This column highlights companies in the business of providing solutions to social and environmental challenges. Featured companies are typically held in the Small Cap Innovations portfolios offered to Walden clients.

Got Kefir?

Kefir is a cultured, enzyme-rich food filled with “good” microorganisms that promote digestive health. Like yogurt, kefir is a cultured milk product. The types of active yeast and bacteria found in kefir provide more nutritive value than those found in yogurt due to their ability to colonize the intestinal tract. The relationship between “good” bacteria and “bad” bacteria in your gut is an important contributor to overall health. Probiotic foods like kefir contain the good bacteria that enable the body to resist intestinal parasites and pathogens such as E. coli. Kefir has additional benefits as well. The curd size of kefir is smaller than yogurt and easier to digest, which makes it a particularly nutritious food for babies and the elderly. Kefir has also reportedly been shown to boost the immune system. And, in the humble opinion of this writer, kefir is delicious!

Lifeway Foods, Inc., a 19 year old public company in Morton Grove, Ill., is the largest supplier of kefir in the United States and reports that it offers the largest selection of kefir in the world. Its kefir product line includes organic kefir, (non-dairy) soy based kefir, low-carb kefir and Greek-style kefir. Lifeway’s latest product to hit the market, ProbugsTM, is an organic whole milk kefir product targeted for children. The drinks include creative flavors like Orange Creamy Crawler and Sublime Slime Lime. Lifeway sells its products in health food stores, major supermarkets like Whole Foods and Ralph’s, and discount stores like Costco and Target.

The Organic Trade Association reports that dairy foods are the second largest segment of the $14 billion organic foods industry. Lifeway makes organic kefir under both the Lifeway and Helios Nutrition brand names. Lifeway operates its own organic dairy thus assuring a steady supply of organic milk. Control of the supply chain is a competitive advantage; Lifeway is the number one organic kefir manufacturer in the United States.

The demand for kefir is not limited to the organic market. The functional and probiotic (meaning live cultures consumed for a health benefit) food market is growing over 20 percent per year. MarketResearch.com believes the functional food segment will approach $30 billion in revenues by 2010, thus catapulting the functional food market from 4 percent to 6 percent of the total U.S. food market. Cultured beverages like kefir are currently more popular internationally, but U.S. consumers are enjoying kefir in greater numbers as they become aware of its health benefits. Lifeway stands to benefit from this trend.