Announcing its April-June 2001 results The Chalone Wine Group Ltd recorded a gross profit of $5.4m, an increase of $33,000 for the same period the previous year. Gross revenues were $13.9m, a fall of 4%.

Commenting on the results, Tom Selfridge, president of the Chalone Wine Group said: "The US fine wine industry has been hurt by the sudden slowing of the economy, discounting caused by the large 2000 harvest from new producing vineyards and the flood of imported wines due to the strong dollar.

"Even in this turbulent market our gross profit has increased to 40%. We knew our recent investments in prime vineyards and wineries would increase our costs for the short-term, but these were necessary investments for our long-term growth and profitability," he continued.

Net income for this quarter was $414,000 versus $548,000 the previous year and diluted earnings per share were $0.04 versus $0.05 the previous year. A statement issued by Chalone claims the reduction in net income is primarily due to higher interest costs resulting from the company's vineyard and winery investments and inventory shortages due to reduced yields from the 1998 and1999 grape harvests.

Case sales fell by 3% to 124,241.