Shareholder Newsletter

December 1, 2006 - Issue No. 37

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DEAR FELLOW SHAREHOLDERS:

LBIX MONTHLY NEWSLETTER

A couple of housekeeping matters are in order.  First, our next newsletter will be posted on February 1, 2007.  I am going to be away from the office over the Holidays and I hope that you excuse me for not writing one in January.  Lastly, we presently anticipate releasing our Q3 results during the second week of January.  That is a few days later than normal, but we've found that holding conference calls between Christmas and the first few days of the New Year can be less than productive.

We have been pleasantly surprised by the continued growth of our brands through the Fall and are extremely optimistic about orders headed into the Winter months.  TrueBlue® in particular has proven to have less seasonality than brands that we have historically carried.  We have had to book additional production prior to Christmas to keep up with demand.

As indicated in previous newsletters, we are continuing to push forward with our marketing campaign for TrueBlue®.  The following festive ads will appear in major newspapers in Seattle, Portland Oregon, Phoenix, Minneapolis, Chicago and Los Angeles next week.  Others will follow in early 2007.

I would urge you to try the Warm TrueBlue® Blueberry Cider recipe with your family over the Holidays.   It's a festive, healthy and low calorie alternative that your children will love.

When sitting down to make the final decision on the installation of our new can line this week I found myself constantly considering the investment in light of the success of our new brands.  If we proceeded with the can line, resources that we could otherwise allocate to support the fastest growing segment of our business (our brand distribution) would be allocated to a slower growth area (bottling).  I was also mindful of diverting management attention from what has become our most rewarding business to installing equipment and then selling out capacity that we currently have no product of our own to utilize.  Consequently, we have decided to scratch the can line from our immediate plans and concentrate our efforts where they are providing the greatest returns.  I believe that the decision to increase investment behind our own brands rather than those of others is the right one for both the immediate and longer terms.  If we need canning capacity for our own brand innovation, we can find it elsewhere.

As I mentioned last month, we now have 10 TrueBlue®-identified vans opening new customers for us across Canada and in the Pacific Northwest.  That is a program that we are looking to expand early next year.  We have also just added regional sales managers in Miami, San Francisco and South Florida.  Those are three very important markets and we anticipate increasing our representation there early next year.

As I write this, Infinite Health™ Water is in full production.  We have had good indications of initial demand from an array of large convenience chains and will continue to broaden the base of distribution for that brand and TREK® in advance of next Spring.

This time of year is usually one of reflection.  I am reminded of the situation we found ourselves in twelve months ago with the Gulf hurricanes spiking oil prices and taking petrochemical capacity off line.  Input costs were rising and raw material supply was constrained.  Our shares were trading in the $1.00 range.  Our brands were relatively new.  In retrospect, it has been a heck of a year.  We successfully increased our margins to accommodate the escalation in costs.  We saw revenue from distribution of our branded products grow by more than 60% this year.  We dramatically expanded our listing base, launched new products and flavors and streamlined our operations.  Our sales force has more than doubled in that period.  We undertook our first media marketing campaign.  Our brands are now available in all 50 States of the Union.

Our stock price is presently in the $3.00 range, having risen to almost $7.00 before retreating.  When our shares last traded at these levels I said that I believed they were undervalued.  I don't think that I need repeat myself now.  I am disappointed that our share price is not higher, but that is primarily because I know that our company is stronger and further advanced today than when we last saw those levels.  I don't want to sound as if I am making light of things, but share prices rise and fall, people sell and buy stock.  What is most important is that the company continues to evolve and its business continues to grow and that is what is happening at Leading Brands.

Sincerely,
LEADING BRANDS, INC.

Per:

Ralph D. McRae
Chairman & CEO

Disclaimer:
Certain information contained in this press release includes forward-looking statements. Words such as “believe”, “expect,” “will,” or comparable terms, are intended to identify forward-looking statements concerning the Company’s expectations, beliefs, intentions, plans, objectives, future events or performance and other developments. All forward-looking statements included in this press release are based on information available to the Company on the date hereof. Such statements speak only as of the date hereof. Important factors that could cause actual results to differ materially from the Company’s estimations and projections are disclosed in the Company’s securities filings and include, but are not limited to, the following: general economic conditions, weather conditions, changing beverage consumption trends, pricing, availability of raw materials, economic uncertainties (including currency exchange rates), government regulation, managing and maintaining growth, the effect of adverse publicity, litigation, competition and other risk factors described from time to time in securities reports filed by Leading Brands, Inc.