Lifeway Foods Reports Record Q2 and First Half 2008 Results

Lifeway Foods, Inc., makers of a nutritious, probiotic dairy beverage called kefir, announced today for the second quarter ended June 30, 2008, sales increased 19% to approximately $11,523,500 from $9,715,000 during the same period a year ago. This increase in sales was driven by another strong sales increase of Lifeway's kefir and ProBugs(R).

Second quarter 2008 gross profit virtually unchanged to $3,872,569 from $3,829,076 during the same period a year ago. Gross margins were 34% in the second quarter 2008. Operating income was $1,546,161 for the second quarter 2008. Net Income was $911,718 for the second quarter 2008. Earnings per share were $.05 per share for the second quarter 2008.

Edward Smolyansky, CFO commented, "We are extremely proud of our second quarter and first half 2008 results. Our margins continue to improve as the cost of our largest raw material, milk, continues to decrease from its record highs set in the fall of 2007. The price of milk in August was the second lowest month in 2008, and we hope the downward trend will persist throughout the remainder of 2008. Even though we have had some relief in the cost of milk, the prices of most of our other production and packaging supplies that are derived from oil continue to rise, as does the cost to deliver our products."

Smolyansky added, "We intend on using the extra savings derived from these lower raw material prices to increase our marketing and promotional activities and to continue to educate the public as to the benefits of our Kefir. Selling related expenses in the second quarter 2008 increased 26% compared to the same period a year ago and we expect to continue to spend a higher percentage of sales on marketing in the second half of 2008."

About Lifeway Foods
Lifeway, recently named Fortune Small Business' 49th Fastest Growing Small Business, is America's leading supplier of the cultured dairy product known as kefir. Lifeway Kefir is a dairy beverage that contains Lifeway's exclusive 10 Live and Active probiotic cultures. While most regular yogurt only contains two or three of these "friendly" cultures, Lifeway kefir products offer more nutritional benefits. Lifeway offers 12 different flavors of its Kefir beverage, Organic Kefir and SoyTreat (a soy based kefir). Lifeway recently introduced a series of innovative new products such as pomegranate kefir, Greek-style kefir, a children's line of organic kefir products called ProBugs (TM) in a no-spill pouch in kid-friendly flavors like Orange Creamy Crawler and Sublime Slime Lime, and a line of organic whole milk kefir. Lifeway also produces a line of products marketed in US Hispanic communities, called La Fruta, Drinkable Yogurt (yogurt drinks distinct from kefir). In addition to its line of Kefir products, the company produces a variety of cheese products and recently introduced a line of organic pudding called It's Pudding!
Live conference calls will now be on an annual basis to discuss fiscal full year results. For more information, contact Lifeway Foods, Inc. at (847) 967-1010 or e-mail at [email protected] visit .

This news release contains forward-looking statements. Investors are
cautioned that actual results may differ materially from such forward-looking
statements. Forward-looking statements involve risks and uncertainties
including, but not limited to, competitive pressures and other important
factors detailed in the Company's reports filed with the Securities and
Exchange Commission.

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