DEAR SHAREHOLDERS:

LBIX MONTHLY NEWSLETTER

We kicked off distribution there again in July with a new partner and seem to be having much greater success this time around. We are also selling Pez® 100% Juice™ off-truck in NYC and should soon be adding Red Devil® to the mix. New distributors continue to join the Trek® team in the US and in general our listing base continues to expand.

We are starting a test of Trek® in Circle-K stores on the West Coast and in K-Mart in Puerto Rico. You can now find Pez® 100% Juice™ in the Christmas Tree chain in the Northeast, the Spectrum C and Circle-K chains in the Southeast and Crown Petroleum in Virginia. Pez® is also now being distributed in New York City, Long Island and across Illinois. We have arranged for a test of Pez® 100% Juice™ at about 100 additional Wal-Mart stores in the continental US. Keep your fingers crossed on that one.

The Trek® sampling tour highlight the past month was the Teva® Mountain Games in Vail, Colorado. With races in kayaking, rafting, climbing, mountain biking and trail running, this event is an absolutely perfect fit for our product. We also followed the Trek® Bikes Pro Team to Vancouver for the Mountain Bike World Cup, which was a great success for us. Other events include the ‘Days of Yore’ Festival in Salt Lake City, Boating at Lake Havasu, Arizona and the San Diego Triathlon. In Canada, the Trek® Team has been hitting the many beaches of Vancouver, the ‘Recreation to the Max’ youth event in Calgary, the ‘Test of Metal’ Mountain Bike event South of Whistler and the Ironman Canada Qualification Triathlon in Huntsville, Ontario, to name but a few.

Another great story is that the stuntmen on the Spiderman 2 set in California have apparently become addicted to Trek® and we are supplying them product for their shoot.

I continue to be impressed with the progress made by our Canadian distribution business. There has been significant margin and listing base improvement over last year. We are perhaps most excited about the new listing of Trek® at Costco in Eastern Canada. That is the first major mass merchandise chain listing for the product anywhere. Sales of Trek® at Safeway Canada are also brisk, hopefully paving the way for additional grocery listings North of the 49^th. June was a bit of a soft month financially for Leading Brands of America as the costs for some of our more intense promotions hit home.

Our Vancouver plant produced its first commercial runs of Mike’s Hard Lemonade® this past month. That is a significant step for that plant and I want to thank all our people there for their hard work. The disruption they put up with over the past 8 months of that installation was not easy. Efficiencies at the Vancouver plant improved dramatically in June and continued advancing through July.

In Edmonton, we commissioned an important new product and moved some production around from one line to another. That impacted results in June, but like Vancouver, that plant was getting well back in stride in July.

Mad Croc™ sales continue to impress. We were temporarily drained of stock because of the greater than expected demand at 7-Eleven, but that situation has now been corrected. We are looking at introducing a ‘Croc 4-pack’ in the early Fall. Our first load of Red Devil® has also just arrived in the country.

This time of year we turn our attention in earnest to product development initiatives for next season. We are well on our way to finalizing designs for an exciting Fall product launch. We are also looking at better differentiating the TREK® NITRO™ and HYDRATOR™ lines. We believe that we could make more of an impact in the energy drink category if NITRO™ took on a slightly more distinctive look. In other words, NITRO™ has to scream: “ENERGY” and the balance of the line has to better communicate that it hydrates you faster than anything else. We are further exploring the best method to get our committed TREK® HYDRATOR™ customers more liquid volume at a better price point while still maintaining that distinctive TREK® look.

I hope you all have a great August, and look for another edition next month.

Sincerely,

LEADING BRANDS, INC.

Per:

Ralph D. McRae
Chairman & CEO

PS.

“Kert:

A little over 1 month ago, one of my Firefighter Training officers came to my office with a bottle of TREK beverage, he wanted to know if we, as a Fire Department, could substitute for a 1 month period your Beverage for what we were currently using @ that time. Up front, the initial cost was quite a bit more and a little harder to store, transport and cool. But after very, very favorable feedback during the trial period I felt we could do away with the [other product) that we had previously been using!

Like many other Fire Departments Worldwide, after a set period of time each firefighter is required to take a cool down and re-hydration break during active firefighting activities. It is at this point you have the chance to re-hydrate and fuel up crews that are expending massive amounts of energy and water. In the past, cool water and cool hydrating drinks were consumed in our air-conditioned cabs of our re-hab units. When we switched over to your product, our crews noticed a marked and substantial energy increase as well afterwards, the vast majority did not feel as “Wiped” as they had in the past. This was a blind trial period for them. They were simply told that a bunch of flavors were available!

Thank you for making a superior Hydration Drink that truly performs!”

Chief Ramsden
Trident Fire Dept

We Build Brands™

Disclaimer: The Company relies upon the Safe Harbor Laws of 1933, 1934, and 1995 for all public news releases, newsletters and other statements. Statements, which are not historical facts, are forward-looking statements. The Company, through its management, makes forward-looking public statements concerning its expected future operations, performance and other developments. Such forward-looking statements are necessarily estimates reflecting the Company's best judgment based upon current information and involve a number of risks and uncertainties, and there can be no assurance that other factors will not affect the accuracy of such forward-looking statements. It is impossible to identify all such factors. Factors which could cause actual results to differ materially from those estimated by the Company include, but are not limited to, 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 factors which may be identified from time to time in the Company's public announcement.

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