| Lifeway Foods,      Inc.For      Immediate Release |   |
|----------------------------------------------------|--------|

| -   | Q2      Sales Up 19% |
|---------------|----------------------|

| -   | Q2      2008 Gross Margin 34%; Operating Income Margin  13% |
|---------------|-------------------------------------------------------------|

| -   | Total      Q2 Net Income $911,718; EPS $.05 |
|---------------|---------------------------------------------|

----

|                                                           |   | (Unaudited)             |       |   | (Unaudited)           |   |
|----------------------------------------------------------------|--------|-------------------------|------------|--------|-----------------------|--------|
|                                                           |   | Three      Months Ended |       |   | Six      Months Ended |   |
|                                                           |   | June      30,           |       |   | June      30,         |   |
|                                                           |   | 2008                    |       |   | 2007                  |   |   | 2008 |   |   | 2007 |   |
|                                                           |   |                    |       |   |                  |   |   |   |   |   |   |   |
| Sales                                                          |   | $                       | 11,523,393 |   |                  | $      | 9,715,262 |   |   | $ | 22,645,631 |   |   | $ | 18,737,506 |   |
| Cost      of goods sold                                        |   |                    | 7,455,696  |   |                  |   | 5,699,883 |   |   |   | 14,897,779 |   |   |   | 10,984,414 |   |
| Depreciation      expense                                      |   |                    | 195,128    |   |                  |   | 186,303 |   |   |   | 384,552 |   |   |   | 351,597 |   |
| Total      cost of goods sold                                  |   |                    | 7,650,824  |   |                  |   | 5,886,186 |   |   |   | 15,282,331 |   |   |   | 11,336,011 |   |
| Gross      profit                                              |   |                    | 3,872,569  |   |                  |   | 3,829,076 |   |   |   | 7,363,300 |   |   |   | 7,401,495 |   |
| Selling      Expenses                                          |   |                    | 1,154,126  |   |                  |   | 912,262 |   |   |   | 2,213,292 |   |   |   | 1,682,343 |   |
| General      and Administrative                                |   |                    | 1,092,420  |   |                  |   | 1,074,530 |   |   |   | 2,077,466 |   |   |   | 1,995,103 |   |
| Amortization      expense                                      |   |                    | 79,862     |   |                  |   | 80,997 |   |   |   | 159,723 |   |   |   | 161,272 |   |
| Total      Operating Expenses                                  |   |                    | 2,326,408  |   |                  |   | 2,067,789 |   |   |   | 4,450,481 |   |   |   | 3,838,718 |   |
| Income      from operations                                    |   |                    | 1,546,161  |   |                  |   | 1,761,287 |   |   |   | 2,912,819 |   |   |   | 3,562,777 |   |
| Other      income (expense):                                   |   |                    |       |   |                  |   |   |   |   |   |   |   |   |   |   |   |
| Interest      and dividend income                              |   |                    | 62,862     |   |                  |   | 98,365 |   |   |   | 165,995 |   |   |   | 164,164 |   |
| Rental      Income                                             |   |                    | 11,647     |   |                  |   | 9,581 |   |   |   | 23,294 |   |   |   | 18,181 |   |
| Interest      expense                                          |   |                    | (68,969    | )      |                  |   | (109,283 | ) |   |   | (154,924 | ) |   |   | (218,812 | ) |
| Gain      (loss) on sale of marketable securities,    net |   |                    | (87,174    | )      |                  |   | 439,586 |   |   |   | (36,145 | ) |   |   | 454,331 |   |
| Total      other income (Expense)                              |   |                    | (81,634    | )      |                  |   | 438,249 |   |   |   | (1,780 | ) |   |   | 417,864 |   |
|                                                                |   |                    |       |   |                  |   |   |   |   |   |   |   |   |   |   |   |
| Income      before provision for income taxes             |   |                    | 1,464,527  |   |                  |   | 2,199,536 |   |   |   | 2,911,039 |   |   |   | 3,980,641 |   |
| Provision      for income taxes                                |   |                    | 552,809    |   |                  |   | 803,510 |   |   |   | 1,110,715 |   |   |   | 1,449,284 |   |
| Net      income                                                |   | $                       | 911,718    |   |                  | $      | 1,396,026 |   |   | $ | 1,800,324 |   |   | $ | 2,531,357 |   |
|                                                                |   |                    |       |   |                  |   |   |   |   |   |   |   |   |   |   |   |
| Basic      and diluted earnings per common share               |   |                    | 0.05       |   |                  |   | 0.08 |   |   |   | 0.11 |   |   |   | 0.15 |   |
|                                                                |   |                    |       |   |                  |   |   |   |   |   |   |   |   |   |   |   |
| Weighted      average number of shares outstanding        |   |                    | 16,765,094 |   |                  |   | 16,875,905 |   |   |   | 16,789,727 |   |   |   | 16,885,586 |   |

----

|                                                           |   | (Unaudited)           |       |   |              |   |
|----------------------------------------------------------------|--------|-----------------------|------------|--------|-------------------|--------|
|                                                           |   | Six      Months Ended |       |   |              |   |
|                                                           |   | June      30,         |       |   | December      31, |   |
|                                                           |   | 2008                  |       |   | 2007              |   |   | 2007 |   |
|                                                           |   |                  |       |   |              |   |   |   |   |
| Cash flows from      operating activities:                     |   |                  |       |   |              |   |   |   |   |
| Net      income                                                |   | $                     | 1,800,324  |   |              | $      | 2,531,357 |   |   | $ | 3,152,660 |   |
| Adjustments      to reconcile net income to net                |   |                  |       |   |              |   |   |   |   |   |   |   |
| cash      flows from operating activities, net of acquisition: |   |                  |       |   |              |   |   |   |   |   |   |   |
| Depreciation      and amortization                             |   |                  | 544,275    |   |              |   | 512,869 |   |   |   | 1,049,913 |   |
| (Gain)Loss      on sale of marketable securities, net          |   |                  | 36,145     |   |              |   | (454,331 | ) |   |   | (539,739 | ) |
| Deferred      income taxes                                     |   |                  | (78,035    | )      |              |   | (5,303 | ) |   |   | (223,717 | ) |
| Treasury      stock issued for compensation                    |   |                  | 34,650     |   |              |   | 6,930 |   |   |   | 48,509 |   |
| Increase      (decrease) in allowance for doubtful accounts    |   |                  | (4,449     | )      |              |   | (40,540 | ) |   |   | (40,540 | ) |
| (Increase)      decrease in operating assets:                  |   |                  |       |   |              |   |   |   |   |   |   |   |
| Accounts      receivable                                       |   |                  | (412,176   | )      |              |   | (619,056 | ) |   |   | (226,405 | ) |
| Other      receivables                                         |   |                  | (6,460     | )      |              |   | 30,755 |   |   |   | 27,939 |   |
| Inventories                                                    |   |                  | (345,171   | )      |              |   | (988,401 | ) |   |   | (984,358 | ) |
| Refundable      income taxes                                   |   |                  | 240,880    |   |              |   | 267,771 |   |   |   | 26,891 |   |
| Prepaid      expenses and other current assets                 |   |                  | 8,950      |   |              |   | (1,224 | ) |   |   | (9,270 | ) |
| Increase      (decrease) in operating liabilities:             |   |                  |       |   |              |   |   |   |   |   |   |   |
| Accounts      payable                                          |   |                  | 279,314    |   |              |   | 64,150 |   |   |   | 131,316 |   |
| Accrued      expenses                                          |   |                  | 134,667    |   |              |   | (93,352 | ) |   |   | (66,062 | ) |
| Accrued      income taxes                                      |   |                  | 395,093    |   |              |   | 31,802 |   |   |   |   |   |
| Net      cash provided by operating activities                 |   |                  | 2,628,007  |   |              |   | 1,243,427 |   |   |   | 2,347,137 |   |
|                                                           |   |                  |       |   |              |   |   |   |   |   |   |   |
| Cash flows from      investing activities:                     |   |                  |       |   |              |   |   |   |   |   |   |   |
| Investment      in cost method securities                      |   |                  | —    |   |              |   | — |   |   |   | (500,000 | ) |
| Purchases      of marketable securities                        |   |                  | (3,490,650 | )      |              |   | (3,274,563 | ) |   |   | (5,744,697 | ) |
| Sale      of marketable securities                             |   |                  | 3,299,791  |   |              |   | 3,750,770 |   |   |   | 7,168,246 |   |
| Increase      in margin                                        |   |                  | 407,479    |   |              |   |   |   |   |   |   |   |
| Purchases      of property and equipment                       |   |                  | (1,475,280 | )      |              |   | (590,096 | ) |   |   | (1,824,879 | ) |
| Purchases      of organizational costs                         |   |                  | —    |   |              |   | (5,858 | ) |   |   |   |   |
| Net      cash used in investing activities                     |   |                  | (1,258,660 | )      |              |   | (119,747 | ) |   |   | (901,330 | ) |
|                                                           |   |                  |       |   |              |   |   |   |   |   |   |   |
| Cash flows from      financing activities:                     |   |                  |       |   |              |   |   |   |   |   |   |   |
| Proceeds      of note payable                                  |   |                  | —    |   |              |   | — |   |   |   | 300,000 |   |
| Purchases      of treasury stock, net                          |   |                  | (1,038,723 | )      |              |   | (752,603 | ) |   |   | (752,603 | ) |
| Repayment      of notes payable                                |   |                  | (584,470   | )      |              |   | (      904,456 | ) |   |   | (1,945,131 | ) |
| Net      cash used in financing activities                     |   |                  | (1,623,193 | )      |              |   | (1,657,059 | ) |   |   | (2,397,734 | ) |
|                                                           |   |                  |       |   |              |   |   |   |   |   |   |   |
| Net      decrease in cash and cash equivalents                 |   |                  | (253,846   | )      |              |   | (533,379 | ) |   |   | (951,927 | ) |
|                                                           |   |                  |       |   |              |   |   |   |   |   |   |   |
| Cash      and cash equivalents at the beginning of the period  |   |                  | 595,885    |   |              |   | 1,547,812 |   |   |   | 1,547,812 |   |
|                                                           |   |                  |       |   |              |   |   |   |   |   |   |   |
| Cash      and cash equivalents at the end of the period        |   | $                     | 342,039    |   |              | $      | 1,014,433 |   |   | $ | 595,885 |   |