US dairy products maker Lifeway Foods was yesterday (31 January) upbeat about its prospects for 2011 despite booking falling profits for 2010 amid higher milk and advertising costs.

Lifeway CEO Julie Smolyansky said the company was “well positioned” to achieve “record” sales and profits in 2011.

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Smolyansky revealed that sales in the first quarter of 2011 were up 25% and said that the US Department of Agriculture’s decision to exempt kefir from the Class I milk classification will cut Lifeway’s milk costs by up to 15%.

The reduced pressure on milk costs will provide some relief to Lifeway. The company, which makes cultured dairy product kefir, filed net income of US$3.6m for the year, down from $5.6m a year earlier.

The firm’s milk costs rose 30% over the year and the company also spent 60% more on advertising in 2010, it said.

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The costs meant Lifeway reported a net loss of US$235,563 for the final three months of 2010 – compared to net income of $119,593 in the fourth quarter of 2009.

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Lifeway’s top line grew in the quarter – and over 2010. Sales increased 11% to $16.1m in the fourth quarter, the company said, while sales over the year were up 9.3% to $63.5m.

Smolyansky said: “We are pleased with our continued strong top-line growth during the fourth quarter and full year of 2010 as well as the expanding consumer awareness from our increased marketing initiatives. This has enabled us to increase retail distribution in leading retailers including Wal-Mart Stores and Safeway Inc.

“Kefir is now becoming a mainstream health and wellness product, and we believe we are only beginning to see the tremendous long-term growth opportunities that are ahead for our company.”