SecProbe.io

September 5, 2014

Via E -mail
Edward P. Smolyansky
Chief Financial Officer
Lifeway Foods Inc.
6431 West Oakton St reet
Morton Grove, Illinois 60053

Re: Lifeway Foods, Inc.
 Form 10-K for Fis cal Year Ended December 31, 2013
 Filed April 2, 2014

Form 10 -Q for Fiscal Quarter Ended June 30 , 2014
 Filed August 11 , 2014

File No . 000-17363

Dear Mr. Smolyansky :

We have reviewed your filing s 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 s, by
providing the requested information, or by advising us when you wil l provide the requested
response.   If you do not believe our comments apply to your facts and circumstances or do not
believe an amendment is appropriate, please tell us why in your response.

After reviewing any amendment to your filing s and the informat ion you provide in
response to these  comments, we may have  additional comments.

Form 10 -K for Fiscal Year Ended December 31, 2013

Business, page 4

Distribution, page 4

1. We note you disclose that you have verbal distribution arrangements with various
distributors throughout the United States and in London .  To the extent material, please
add a related risk factor.

Edward P. Smolyansky
Lifeway Foods, Inc.
September 5, 2014
Page 2

 Major Customers, page 5

2. Please identify the name of your two major customers as required by Item 101(c)(vii) of
Regulation S-K.  Also, file the customer agreements as material contracts pursuant to
Item 601(b)(10) of Regulation S -K.

Management’s Discussion and Analysis of Financial Condition and Results of Operations,
page 15

General

3. As a general observation, we note your M D&A does not consistently provide enough
detail to separately quantify the effect of each causal factor that results in a material
change in your financial statement line items for the periods under comparison.  The
staff’s observation is applicable to you r periodic filings, including your Form 10 -K and
Forms 10 -Q.  In future filings, please enhance your discussion to provide the reader with
a better understanding of your business results.  Refer to Item 303(a) of Regulation S -K
and, for further guidance, S ection III.D. of SEC Release 33 -6835.  More specifically, the
comments that follow pertain to the filing under review.

Comparison of Year Ended December 31, 2013 to Year Ended December 31, 2012

4. We note your statement that Gross sales increased by $19.2M or approximately 21%
during 2013 when compared to 2012 and that such increase “is primarily attributable to
increased sales and awareness of the Company’s flagship line, Kefir, as well as ProBugs
Organic Kefir for kids and BioKefir.”  Please enhance your d isclosure to provide
additional detail separately quantifying the effect of each causal factor of the increase.
Item 303(a)(3)(iii) of Regulation S -K contemplates a discussion of the extent to which
such increases are attributable to increases in prices o r to increases in the volume or
amount of goods being sold or to the introduction of new products.

5. We note your statement that Cost of goods sold was 70% of net sales during 2013 as
opposed to 65% of net sales during 2012 and that such increase “was prima rily
attributable to the cost of conventional and organic milk.”  We further note your
disclosure that the total cost of milk was approximately 25% higher during the periods
under comparison.  Please expand your discussion to provide the actual cost figure s
necessary to put this change in proper context.

6. Please enhance your discussion surrounding your operating expenses to provide sufficient
detail separately quantifying the effect of the material changes in your Selling expenses
and General and administra tive financial  statement line items.

7. We note from the transcript of your earnings call held on March 31, 2014 that a Starfruit
café location was closed permanently and that you v iew this as a non -recurring event, and

Edward P. Smolyansky
Lifeway Foods, Inc.
September 5, 2014
Page 3

 other  locations continue to exceed your performance expectation.   We are unable to
locate discussion within your filing of the operation and related results of such café’s
other than the disclosure on page two that such entities exist.  Please expand your
disclosure in a meaningful way to ad dress this portion of your business.

Liquidity and Capital Resources, page 16

8. We note Net cash used in investing activities increased $7M and your explanation that
such increase was “ primarily due to an increase in purchases of property and equipment
of $7,051,169 compared to 2012. ”  Please expand your discussion to address the material
components of this increase in sufficient detail.

9. Please also expand your discussion to address your purchase of the Golden Guernsey
dairy plant in Wisconsin .  In this regard, we note from the transcript of your earnings call
held on March 31, 2014 that this particular purchase was considered by management to
be “One of the most exciting highlights this past year …, which will provide us with an
additional manufacturing capacity for our growing business. ”  Furthermore, it appears
that you should discuss, as you did in the earnings call that this purchase was made with
the intent of processing your own milk.  Refer to Item 303(a)(1) of Regulation S -K,
which contemplates th e discussion of events that will likely result in the registrant’s
liquidity increasing or decreasing in any material way.

Consolidated Statements of Financial Condition, page 20

10. We note the line item “Goodwill and other non amortizable brand assets” doe s not appear
to comply with FASB ASC 350 -20-45-1, which requires that the aggregate amount of
goodwill be shown separately on the face of the balance sheet.  Please revise your
presentation as necessary.  Additionally, please expand your footnote disclosur e as it
relates to your indefinite -lived brand assets to disclose the total carrying amount as
required by FASB ASC 350 -30-50-2(b).

Notes to Consolidated Financial Statements, page 24

General

11. We note your footnotes do not provide the reader with an un derstanding of how
management considered segment reporting in accordance with FASB ASC 280 -10-50-21.
Please expand your disclosure to address this disclosure requirement.  Additionally,
please tell us how you considered the need to provide information abo ut products as per
FASB ASC 280 -10-50-40 and information about geographic areas as per FASB ASC
280-10-50-41.

Edward P. Smolyansky
Lifeway Foods, Inc.
September 5, 2014
Page 4

 Management’s Report on Internal Control Over Financial Reporting, page 35

12. We note that you identified material weaknesses in your internal con trol over financial
reporting as of December 31, 2013 and understand that such weaknesses still exist as of
June 30, 2014.   In your response letter to us dated October 14, 2011, you indicated your
expectation that changes made in 2011 would eliminate your material weaknesses.  Given
your continued conclusion that your internal control over financial reporting is
ineffective, please provide us with an update on the status of your efforts to eliminate all
material weaknesses.

Form 10 -Q for Fiscal Quarter Ended June 30, 2014

Legal Proceedings page 22

13. You indicate that you are not party to material legal proceedings but you also state that
you are party to various litigation  claims and legal proceedings under the risk factor
subheading, “Litigation or lega l proceedings could expose us to significant liabilities…”
at page 27.  Please revise to clarify.

We urge all persons who are responsible for the accuracy and adequacy of the disclosure
in the filing to be certain that the filing includes the information the Securities Exchange Act of
1934 and all applicable Exchange Act rules require.   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 disclosure s they have made.

 In responding to our comments, please provide  a written statement from the company
acknowledging that:

 the company is responsible for the adequacy and accuracy of the disclosure 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 federal secu rities laws of the United States.

Edward P. Smolyansky
Lifeway Foods, Inc.
September 5, 2014
Page 5

You may contact Jennifer O’Brien , Staff Accountant, at (202) 551 -3721  or Kimberly L.
Calder , Assistant Chief Accountant , at (202) 551 -3701  if you have  questions regarding
comments on the financial statements and related matters.  Please contact Caroline Kim,
Attorney -Advisor, at (202) 551 -3878 or, in her absence, the undersigned at  (202) 551 -3611 with
any other questions.

Sincerely,

/s/ A.N. Parker

        Anne Nguyen Parker
        Branch Chief