within five business days by the time it’s on the shelf,” Smolyansky says.
Lower milk prices, which have decreased from their peak in 2008, have benefitted the company, Smolyansky says.

“It’s given us a ton of free cash flow and brought our costs down and given us the ability to pass on savings to the consumers as well, in a time where a large portion of our population is looking for savings and looking to save money on groceries wherever they can,” he says.

At the Morton Grove facility, production of kefir begins when tanker trucks of milk arrive from Wisconsin or Iowa. The facility has a network of pipes running across the ceiling that pump the milk to a selection of 33 1,500-gallon tanks. Inside the tanks, the product is pasteurized, cooled, mixed with cultures, fermented and flavored before being piped to one of its four beverage filling lines.

The facility has three 32-ounce bottle fillers, one of which features a high-speed filler with a shrink label applicator. In addition, the Morton Grove plant has one line dedicated to its 8-ounce bottles as well as two additional lines to fill its ProBugs products, which are packaged in curvy, flexible pouches with patented no-spill spouts.

The company also has been working toward the addition of two new filling lines in existing space within the Morton Grove facility. Lifeway has ordered two more high-speed fillers and shrink sleeve applicators, which will complete the new production area. The area also features a new set of 22 1,500-gallon tanks. The addition of the new lines has been two-years in the making, Smolyansky says.

The kefirs are then boxed or palletized and then stored in Morton Grove’s 10,000-square-foot cooler space as they wait to be transferred to the nearby distribution facility in Niles. With 50,000 square feet of cooler space at its distribution facility, the company has dedicated areas for product storage. Products in the cooler space frequently are palletized, wrapped and ready for shipment to a retailer. The distribution warehouse also has areas for assembling cases, such as four-packs of ProBugs.

Lifeway handles some of the local distribution in vans emblazoned with the company’s brand and products. The remainder of distribution is handled by third-party distributors, Smolyansky says.

Recently, the company has seen an increase in organic production, which calls for special attention during production, Smolyansky says. As its products continue to grow in the natural market, it has noticed consumers are looking for products that are more eco-friendly. Lifeway is looking into environmentally friendly packaging alternatives. In addition, it currently purchases carbon credits to offset 100 percent of its carbon footprint with renewable energy, Smolyansky says. BI