2. INVENTORIES

Inventories consist principally of packaged meal replacements held in the Company’s warehouses. Inventory is stated at the lower of cost or net realizable value, utilizing the first-in, first-out method. The cost of finished goods includes the cost of raw materials, packaging supplies, direct and indirect labor and other indirect manufacturing costs. On a quarterly basis, management reviews inventory for unsalable or obsolete inventory.

Inventories consisted of the following (in thousands):


	March 31, 2019		December 31, 2018

Raw materials	$	10,535	$	11,156
Packaging		1,813		1,563
Non-food finished goods		4,078		2,391
Finished goods		28,739		25,509
Reserve for obsolete inventory		(1,908)		(1,731)
Total	$	43,257	$	38,888