Last summer's spike in raw milk prices affected small dairy companies the same way it affected the nation's largest processor, Dean Foods.

Third quarter income for the Morton Grove, Ill.-based Lifeway Foods fell 27.3% to $515,109, compared with $709,196, in the third-quarter 2003. Sales in the quarter ended Sept. 30 rose 7.8% to a record $4.14 million but the company attributed the drop in income to higher costs for milk.

Lifeway makes a dozen flavors of kefir, including varieties with no added sugar and low carbohydrates.