US firm Lifeway Foods has posted a 2% drop in first-quarter profits despite rising sales, as a 30% increase in milk prices ate into the group’s margins.

Profits fell to US$3.5m despite a 23% increase in revenues, which rose to $11.1m in the quarter to 31 March.

Sales gains were driven by growth of Lifeway’s flagship kefir line, Lifeway’s ProBugs Organic Kefir for Kids, and Lifeway’s Helios Organic brand kefir, the company said.

Despite soaring commodity prices, Lifeway CFO Edward Smolyansky remained upbeat. 

“We are extremely pleased at our first quarter 2008 results. Sales were again very strong, and we really started to see the benefits of decreasing milk cost, which began in March. These decreases have since continued in April, and even more so in May, and we hope that this trend continues throughout the year,” Smolyansky said.