DEAR SHAREHOLDERS:

LBIX MONTHLY NEWSLETTER

Our plants have made great strides in assimilating the new business we threw at them. There were certainly stresses and strains associated with the extent of the change that we encountered, but it has left us with significant new equipment, capacity and volume � if not to mention a few battle scars. Over the Fall and Winter we will focus on improving our systems and efficiencies in order to better deal with that onslaught next year.

The Canadian Distribution Division has continued to excel throughout the first half of the year. My hat goes off to those guys for the way that they have profitably managed some pretty exciting growth. For next year we will concentrate on how to take many of our brands to �the next level� of distribution and prominence.

With Leading Brands of America we are presently reviewing how we are going to market. Although we are coming off our best month ever there, we need to re-jig a few things to get a better bang for our buck and allow us to focus on the many markets that are really working for us. A lot of those initiatives are well under way and we will have things better fleshed out by next month.

As for our brands, we are very excited about the progress that TREK® has made in Canada. We are two and a half times ahead of our forecasts there. The brand is growing strong and our listing base is improving rapidly. In the US, we have not had the same lift we have experienced in Canada. There are a few readily identifiable reasons for that and we are addressing them. It was a mistake for us to have removed the caribiner from the US product and we are making that change back.

As mentioned last month, we are providing a more individual identity to the Nitro category; making sure it screams �Energy Drink�. As for the Hydrators, we have a couple of �tweaks� left to do � of which one involves our putting the caribiners back on the bottle.

Pez® 100% Juices™ continue their roll out. We are waiting for results from some of our larger test markets and are pursuing more and more listings. Mad Croc™ sales continue to grow each month and we are getting ready to load in the �Croc 4-pack� to 7-Eleven® this month.

As announced earlier, we are preparing for the launch of a new product in October. We anticipate that will happen in conjunction with the National Association of Convenience Store Convention in Chicago in mid-October. Look for more soon on that front.

Thank you for your continued support.

Sincerely,

LEADING BRANDS, INC.

Per:

Ralph D. McRae
Chairman & CEO

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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