The Chalone Wine Group, Ltd. (Nasdaq:CHLN) announced today record gross revenues of $14,518,000 for the first quarter ended June 30, 2000, a 34 percent increase over last year. Record case sales of 128,545 for the first quarter represented a 50 percent increase over the prior year. The resulting gross profit of $5,412,000 increased by eight percent.

Net income for the period was $548,000 with diluted earnings-per-share of $.05 versus $926,000 and diluted earnings-per-share of $.10 in the first quarter of the prior year. The reduction in earnings is driven primarily by two factors, the short harvests of 1998 and 1999 at our estate properties which decreased our margins, and the higher interest costs associated with our vineyard acquisitions.

"Our long-term strategy of sustaining volume growth through the development of small unique wine properties, especially estate vineyards, sometimes leads to short-term economic pain to our margin because of the unpredictable nature of agriculture and the interest costs associated with our need to invest in quality vineyard properties. We believe our emphasis on quality growth sets the stage for our long-term profitability," said Chalone Wine Group President Tom Selfridge.

Chalone Wine Group, Ltd. (the "Company") is a Napa-based company specializing in premium white and red varietal wines. In California, the company owns and operates Chalone Vineyard® in Monterey County, Acacia(TM) Winery in the Carneros District of Napa County and Carmenet® Vineyard in Sonoma County. In conjunction with its 50 percent joint-venture partner, Paragon Vineyard Co., the Company also owns and operates Edna Valley Vineyard® in San Luis Obispo County. Additionally, the Company produces and markets wines of Central Coast appellation under the brand name Echelon(TM) Vineyards and from Napa Valley, Jade Mountain® wines. In the state of Washington, the Company owns and operates Sagelands Winery(TM) (formerly Staton Hills) and is a 50.5 percent managing partner in Canoe Ridge Vineyard®. In the Bordeaux region of France, the company owns 23.5 percent of the fourth-growth estate of Chateau Duhart-Milon, in partnership with Les Domaines Barons de Rothschild (Lafite) which owns the other 76.5 percent.

CHALONE Wine Group
Earnings Release for the
First Quarter Ended June 30, 2000

The financial position and results below are in thousands of US

June 30,
2000 1999

Current assets $ 61,892 $ 57,566

Total assets $ 147,317 $ 112,608

Current liabilities $ 36,568 $ 17,381

Shareholders' equity $ 74,204 $ 65,277

Working capital $ 25,324 $ 40,185

Three Months Ended June 30,
2000 1999

Gross revenues $ 14,518 $ 10,828
Excise taxes $ (388) $ (259)
Net revenues $ 14,130 $ 10,569
Cost of wines sold $ (8,718) $ (5,538)
Gross profit $ 5,412 $ 5,031
Other operating revenue and expenses, net $ 11 $ 483
SG&A expenses $ (3,668) $ (3,086)
Operating income $ 1,755 $ 2,028
Interest expense $ (888) $ (493)
Equity in Chateau Duhart-Milon $ 318 $ 337
Minority interests $ (256) $ (304)
Income before taxes $ 929 $ 1,568
Net Income $ 548 $ 926

Diluted earnings per share $ 0.05 $ 0.10
Average number of shares outstanding 10,226 9,341

From time-to-time, information provided by the Company, statements made by its employees, or information included in its filings with the Securities and Exchange Commission as well as its statements to the press (including this earnings release) may contain statements which are not historical facts, so called "forward looking statements" that involve risks and uncertainties. Forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The terms "anticipates," "expects," "estimates," "intends," "believes," and other similar terms as they relate to the Company or its management are intended to identify such forward looking statements. Factors that may cause such differences include, but are not limited to: (i) future weather and general farming conditions affecting annual harvest quantity as well as quality; (ii) variations in market taste as well as demand; (iii) changes in the wine industry regulatory environment; (iv) changes in world-wide supply and demand of grapes and wine. Each of the factors, and others, are discussed from time-to-time in the Company's filings with the Securities and Exchange Commission including the Company's annual report on Form 10-K for the year ended March 31, 2000.