Alginate beads with entrapped Lactococcus lactis spp. lactis by. diacetylactis were used as biocatalysts in continuous fermentation and the dynamics of the system analysed. Colonization by cells changed during fermentation, concentrating at the periphery (where cell densities reach 350 g litre(-1)). In the steady state, colonization of the gel was interrupted while growth continued, producing cells that were released into the effluent medium. The initial cell concentration in the beads had little influence on steady-state gel activity, while bead radius (0.75 to 1.5 mm) modified growth and acid production. A higher growth yield and cell release rate were obtained with smaller beads. Activity inside beads was not limited by external transfer, but rather by internal transfer and by the reaction. The increase of citrate concentration in the feeding medium activates citrate utilization, diacetyl + acetoin production, and leads to a great enhancement of citrate bioconversion to aroma compounds.