**EXHIBIT
      99.1**






**Lifeway
                  Foods, Inc.**
                For
                  Immediate Release
  **Lifeway
        Foods Reports Record 2nd Quarter and First Half 2007
        Results**
  **-**
              **Q2
                  Sales Up 53%**
  **-**
              **Q2
                  Gross Profit Up 48%; Operating Income Up
                  89%**
  **-**
              **Total
                  Q2 EPS Doubles to $.08 in 2007 from $.04 in
                  2006**
  **Morton
        Grove, IL—August 14, 2007—**Lifeway Foods, Inc., (Nasdaq: LWAY),makers
        of a nutritious, probiotic dairy beverage called kefir, announced today for
        the
        second quarter ended June 30, 2007, total consolidated sales increased 53%
        to
        approximately $9,715,000 from $6,367,000 during the same period a year
        ago.  This increase in sales was driven by another strong sales
        increase of Lifeway’s kefir line of 30% and the remainder coming from the sales
        of the Helios kefir line and Pride of Main Street’s milk line.
  Second
        quarter 2007 gross profit increased 48% to $3,829,076 from $2,579,820 during
        the
        same period a year ago.  Gross margins were 40% in the second quarter
        2007.  Second quarter operating income increased 89% to $1,761,287
        from $930,154 during the same period a year ago.  Operating margins
        were 18% in the second quarter 2007 compared with 15% in the second quarter
        2006.  Net income rose 86% to $1,396,026 in the second quarter 2007,
        from $750,044 during the same period a year ago.  Earnings per share
        increased to $.08 per share for the second quarter 2007, up 100% from $.04
        per
        share for the same three-month period in 2007.
  For
        the
        six months ended June 30, 2007, total consolidated sales increased 51% to
        approximately $18,737,500 from $12,370,000 during the same period a year
        ago.
        This increase in sales was driven by another strong sales increase of Lifeway’s
        kefir line of 29% and the remainder coming from the sales of the Helios kefir
        line and Pride of Main Street’s milk line.
  For
        the
        six months ended June 30, 2007 gross profit increased 40% to $7,401,495 from
        $5,277,199 during the same period a year ago.  Gross margins were 40%
        in the first six months of 2007.  For the six months ended June 30,
        2007 operating income increased 53% to $3,562,777 from 2,336,525 during the
        same
        period a year ago.  Net income rose 54% to $2,531,357 in the first six
        months of 2007, from $1,644,702 during the same period a year ago, while
        earnings per share increased to $.15 per share for, up $.10 per share for
        the
        same six-month period in 2007.
  Edward
        Smolyansky, CFO commented, “We are extremely proud of our second quarter and
        first half   2007 results, one of the best periods we have ever
        had from top to bottom.  Despite historically high conventional milk
        prices, and due to organic milk prices stagnating over the last year, we
        continue to see benefits from leveraging our recent acquisition of the Helios
        Organic Kefir line into our overall operations.  In addition to the
        Organic Helios Kefir line, our own Lifeway Organic Kefir lines continue to
        outpace our conventional Kefir line in growth as we focus on products such
        as
        Probugsä
        Organic Kefir for kids.”
  Smolyansky
        added, “Going forward, we believe that our focus on Organic Kefir will help
        mitigate the effects of historically high conventional milk prices on costs,
        and
        we hope these milk prices are temporary.”
  **About
        Lifeway Foods**
 
 Lifeway,
        recently named Fortune Small Business' 94th Fastest Growing Small Business,
        and
        one of only 20 companies to ever be named to the list three straight years
        in a
        row, is America's leading supplier of the cultured dairy product known as
        kefir,
        and now America’s largest supplier of Organic 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 patented 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 info@lifeway.net and visit
http://www.lifeway.net .
  **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.**
 
 (Unaudited)
              
              
              (Unaudited)Three
                  Months Ended
              
              
              Six
                  Months EndedJune
                  30,
              
              
              June
                  30,**2007**
              
              
              **2006**
              
              
              **2007**
              
              
              **2006****Sales**
              
              $
              9,715,262
              
              
              $
              6,367,397
              
              
              $
              18,737,506
              
              
              $
              12,370,420Cost
                  of goods sold
              
              
              5,886,186
              
              
              
              3,787,577
              
              
              
              11,336,011
              
              
              
              7,093,221**Gross
                  profit**
              
              ****
              **3,829,076**
              
              
              ****
              **2,579,820**
              
              
              ****
              **7,401,495**
              
              
              ****
              **5,277,199**Selling
                  Expenses
              
              
              912,262
              
              
              
              849,647
              
              
              
              1,682,343
              
              
              
              1,432,591General
                  and Administrative
              
              
              1,155,527
              
              
              
              800,019
              
              
              
              2,156,375
              
              
              
              1,508,083**Total
                  Operating Expenses**
              
              
              2,067,789
              
              
              
              1,649,666
              
              
              
              3,838,718
              
              
              
              2,940,674**Income
                  from operations**
              
              ****
              **1,761,287**
              
              
              ****
              **930,154**
              
              
              ****
              **3,562,777**
              
              
              ****
              **2,336,525**Other
                  income (expense):Interest
                  and dividend income
              
              
              98,365
              
              
              
              122,033
              
              
              
              164,164
              
              
              
              208,264Rental
                  Income
              
              
              9,581
              
              
              
              ---
              
              
              
              18,181
              
              
              
              ---Interest
                  expense
              
              
              (109,283
              )
              
              
              (63,200
              )
              
              
              (218,812
              )
              
              
              (113,426
              )Gain
                  (loss) on sale of marketablesecurities,
                  net
              
              
              439,243
              
              
              
              225,292
              
              
              
              453,380
              
              
              
              188,414Gain
                  on marketable securitiesclassified
                  as trading
              
              
              343
              
              
              
              2,549
              
              
              
              951
              
              
              
              3,061Total
                  other income (Expense)
              
              
              438,249
              
              
              
              286,674
              
              
              
              417,864
              
              
              
              286,313**Income
                  before provision for****income
                  taxes**
              
              ****
              **2,199,536**
              
              
              ****
              **1,216,828**
              
              
              ****
              **3,980,641**
              
              
              ****
              **2,622,838**Provision
                  for income taxes
              
              
              803,510
              
              
              
              466,784
              
              
              
              1,449,284
              
              
              
              978,136**Net
                  income**
              
              **$**
              **1,396,026**
              
              
              **$**
              **750,044**
              
              
              **$**
              **2,531,357**
              
              
              **$**
              **1,644,702****Basic
                  and diluted earnings per****common
                  share**
              
              
              0.08
              
              
              
              0.04
              
              
              
              0.15
              
              
              
              0.10**Weighted
                  average number of****shares
                  outstanding**
              
              ****
              **16,875,905**
              
              
              ****
              **16,799,536**
              
              
              ****
              **16,885,586**
              
              
              ****
              **16,795,473**