Lifeway Foods, Inc. (Nasdaq: LWAY) announced its financial results for the second quarter and six month period ended June 30, 2001. Revenues of the quarter increased to $2.75 million, a 20 percent gain over $2.287 million revenues in the same quarter last year. Revenues for the first six months rose sharply to $5.382 million, up 18 percent from revenues of $4.560 million for the same period a year ago.

Net income for the quarter was $232,243, or $0.05 per share, compared to $184,290, or $0.04 per share for the second quarter last year. Six month net income was $560,956, or $0.13 per share, up 44 percent from $373,156, or $0.9 per share for the same period a year ago.

Michael Smolyansky, President and CEO commented, "Sales continued to climb in the second quarter furthering the strong trend we experienced since the first half of the year. Sales of our Kefir product line remains strong, as we continued to experience better than expected sales of our SoyTreat(TM) during the quarter. We expect this strong trend to carry forward in the second half of the year and for 2001 to be another year of record sales and earnings for Lifeway. We also expect substantially increased sales of our new Lifeway Organic(TM) line of products during the second half of this year."

Lifeway is a manufacturer of cultured, probiotic and functional food products and is America's leading supplier of the cultured dairy product known as kefir. The Company markets 12 flavors of kefir and does a successful business exporting its products to Eastern Europe and Canada. The Company continues to market a dairy based immune-supporting dietary supplement beverage called Basics Plus(TM), as well as Kefir Starter for consumers to make kefir at home or in travel. With the recent introduction of America's first non-dairy soy kefir called SoyTreat (TM), as well as Lifeway Organic(TM) the Company is entering into the organic and soy milk market.

For more information, contact Michael Smolyansky, President, Lifeway Foods, Inc. at 847-967-1010 or e-mail at info@lifeway.net or visit www.kefir.com .

This press release contains "forward-looking statements" Investors are cautioned that actual results may differ materially from such forward-looking statements. Forward-looking statements involve risk and uncertainties including, but not limited to, competitive pressures and other important factors detailed in the Company's annual reports on Form 10-K filed with the Securities and Exchange Commission.

                             Lifeway Foods, Inc.
                  Condensed Consolidated Statement of Income
                                 (Unaudited)

                       Three Months Ended              Six Months Ended

                   June 30, 2001   June 30, 2000  June 30, 2001  June 30, 2000
    Sales            $2,749,719     $2,287,222      $5,382,418      $4,560,008
    Cost of
     Goods Sold       1,644,786      1,288,341       3,192,013       2,425,097
    Gross Profit      1,104,933        998,881       2,190,405       2,134,911
    Operating Expenses  773,467        882,750       1,426,945       1,792,368
    Pre-tax income      381,306        300,778         945,368         609,044
    Income taxes        149,063        116,488         384,412         235,888
    Net income          232,243        184,290         560,956         373,156

    Per Share Earnings    $0.05          $0.04           $0.13           $0.09

    Wtg. Ave.
     Shares           4,318,444      4,318,444       4,318,444       4,318,444


                                Balance Sheet

                                                    Three Months Ended
                                               June 30, 2001  June 30, 2000

    Current Assets                               $ 8,765,912     $7,938,858
    Current Liabilities                            1,559,814        633,861
    Long-term Debt                                   516,536      1,188,013
    Stockholders Equity                           11,314,995     10,657,834
    Total Assets                                 $13,774,197    $12,743,381