The largest shareholders of US-based kefir producer Lifeway Foods, Ludmila and Edward Smolyansky, have urged the resignation of the company’s CEO, Julie Smolyansky, and some directors.
This call is deemed necessary “to avoid further underperformance and mismanagement of company assets,” as stated by Pure Culture Organics, a Lifeway competitor founded by Edward Smolyansky, who is also Julie’s brother.
The statement emphasizes that “new leadership can deliver swift and significant changes to shareholders.”
This latest development appears to reignite a family dispute that started in March 2022 when Ludmila and Edward Smolyansky, who held a 39.4% stake in Lifeway Foods at the time, first called for Julie Smolyansky to step down.
Despite initial demands being met in a settlement in August 2022, the Smolyanskys claim that Lifeway did not fulfill its obligations under the agreement, leading to further calls for resignations and changes within the board.
Allegations against Julie Smolyansky included soliciting $1m worth of Lifeway shares from Ludmila and spending over $1m in lawsuits against Edward and Ludmila Smolyansky. Additionally, Lifeway faced legal battles with Pure Culture Organics in 2023, accusing the latter of stealing proprietary information, which was later settled in June. In response, Edward Smolyansky left Lifeway and established Pure Culture Organics, which specializes in drinkable kefirs for the US market.
Further accusations in the latest statement involved Julie Smolyansky’s husband, Jason Burdeen, exercising managerial control without an official role, leading to accusations of making false affidavits during lawsuits. Following a critical letter from the fourth-largest shareholder in June 2023, where the board’s alignment with shareholders was questioned, the Smolyanskys are now pushing for more significant changes at Lifeway.
Julie Smolyansky defended Lifeway’s performance, emphasizing revenue growth and market dominance in the kefir category during an interview earlier this month. Despite ongoing challenges and family tensions, the Smolyanskys remain firm in their belief that Lifeway needs a shift in leadership to realize its full potential.
For Lifeway to thrive, according to Ludmila Smolyansky, entrenched leadership barriers must be overcome, paving the way for new opportunities.