Lifeway Foods saw its net income fall during the third quarter due to increases in advertising and selling expenses as well as the higher cost of conventional milk, with milk prices increasing more than 50% against the same period of 2009.

The Kefir fermented milk drink producer recorded US$904,837 net income for the quarter against $1.3m in the same quarter of the previous year.

However, the company said that total sales increased more than 3% to $15.9m.

“Lifeway’s third quarter results are in-line with our expectations given the weak consumer environment, and reflect the company’s current growth strategy,” said Edward Smolyansky, Lifeway Food’s chief financial officer. “Our gross margins have been strong and consistent year-over-year and the decrease in net income was primarily driven by higher conventional milk prices and our increased advertising and marketing initiatives. We believe our marketing program continues to build awareness for the health benefits of Kefir, as well as increases the visibility of the brand with retailers.”

Click here for the company’s full earnings statement.