Cheese, lassi and yoghurt producer Lifeway Foods has announced a deal almost tripling the distribution of its kefir dairy line in Target stores across the US.

The agreement, revealed yesterday (15 May), will also see the addition of new Lifeway products to Target’s dairy cases. Availability in the US retailer’s stores will increase from 170 to 453 locations, with the addition of three flavours of Lifeway Kefir four-packs to Target’s offerings.

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Lifeway said this is the “first major expansion” with Target in eight years.

The announcement comes as Lifeway reported a drop in first-quarter net profits.

For the three months to the end of March, net income slid 42% to US$1.1m. The decrease, the company said, was primarily due to a 30% increase in freight expense and higher fuel costs during the quarter, in addition to the increased cost of conventional and organic milk.

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Total operating income in the period dropped 43% to $1.9m on the back of a decrease in gross profit and increased operating expenses.

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Net sales, however, increased 12% to $19.4m in the quarter.

Despite the cost headwinds, CEO Julie Smolyansky said the company is “pleased” with its first quarter financial performance.

“This year, we expect increased distribution of our kefir products with our retail partners. Our recent expansion with Target exhibits the growing healthy living trend, consumers’ demand for nutritious products, and retailers increasingly expanding their product offerings to support consumer demand,” she said, adding that the company is “confident” of realising lower milk prices in the second quarter.

Click here to view the full earnings release.