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11. Segments, Products and Customers

12 Months Ended

Dec. 31, 2017

Segment Reporting [Abstract]

Segments, Products and Customers

Lifeway’s primary product is drinkable kefir, a cultured dairy product. Lifeway Kefir is a tart and tangy cultured milk smoothie that is 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. As of December 31, 2017, Lifeway offered over 50 varieties of our kefir products including more than 20 flavors. In addition to our core drinkable kefir products, we offer 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 with mini-spoons. We also offer Lifeway Elixir, a line of non-dairy, sparkling organic probiotic beverages, as well as probiotic supplements for adults and children. In late 2017, we also announced that we would begin offering Skyr, a strained cupped Icelandic yogurt, and Plantiful, a plant-based probiotic beverage made from organic and non-GMO pea protein with 10 vegan kefir cultures.

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

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

	·	Other Dairy, which include Cupped Kefir and Icelandic Skyr, a line of strained kefir and yogurt products in a 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 Company 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 years ended December 31:

		2017								2016
In thousands		$				%				$				%

Drinkable Kefir other than ProBugs		$	90,514				76%			$	96,782				78%
Cheese			11,516				10%				11,007				9%
Cream and other (a)			6,527				5%				6,114				5%
ProBugs Kefir			4,537				4%				6,722				5%
Other dairy			4,138				4%				1,279				1%
Frozen Kefir (b)			1,661				1%				1,975				2%
Net Sales		$	118,893				100%			$	123,879				100%

(a)	Includes cream byproducts and other non-dairy products for resale

(b)	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% and 23% of net sales for the years ended December 31, 2017 and 2016, respectively. Two major customers accounted for approximately 19% and 25% of accounts receivable as of December 31, 2017 and 2016, respectively. Our ten largest customers as a group accounted for approximately 59% and 58% of net sales for the years ended December 31, 2017 and 2016, respectively.