August 1, 2001
Orlando, FL

Contact
Dawn M. Robert, Investor Relations
Galaxy Nutritional Foods
407/854-0433
galxinvest@galaxyfoods.com

GALAXY NUTRITIONAL FOODS AWARDED LUCRATIVE PRIVATE-PACKING ARRANGEMENT

ORLANDO, Florida (August 1, 2001) - Galaxy Nutritional Foods (AMEX: GXY), a leading producer of nutritious plant-based dairy alternatives for the retail and foodservice markets, announced that it will private pack the world's first individually wrapped peanut butter slice for immediate distribution to Walmart and Albertson's, two of the largest retail food chains in the nation. Galaxy was selected to process and pack the product by Kennedy Foods of Stillwater, Oklahoma, the company that conceptualized and formulated this innovative and functional product with the University of Oklahoma. First year sales are estimated to reach $2 million and grow substantially thereafter as the product is expected to eventually be distributed to every supermarket chain nationwide as well as to foodservice outlets.

Galaxy's Chairman and President, Angelo S. Morini, commented, "I believe this peanut butter slice will revolutionize the category so I am therefore very pleased that Galaxy will be a part of its dynamic entrance into the marketplace. The slice, being of peanut origin, is made from plant proteins which is what all of Galaxy's healthy dairy alternatives are made from. In fact, Galaxy is the leader in producing slices made from plant proteins so we are quite confident we will consistently produce a great tasting, high quality product for Kennedy Foods." The peanut business in the United States alone is well over one billion dollars, the peanut butter slice may be an item for the world to embrace.

About Galaxy Nutritional Foods
Galaxy Nutritional Foods is the leading producer of health-promoting plant-based dairy and dairy-related alternatives for the retail and foodservice markets. These phytonutrient- enriched products, made from nature's best grains - soy, rice and oats - are low and no fat (no saturated fat and no trans-fatty acids), have no cholesterol, no lactose, are growth hormone and antibiotic free and have more calcium, vitamins and minerals than conventional dairy products. Because they are made with plant proteins, they are more environmentally friendly and economically efficient than dairy products derived solely from animal proteins. Galaxy's products are part of the nutritional or functional foods category, the fastest growing segment of the retail food market. Galaxy brand names include: Veggie™, Nature's Alternative, Galaxy™, Soyco™, Soymage™, Wholesome Valley™, formägg®, Lite Bakery®, Veggie Café™ and Veggie Lite Bakery™. For more information, please visit Galaxy's website at www.galaxyfoods.com.

This press release contains "forward-looking" statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties, or other factors which may cause actual results, performance or achievements of the company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Readers are cautioned not to place undue reliance on those forward-looking statements which speak only as of the date hereof. The company undertakes no obligation to release publicly any revisions to these forward-looking statements to reflect events or circumstances after the date hereof or to reflect unanticipated events or developments.