SecProbe.io

September 14, 2011
 Edward P. Smolyansky, CFO & CAO Lifeway Foods, Inc. 6431 West Oakton Morton Grove, Illinois  60053
Re: Lifeway Foods
  Form 10-K for Fiscal Year Ended December 31, 2010   Filed March 31, 2011   File No.:  0-17363

Dear Mr. Smolyansky:
We have reviewed your filing and have the following comments.  In some of our
comments, we may ask you to provide us with  information so we may better understand your
disclosure.
 Please respond to this letter within ten business days by amending your filing, by
providing the requested information, or by advi sing us when you will provide the requested
response.  If you do not believe our comments apply to your fact s and circumstances or do not
believe an amendment is appropriate, pl ease tell us why in your response.
 After reviewing any amendment to your filing and the information you provide in
response to these comments, we may have additional comments.
Form 10-K for Fiscal Year Ended December 31, 2010

 Business, page 1

 Competition, page 5

 1. Tell us the status of your di scussions with Danone Foods, In c. related to the non-compete
agreement and explain your view regarding th e anticipated impact of not being able to
extend this agreement.  If the likelihood of material implications is reasonably possible,
also submit the disclosure that you propose to  comply with Item 303 of Regulation S-K.
The guidance in Instruction 3 to paragra ph 303(a) requires that you focus in MD&A on
material events and uncertainties that woul d cause reported financial information not to
be necessarily indicative of future operati ng results or future financial condition.

Edward P. Smolyansky
Lifeway Foods, Inc.   September 14, 2011 Page 2

 Employees, page 14

 2. We understand from your disclosures on page s 4, 27 and 30 that you recognize revenue
when distributors take custody of your products, although it appears you may have
distributors who are also your employees.  Please describe any circumstances under
which you recognize revenue when products are placed in the custody of distributors who
are your employees or who are utilizing your vehicles.  Tell us the extent to which you
consider distributors utilized  in your operations to be em ployees for purposes of your
disclosure on page 14 and indica te whether your approach is c onsistent with that taken in
determining federal employment taxes and federal and state income tax withholding.
Please identify the factors you consider ed in making these determinations.
 Financial Statements and Supplementary Data, page 20

 Revenue Recognition, page 27

 3. We note your disclosure on page four explaini ng that each distributor must meet certain
product handling, service and administrative  requirements, which include replacing
damaged, old, and substandard packages at retail  stores.  Please expand your disclosure to
clarify whether your distributor s and retailers have a right of return and, if so, also
disclose the terms under which this right ma y be exercised.  If your products are sold
with a right of return, submit the analys is that you performed under FASB ASC 605-15-
25-1 and 3 in determining the point at which you recognize revenue.
 Accounts Receivable, page 28

4. We note your disclosure explai ning that you perform ongoing credit evaluations of your
customers.  Tell us whether these credit evaluations are being performed for both
distributors and retailers alik e, and explain your rationale.  We would like to understand
the extent to which you regard distributors as customers.
 Controls and Procedures, page 41

 5. We note that you identified material weaknesse s in your internal control over financial
reporting as of December 31, 2010, 2009, 2008 and 2007; and understand that such
weaknesses still exist as of  June 30, 2011.  Under Rule 13a-15(a) of Regulation 13A, you
are required to maintain internal control ove r financial reporting.  Please disclose details
of your plans including a timetable to remediate all material weaknesses.

We urge all persons who are responsible for th e accuracy and adequacy of the disclosure
in the filing to be certain that the filing include s the information the Securities Exchange Act of
1934 and all applicable Exchange Act rules requir e.  Since the company and its management are
in possession of all facts relating to a company’s disclosure, they are responsible for the accuracy
and adequacy of the disclosures they have made.

Edward P. Smolyansky
Lifeway Foods, Inc.   September 14, 2011 Page 3

  In responding to our comments, please provi de a written statement from the company
acknowledging that:
 the company is responsible for the adequacy an d accuracy of the disclo sure in the filing;

 staff comments or changes to disclosure in response to staff comments do not foreclose
the Commission from taking any action with respect to the filing; and

 the company may not assert staff comments as  a defense in any proceeding initiated by
the Commission or any person under the federa l securities laws of  the United States.

You may contact Michael Fa y at 202-551-3812 if you have questions regarding the
comments and related matters.  Please contac t me with any other questions at 202-551-3686.

 Sincerely,
  /s/ Karl Hiller          K a r l  H i l l e r          B r a n c h  C h i e f