12. Segments, Products and Customers

9 Months Ended

Sep. 30, 2019

Segment Reporting [Abstract]

Segments, Products and Customers

Note 12 – Segments, Products and Customers

Lifeway’s primary product is drinkable kefir, a cultured dairy product. Lifeway Kefir is tart and tangy, high in protein, calcium and vitamin D. Thanks to our exclusive blend of kefir cultures, each cup of kefir contains 12 live and active cultures and 15 to 20 billion beneficial CFU (Colony Forming Units) at the time of manufacture.

We manufacture (directly or through co-packers) our products under our own brand, as well as under private labels on behalf of certain customers. Lifeway offers approximately 20 varieties of our kefir products including more than 60 flavors. In addition to our core drinkable kefir products, we offer several lines of products developed through our innovation and development efforts. These include Kefir Cups, a strained, cupped version of our kefir; and Organic Farmer Cheese Cups, a cupped version of our soft cheeses, both served in resealable 5 oz. containers. We also offer Skyr, a strained cupped Icelandic yogurt; Plantiful, a plant-based probiotic beverage made from organic and non-GMO pea protein with 10 vegan kefir cultures; a line of probiotic supplements for adults and children; and a soft serve kefir mix.

Our product categories are:

· Drinkable Kefir, sold in a variety of organic and non-organic sizes, flavors, and types, including low fat, non-fat, whole milk, protein, BioKefir (a 3.5 oz. kefir with additional probiotic cultures), and Kefir with Oats.

· European-style soft cheeses, including farmer cheese in resealable cups.

· Cream and other, which consists primarily of cream, a byproduct of making our kefir.

· ProBugs, a line of kefir products in drinkable and frozen formats, designed for children.

· Other Dairy, which includes Cupped Kefir and Icelandic Skyr, a line of strained kefir and yogurt products in resealable cups.

· Frozen Kefir, available in both bars and pint-size containers.

Lifeway has determined that it has one reportable segment based on how our chief operating decision maker manages the business and in a manner consistent with the internal reporting provided to the chief operating decision maker. The chief operating decision maker, who is responsible for allocating resources and assessing our performance, has been identified collectively as the Chief Financial Officer, the Chief Operating Officer, the Chief Executive Officer, and Chairperson of the board of directors. Substantially all of our consolidated revenues relate to the sale of cultured dairy products that we produce using the same processes and materials and are sold to consumers through a common network of distributors and retailers in the United States.

Net sales of products by category were as follows for the nine months ended September 30:

	2019			2018
		$	%			$	%
Drinkable Kefir other than ProBugs	$	54,126	77%		$	61,255	76%
Cheese		8,348	12%			8,443	11%
Cream and other		3,359	5%			4,104	5%
ProBugs Kefir		2,050	3%			2,166	3%
Other dairy		1,334	2%			3,154	4%
Frozen Kefir (a)		1,280	1%			1,196	1%
Net Sales	$	70,497	100%		$	80,318	100%

(a) Includes Lifeway Kefir Shop sales

Net sales of products by category were as follows for the three months ended September 30:

	2019				2018
	$		%		$		%
Drinkable Kefir other than ProBugs	$	17,513		77%	$	18,877		77%
Cheese		2,791		12%		2,656		11%
Cream and other		913		4%		1,406		6%
ProBugs Kefir		590		3%		471		2%
Other dairy		432		2%		699		3%
Frozen Kefir (a)		490		2%		371		1%
Net Sales	$	22,729		100%	$	24,480		100%

(a) Includes Lifeway Kefir Shop sales

Significant Customers – Sales are predominately to companies in the retail food industry located within the United States. Two major customers accounted for approximately 22% of net sales for the nine months ended September 30, 2019 and 2018, respectively. Two major customers accounted for approximately 21% and 20% of net sales for the three months ended September 30, 2019 and 2018, respectively.