UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                     Washington, D.C. 20549

                           FORM 10-KSB

        ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                  SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2003
                                    Commission File No


                  WILLAMETTE VALLEY VINEYARDS, INC.

            (Name of Small Business Issuer in Its Charter)
OREGON                                            93-0981021
(State or other jurisdiction of              (I.R.S. employer
incorporation or organization)          identification number)

                      8800 Enchanted Way, S.E.
                          Turner, OR 97392
              (Address of principal executive offices,
                         including zip code)

                            (503) 588-9463
         (Issuer's telephone number, including area code)

            _______________________________________

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act: Common
Stock

Check whether the Issuer (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the past 12 months (or for such shorter period that
the Issuer was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
YES  [X] NO [ ]

Check if there is no disclosure of delinquent filers pursuant to
Item 405 of Regulation S-B is not contained in this form, and no
disclosure will be contained, to the best of the Issuer's
knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this form 10-KSB or any
amendment to this Form 10-KSB [X].

                                      As of December 31, 2003

Issuer's revenues for its most recent fiscal year:    $7,438,981

Aggregate market value of the voting stock held by
non-affiliates of the Issuer based upon the closing
bid price of such stock:                          $9,496,493

Number of shares of Common Stock outstanding:      4,479,478

Transitional Small Business Disclosure Format:     YES [ ] No [X]

                 DOCUMENTS INCORPORATED BY REFERENCE





ITEM 1.     DESCRIPTION OF BUSINESS.

Introduction

Willamette Valley Vineyards, Inc. (the "Company") was formed in May
1988 to produce and sell premium, super premium and ultra premium
varietal wines (i.e., wine which sells at retail prices of $7 to $14,
$14 to $20 and over $20 per 750 ml bottle, respectively).  Willamette
Valley Vineyards was originally established as a sole proprietorship
by Oregon winegrower Jim Bernau in 1983.  The Company's wines are
made from grapes grown at its vineyard (the "Vineyard") and from
grapes purchased from other nearby vineyards.  The grapes are crushed,
 fermented and made into wine at the Company's winery (the "Winery")
and the wines are sold principally under the Company's Willamette
Valley Vineyards label.  The Company's Vineyard and Winery are
located on 75 acres of Company-owned land adjacent to Interstate 5,
approximately two miles south of Salem, Oregon.

The Company owns 146 acres of vineyard land, fifty acres of planted
vineyards-42 acres producing and 8 acres in development at the Turner
site. In April 1997, the Company acquired 100 percent of the
outstanding stock of Tualatin Vineyards, Inc. (TVI), adding 83 acres
of producing vineyard, 60 additional plantable acres and an
additional 20,000 cases of winemaking capacity.  The purchase price
paid by the Company to the Tualatin Vineyards' shareholders in
exchange for their shares was $1,824,000 plus Tualatin Vineyards'
current assets minus TVI's current and long-term liabilities as
reflected in its balance sheet dated April 15, 1997.  The Company
paid 35 percent of the purchase price in the form of cash with the
balance paid through the issuance of shares of the Company's common
stock at an agreed price per share.  The final purchase price was
$1,988,601.  In 1999, the Company purchased 33 acres of vineyard land
adjoining Tualatin Estate for future plantings and used lot line
adjustments to create three separate land parcels at Tualatin Estate.

In December 1999, the Company sold one parcel of three parcels
offered for sale at its Tualatin Estate Vineyard. The Company entered
into an agreement with the new owners to lease back the land for
growing grapes for use in the Company's Estate bottling program. The
final purchase price paid was $1,500,000 for the 80-acre parcel. The
lease is for twenty years with three 5-year renewals at the Company's
option. The Company continues to offer the two remaining properties
and equipment on the same type of sale/leaseback arrangement. One
parcel contains 75 acres priced at $725,000 and the last parcel,
which contains the Tualatin Estate winery plus 115 acres, is priced
at $1,605,000.

The Company also leases Belle Provenance Vineyards, formerly known as
O'Connor Vineyards, on a ten-year contract adding an additional 59
producing acres.  All of these vineyards are within the Willamette
Valley Appellation.


Products

Under its Willamette Valley Vineyards label, the Company currently
produces and sells the following types of wine in 750 ml bottles:
Pinot noir, the brand's flagship and its largest selling varietal in
2002, from $15 to $60 per bottle; Chardonnay, from $14 to $25 per
bottle; Pinot gris, $14 per bottle; Riesling and Oregon Blossom
(blush blend), $9 per bottle, all bottle prices included herein are
the suggested retail prices.  The Company's mission for this brand is
to become the premier producer of Pinot noir from the Pacific
Northwest.

The Company currently produces and sells small quantities of Oregon's
Nog (a seasonal holiday product), $10 per bottle, and Edelweiss, $9
per bottle, under a "Made in Oregon Cellars" label, all bottle prices
are suggested retail prices.

Under its Tualatin Estate Vineyards label, the Company currently
produces and sells the following types of wine in 750 ml bottles:
Pinot noir, the brand's flagship, $28 per bottle; Chardonnay, $14 per
bottle; Semi-Sparkling Muscat, $15 per bottle; Late Harvest
Gewurztraminer, $20 per bottle; and Pinot blanc, $14 per bottle, all
bottle prices are suggested retail prices.  The Company's mission for
this brand is to be among the highest quality estate producers of
Burgundy and Alsatian varietals in Oregon.

In November 1998, the Company released a new label under the Griffin
Creek brand name, which the Company owns.  This represents a joint
effort between the Company and Quail Run Vineyards to develop a new
brand of wines from the Southern Oregon growing region.  Currently,
the Company has several varieties under this label: Merlot, the
brand's flagship, $30 per bottle; Syrah, $35 per bottle; Cabernet
Sauvignon, $35 per bottle; Cabernet Franc, $35 per bottle; The Griffin
(a Bordeaux blend), $70 per bottle; Pinot gris, $18 per bottle;
Viognier, $25 per bottle; and Pinot noir, $25 per bottle, all bottle
prices are suggested retail prices.  This brand's mission is to be
the highest quality producer of Bordeaux and Rhone varietals in
Oregon.


Market Overview

Wine Consumption Trends:  Wine consumption in the United States
declined from 1987 to 1994 due to increased consumer health concerns
and a growing awareness of alcohol abuse.  That decline was led by
sharp reductions in the low-cost non-varietal ("jug") wine and wine
cooler segments of the market, which, prior to 1987, were two of the
fastest growing market segments.  Beginning in 1994, per capita wine
consumption began to rise.  The Company estimates that premium; super
premium and ultra premium wine consumption will experience a moderate
increase over the next few years.  Consumers have restricted their
drinking of alcoholic beverages and view premium, super premium and
ultra premium wines as a beverage of moderation.  The Company believes
this change in consumer preference from low quality, inexpensive wines
to premium, super premium and ultra premium wines reflects, in part, a
growing emphasis on health and nutrition as a principal element of the
contemporary lifestyle as well as an increased awareness of the risks
associated with alcohol abuse.

The Oregon Wine Industry.

Oregon is a relatively new wine-producing region in comparison to
California and France.  In 1966, there were only two commercial
wineries licensed in Oregon.  By contrast, in 2003, there were over
200 commercial wineries licensed in Oregon and over 13,400 acres of
wine grape vineyards, 10,700 acres of which are currently producing.
Total production of Oregon wines in 2003 is estimated to be
approximately 1,379,162 cases.  Oregon's entire 2003 production would
have an estimated retail value of approximately $206.9 million,
assuming a retail price of $150 per case, and a FOB value of
approximately one-half of the retail value, or $103.5 million.

Because of climate, soil and other growing conditions, the Willamette
Valley in western Oregon is ideally suited to growing superior
quality Pinot noir, Chardonnay, Pinot gris and Riesling wine grapes.
Some of Oregon's Pinot noir, Pinot gris and Chardonnay wines have
developed outstanding reputations, winning numerous national and
international awards.

Oregon wine producers enjoy certain cost advantages over their
California and French competitors due to lower costs for grapes,
vineyard land and winery sites.  For example, the average cost of
unplanted vineyard land in Napa County, California is approximately
$40,000 per acre as compared to approximately $6,000 per acre in
Oregon.  In the Burgundy region of France, virtually no new vineyard
land is available for planting.

Oregon does have certain disadvantages, however.  As a new wine-
producing region, Oregon's wines are relatively little known to
consumers worldwide and the total wine production of Oregon wineries
is small relative to California and French competitors.  Greater
worldwide label recognition and larger production levels give Oregon's
competitors certain financial, marketing, distribution and unit cost
advantages.

Furthermore, Oregon's Willamette Valley has an unpredictable rainfall
pattern in early autumn.  If significantly above-average rains occur
just prior to the autumn grape harvest, the quality of harvested
grapes is often materially diminished, thereby affecting that year's
wine quality.

Finally, phylloxera, an aphid-like insect that feeds on the roots of
grapevines, has been found in several commercial vineyards in Oregon.
Contrary to the California experience, most Oregon phylloxera
infestations have expanded very slowly and done only minimal damage.
Nevertheless, phylloxera does constitute a significant risk to Oregon
vineyards.  Prior to the discovery of phylloxera in Oregon, all vine
plantings in the Company's Vineyard were with non-resistant rootstock.
As of December 31, 2003, the Company has not detected any phylloxera
at its Turner site.  Beginning with the Company's plantings in May
1992, only phylloxera-resistant rootstock was planted until 1997,
when the previous management planted non-resistant rootstock on
approximately 10 acres at the Tualatin Vineyard.  In 1997, the
Company purchased Tualatin Vineyards, which has phylloxera at its
site.  Since the third quarter of 1997, all plantings have been and
all future planting will be on phylloxera resistant rootstock.  The
Company takes all necessary precautions to prevent the spread of
phylloxera to its Turner site.  Also phylloxera is active at the
Belle Provenance Vineyard for which the Company has a 10-year lease.
Any planting, training, and care of new plants at the Belle Provenance
vineyard will not be at the expense of the Company, because under the
terms of the lease, it would be the responsibility of the landowner.

In 1994, the largest development in the Oregon wine industry, King
Estate Winery, was completed.  The facility, which is located 22 miles
southwest of Eugene, is approximately 100,000 square feet in size
surrounded by a 180-acre vineyard.  King Estate is focused on serving
the national market.  The Company views King Estate as a welcome
addition to the Oregon wine industry and believes they could have the
same positive effect on wine exports as St. Michelle Winery has had
on the Washington wine industry.  The most recent high-profile move
in Oregon was the Benziger family's purchase of 65 acres, including
32 producing acres of vineyard, near Scholls.  The Benziger family
created the Glen Ellen wine brand in California, before selling it to
Grand Metropolitan.  Well-known California winemaker Tony Soter is
making Oregon Pinot noir under the Etude label.  The Company believes
that further investments by other experienced wine producers will
continue, ultimately benefiting the Company and the Oregon wine
industry as a whole by bringing increased national and international
recognition to the quality of Oregon wines.

As a result of these factors, subject to the risks and uncertainties
identified above, the Company believes that long-term prospects for
growth in the Oregon wine industry are excellent.  The Company
believes that over the next 20 years the Oregon wine industry will
grow at a faster rate than the overall domestic wine industry, and
that much of this growth will favor producers of premium, super
premium and ultra premium wines such as the Company's.


Company Strategy

The Company, one of the largest wineries in Oregon, believes its
success is dependent upon its ability to: (1) grow and purchase high
quality vinifera wine grapes; (2) vinify the grapes into premium,
super premium and ultra premium wine; (3) achieve significant brand
recognition for its wines, first in Oregon and then nationally and
internationally; and (4) effectively distribute and sell its products
nationally.  The Company's goal is to continue as one of Oregon's
largest wineries, and establish a reputation for producing some of
Oregon's finest, most sought after wines.

Based upon several highly regarded surveys of the US wine industry,
the Company believes that successful wineries exhibit the following
four key attributes:  (i) focus on production of high-quality
premium, super premium and ultra premium varietal wines;  (ii)
achieve brand positioning that supports high bottle prices for its
high quality wines;  (iii) build brand recognition by emphasizing
restaurant sales; and  (iv) development of the strong marketing
advantages (such as a highly visible winery location and successful
self-distribution).

The Company has designed its strategy to address each of these
attributes.

To successfully execute this strategy, the Company has assembled a
team of accomplished winemaking professionals, and has constructed
and equipped a 22,934 square foot state-of-the-art Winery and a
12,500 square foot outdoor production area for the crushing, pressing
and fermentation of wine grapes.

The Company's marketing and selling strategy is to sell its premium,
super premium and ultra premium cork finished wine through a
combination of  (i) direct sales at the Winery,  (ii) self-
distribution to local and regional restaurants and retail outlets,
and  (iii) sales through independent distributors and wine brokers
who market the Company's wine in specific targeted areas where self-
distribution is not economically feasible.

The Company believes the location of its Winery next to Interstate 5,
Oregon's major north-south freeway, significantly increases direct
sales to consumers and facilitates self-distribution of the Company's
products.  The Company believes this location provides high
visibility for the Winery to passing motorists, thus enhancing
recognition of the Company's products in retail outlets and
restaurants.  The Company's Hospitality Center has further increased
the Company's direct sales and enhanced public recognition of its
wines.


Vineyard

The Property.  The Company's estate vineyard at the Turner site
currently has 50 acres planted and 40 acres producing which includes
17 acres of Pinot noir and 8 acres of Riesling grape vines planted in
1985, which were grafted to Pinot noir in 1999.  The Company planted
8 acres of Pinot gris vines in May 1992 and 6 acres of Chardonnay
vines in 1993.  In 1996, the Company planted its remaining 11 acres
in Chardonnay and Pinot gris.  Grapevines do not bear commercial
quantities until the third growing season and do not become fully
productive until the fifth to eighth growing season.  Vineyards
generally remain productive for 30 to 100 years, depending on weather
conditions, disease and other factors.

The Vineyard uses an elaborate trellis design known as the Geneva
Double Curtain.  The Company has incurred the additional expense of
constructing this trellis because it doubles the number of canes upon
which grape clusters grow and spreads these canes for additional
solar exposure and air circulation.  Research and practical
applications of this trellis design indicate that it will increase
production and improve grape quality over traditional designs.

Beginning in 1997, The Company embarked on a major effort to improve
the quality of its flagship varietal by planting new Pinot noir
clones that originated directly from the cool climate growing region
of Burgundy rather than the previous source, Napa California where
winemakers believe the variety adopted to the warmer climate over the
many years it was grown there.

These new French clones are called "Dijon clones" after the
University in Burgundy who assisted in their selection and shipment
to a US government authorized quarantine site, and then seven years
later to Oregon winegrowers.  The most desirable of these new clones
are numbered 113, 114, 115, 667 and 777.  In addition to certain
flavor advantages, these clones ripen up to two weeks earlier,
allowing growers to pick before heavy autumn rains.  Heavy rains can
dilute concentrated fruit flavors and promote bunch rot and spoilage.
These new Pinot noir clones were planted at the Tualatin Estate on
disease resistant rootstock and the 667 and 777 clones have been
grafted onto 8 acres of self rooted, non disease resistant vines at
the Company's Estate Vineyard near Turner.

New clones of Chardonnay preceded Pinot noir into Oregon also
arranged by the University of Dijon, which were planted at the
Company's Estate Vineyard on disease resistant rootstock.

The purchase of Tualatin Vineyards, Inc. in April 1997 (including the
subsequent sale-leaseback of a portion of the property in December
1999) added 83 acres of additional producing vineyards and
approximately 60 acres of bare land for future plantings.  In 1997,
the Company planted 19 acres at the Tualatin site and planted another
41 acres in 1998, the majority being Pinot noir, which is the
Company's flagship varietal.  All of the new planting will be
available to harvest in the next one to two years.

Also in 1997, the Company entered into a 10-year lease with O'Connor
Vineyards, now known as Belle Provenance, (59 acres) located near
Salem to manage and obtain the supply of grapes from Belle Provenance
Vineyards.

In 1999, the Company purchased 33 acres of vineyard land adjoining
Tualatin Estate for future plantings and used lot line adjustments to
create three separate land parcels at Tualatin Estate.

The Company now controls 280 acres of vineyard land.  At full
production, these vineyards should enable the Company to grow
approximately 50% of the grapes needed to meet the Winery's ultimate
production capacity of 298,000 gallons (124,000 cases).

Grape Supply.  In 2003, the Company's 40 acres of producing estate
vineyard yielded approximately 119 tons of grapes for the Winery's
thirteenth crush.  Tualatin Vineyards produced 503 tons of grapes in
2003.  Belle Provenance Vineyards produced 102 tons of grapes in 2003.
In 2003, the Company purchased an additional 193 tons of grapes from
other growers. The Winery's 2003 total wine production was 219,227
gallons (92,208 cases) from its 2001 and 2002 crushes. The Company
expects to produce 141,713 gallons in 2004 (59,605 cases) from its
2002 crush.  The Vineyard cannot and will not provide the sole supply
of grapes for the Winery's near-term production requirements.  The
Company has also entered into grape purchase contracts with certain
directors or their respective affiliates of the Company.  See
"CERTAIN TRANSACTIONS."

The Company fulfills its remaining grape needs by purchasing grapes
from other nearby vineyards at competitive prices.  The Company
believes high quality grapes will be available for purchase in
sufficient quantity to meet the Company's requirements except in the
Pinot noir varietal, where there is increasing demand.  The grapes
grown on the Company's vineyards establish a foundation of quality
upon which the purchase of additional grapes is built.  In addition,
wine produced from grapes grown in the Company's own vineyards may be
labeled as "Estate Bottled" wines.  These wines traditionally sell at
a premium over non-estate bottled wines.

Viticultural Conditions.  Oregon's Willamette Valley is recognized as
a premier location for growing certain varieties of high quality wine
grapes, particularly Pinot noir, Chardonnay, Riesling and Pinot gris.
The Company believes that the Vineyard's growing conditions,
including its soil, elevation, slope, rainfall, evening marine
breezes and solar orientation are among the most ideal conditions in
the United States for growing certain varieties of high-quality wine
grapes.  The Vineyard's grape growing conditions compare favorably to
those found in some of the famous Viticultural regions of France.
Western Oregon's latitude (42o-46o North) and relationship to the
eastern edge of a major ocean is very similar to certain centuries-
old wine grape growing regions of France.  These conditions are
unduplicated anywhere else in the world except the great wine grape
regions of Northern Europe.

The Vineyard's soil type is Jory/Nekia, a dark reddish-brown silky
clay loam over basalt bedrock noted for being well drained, acidic,
of adequate depth, retentive of appropriate levels of moisture and
particularly suited to growing high quality wine grapes.

The Vineyard's elevation ranges from 533 feet to 700 feet above sea
level with slopes from 2 percent to 30 percent (predominately 12-20
percent).  The Vineyard's slope is oriented to the south, southwest
and west.  Average annual precipitation at the Vineyard is 41.3
inches; average annual air temperature is 52 to 54 degrees Fahrenheit,
and the length of each year's frost-free season averages from 190 to
210 days.  These conditions compare favorably with conditions found
throughout the Willamette Valley viticultural region and other
domestic and foreign viticultural regions, which produce high quality
wine grapes.

In the Willamette Valley, permanent vineyard irrigation is not
required.  The average annual rainfall provides sufficient moisture
to avoid the need to irrigate the Vineyard.  However, if the need
should arise, the Company's property contains one water well which
can sustain sufficient volume to meet the needs of the Winery and to
provide auxiliary water to the Vineyard for new plantings and unusual
drought conditions.


Winery

Wine Production Facility.  The Company's Winery and production
facilities, built at an initial cost of approximately $1,500,000,
were originally capable of producing up to 75,000 cases of wine per
year, depending on the type of wine produced.  In 1996 the Company
invested an additional $750,000 to increase its capacity from 75,000
cases to its present capacity of 104,000 cases (250,000 gallons).  It
added one large press, six stainless steel fermenters, and handling
equipment to increase its capacity to the new level.  It also
expanded the size of its crush pad to meet the needs of the
additional tons of grapes crushed.  In 2003, the Winery produced
219,227 gallons (92,208 cases) from its 2001 and 2002 crushes.  The
Winery is 12,784 square feet in size and contains areas for the
processing, fermenting, aging and bottling of wine, as well as an
underground wine cellar, a tasting room, a retail sales room and
administrative offices.  A 12,500 square foot outside production area
was added for the crushing, pressing and fermentation of wine grapes.
In 1993, a 4,000 square foot insulated storage facility with a
capacity of 30,000 cases of wine was constructed at a cost of
approximately $70,000.  This facility was converted to barrel storage
in 1998 in order to accommodate an additional 750 barrels for aging
wines.  This change increases the Company's barrel aging capacity at
the Turner site.  The production area is equipped with a settling
tank and sprinkler system for disposing of wastewater from the
production process in compliance with environmental regulations.  The
settling tank and sprinkler system were installed at a total cost of
approximately $20,000.

In 1997, the Company constructed a 20,000 square foot storage
building to store all of its bottled product at an approximate cost
of $750,000.  Previously, the Company rented a storage facility with
an annual rental cost to the Company of $96,000.

With the purchase of Tualatin Vineyards, Inc., the Company added
20,000 square feet of additional production capacity.  Although the
Tualatin facility was constructed over twenty years ago, it adds
20,000 cases of wine production capacity to the Company, which the
Company felt at the time of purchase was needed.  To date, production
and sales volumes have not expanded enough to necessitate the
utilization of the Tualatin facilities.  The Company decided to move
current production to its Turner site to meet short-term production
requirements.  The capacity at Tualatin is available to the Company
to meet any anticipated future production needs.

Construction of Hospitality Facility.  In May 1995, the Company
completed construction of a large tasting and hospitality facility of
19,470 square feet (the "Hospitality Center").  The first floor of
the Hospitality Center includes retail sales space and a "great room"
designed to accommodate approximately 400 persons for gatherings,
meetings, weddings and large wine tastings.  An observation tower and
decking around the Hospitality Center enable visitors to enjoy the
view of the Willamette Valley and the Company's Vineyard.  The
Hospitality Center is joined with the present Winery by an
underground cellar tunnel.  The facility includes a basement cellar
of 10,150 square feet (including the 2,460 square foot underground
cellar tunnel) to expand storage of the Company's wine in a proper
environment.  The cellar provides the Winery with ample space for
storing up to 1,600 barrels of wine for aging.

Just outside the Hospitality Center, the Company has planned a
landscaped park setting consisting of one acre of terraced lawn for
outdoor events and five wooded acres for picnics and social
gatherings.  The area between the Winery and the Hospitality Center
forms a 20,000 square foot quadrangle.  As designed, a removable
fabric top making it an all-weather outdoor facility to promote sale
of the Company's wines through outdoor festivals and social events
can cover the quadrangle.  The Company utilizes this space to host
numerous events, most notably the annual fundraiser for the Marion-
Polk Food Share, "Chefs' Nite Out."

The Company believes the addition of the Hospitality Center and the
park and quadrangle has made the Winery an attractive recreational
and social destination for tourists and local residents, thereby
enhancing the Company's ability to sell its wines.

Mortgages on Properties.  The Company's winery facilities are subject
to two mortgages with a principal balance of $2,777,779 at
December 31, 2003 and $3,003,720 at December 31, 2002. The mortgages
are payable in annual aggregate installments including interest of
approximately $350,000 through 2012.  After 2012, the Company's
annual aggregate mortgage payment including interest will be
approximately $75,000 until the year 2014.  The mortgage on the
Turner site had a principal balance of $2,140,159 on December 31,
2003. The mortgage on the Tualatin Valley property, issued in April
1997 to fund the acquisition of the property and development of its
vineyard, had a principal balance of $637,620 on December 31, 2003.

Wine Production.  The Company operates on the principle that
winemaking is a natural but highly technical process requiring the
attention and dedication of the winemaking staff.  The Company's
Winery is equipped with current technical innovations and uses modern
laboratory equipment and computers to monitor the progress of each
wine through all stages of the winemaking process.

Beginning with the Company's first vintage in 1989, the Company's
annual grape harvest and wine production are as follows:

             Tons of
             Grapes      Production               Cases
Crush Year   Crushed        Year                 Produced

1989          203
1990          206           1990                  13,200
1991          340           1991                  13,400
1992          565           1992                  22,100
1993          633           1993                  38,237
1994          590           1994                  41,145
1995          885           1995                  40,411
1996         1290           1996                  53,693
1997         1426           1997                  91,793
1998         1109           1998                  77,064
1999         1383           1999                  81,068
2000         1223           2000                  98,936
2001         1859           2001                  85,554
2002         1091           2002                 110,063
2003          917           2003                  92,208

The quantity of grapes crushed in 1997 does not include 228 tons of
grapes that were purchased and resold on the open market because the
Company had contracted for more grapes than were needed.  The Company
was unable to sell 270 tons of grapes before crush; this tonnage
converts to 44,000 gallons of bulk wine that the Company sold in
1998.


Sales and Distribution

Marketing Strategy.  The Company markets and sells its wines through
a combination of direct sales at the Winery, sales directly and
indirectly through its shareholders, self-distribution to local
restaurants and retail outlets in Oregon, directly through mailing
lists, and through distributors and wine brokers who sell in specific
targeted areas outside of the state of Oregon.  As the Company has
increased production volumes and achieved greater brand recognition,
sales to other domestic markets have increased both in terms of
absolute dollars and as a percentage of total Company sales.

Direct Sales.  The Company's Winery is located adjacent to the
state's major north-south freeway (Interstate 5), approximately
2 miles south of the state's third largest metropolitan area (Salem),
and 50 miles in either direction from the state's first and second
largest metropolitan areas (Portland and Eugene, respectively).  The
Company believes the Winery's unique location along Interstate 5 has
resulted in a greater amount of wines sold at the Winery as compared
to the Oregon industry standard.  Direct sales from the Winery are
an important distribution channel and an effective means of product
promotion.  To increase brand awareness, the Company offers
educational Winery tours and product presentations by trained
personnel.

The Company holds four major festivals and events at the Winery each
year.  In addition, open houses are held at the Winery during major
holiday weekends such as Memorial Day, Independence Day, Labor Day
and Thanksgiving, where barrel tastings and cellar tours are given.
Numerous private parties, wedding receptions, political and other
events are also held at the Winery.  Finally, the Company participates
in many wine and food festivals throughout Oregon.  Each of these
events results in direct sales of the Company's wines and promotion
of its label to event attendees.

Direct sales are profitable because the Company is able to sell its
wine directly to consumers at retail prices rather than to
distributors or retailers at wholesale prices.  Sales made directly
to consumers at retail prices result in an increased profit margin
equal to the difference between retail prices and distributor or
wholesale prices, as the case may be.  For 2003, direct sales make up
approximately 22% of the Company's revenue.

Self-Distribution.  The Company has established a self-distribution
system to sell its wines to restaurant and retail accounts located in
Oregon.  Eighteen sales representatives who take wine orders and make
deliveries on a commission-only basis, currently carry out the self-
distribution program.  Company provided trucks and delivery drivers
support several of these sales representatives.  The Company believes
this program of self-representation and delivery has allowed its
relatively new wines to gain a strong presence in the Oregon market
with over 1,200 restaurant and retail accounts established as of
December 31, 2003.  The Company further believes that the location of
its Winery along Interstate 5 facilitates self-distribution throughout
the entire Willamette Valley, where approximately 70% of Oregon's
population resides.

The Company has expended significant resources to establish its self-
distribution system.  The system initially focused on distribution in
the Willamette Valley, but then expanded to the Oregon coast, and
then into southern Oregon.  For 2003, approximately 46% of the
Company's net revenues were attributable to self-distribution.

Distributors and Wine Brokers.  The Company uses both independent
distributors and wine brokers primarily to market the Company's wines
in specific targeted areas where self-distribution is not feasible.
Only those distributors and wine brokers who have demonstrated
knowledge of and a proven ability to market premium, super premium,
and ultra premium wines are utilized.

Shareholders.  As a public company, the Company has a unique
marketing opportunity available to only a few of its competitors.
The Company has approximately 3,091 shareholders of record, which
represents approximately 5,000 wine consumers since family members
hold many shares jointly.  The Company's shareholders, as a group,
purchase a significant portion of the Company's cork-finished wines
directly from the Winery.

Tourists.  Oregon wineries are experiencing an increase in on-site
visits by consumers.  In California, visiting wineries is a very
popular leisure time activity.  Napa Valley is one of California's
largest tourist attractions with over 3.4 million visitors in 2001.
Wineries in Washington are also experiencing strong interest from
tourists.  Chateau Ste. Michelle, located near Woodinville,
Washington, attracts approximately 200,000 visitors per year.

The Winery is located less than one mile from The Enchanted Forest, a
gingerbread village/forest theme park that, in 2002, was Oregon's
twentieth most visited tourist attraction.  The Enchanted Forest,
which operates from March 15 to September 30 each year, attracts
approximately 130,000 paying visitors per year.  Adjacent to the
Enchanted Forest is the Thrillville Amusement Park and the Forest
Glen Recreational Vehicle Park, which contains approximately 110
overnight recreational vehicle sites.  Many of the visitors to the
Enchanted Forest and RV Park visit the Winery.  More importantly, the
Company believes its convenient location, adjacent to Interstate 5,
enables the Winery to attract a significant number of visitors.

Competition

The wine industry is highly competitive.  In a broad sense, wines may
be considered to compete with all alcoholic and nonalcoholic
beverages.  Within the wine industry, the Company believes that its
principal competitors include wineries in Oregon, California and
Washington, which, like the Company, produce premium, super premium,
and ultra premium wines.  Wine production in the United States is
dominated by large California wineries that have significantly greater
financial, production, distribution and marketing resources than the
Company.  Currently, no Oregon winery dominates the Oregon wine
market.  Several Oregon wineries, however, are older and better
established and have greater label recognition than the Company.

The Company believes that the principal competitive factors in the
premium, super premium, and ultra premium segment of the wine
industry are product quality, price, label recognition, and product
supply.  The Company believes it competes favorably with respect to
each of these factors.  The Company has received Excellent to
Recommended reviews in tastings of its wines and believes its prices
are competitive with other Oregon wineries.  Larger scale production
is necessary to satisfy retailers' and restaurants' demand and the
Company believes that its current level of production is adequate to
meet that demand for the foreseeable future.  Furthermore, the
Company believes that its ultimate forecasted production level of
298,000 gallons (124,000 cases) per year will give it significant
competitive advantages over most Oregon wineries in areas such as
marketing, distribution arrangements, grape purchasing, and access
to financing.  The current production level of most Oregon wineries
is generally much smaller than the projected production level of the
Company's Winery.  With respect to label recognition, the Company
believes that its unique structure as a consumer-owned company will
give it a significant advantage in gaining market share in Oregon
as well as penetrating other wine markets.


Governmental Regulation of the Wine Industry

The production and sale of wine is subject to extensive regulation by
the Federal Bureau of Alcohol, Tobacco and Firearms and the Oregon
Liquor Control Commission.  The Company is licensed by and meets the
bonding requirements of each of these governmental agencies.  Sale of
the Company's wine is subject to federal alcohol tax; payable at the
time wine is removed from the bonded area of the Winery for shipment
to customers or for sale in its tasting room.  The current federal
alcohol tax rate is $1.07 per gallon; however, wineries that produce
not more than 250,000 gallons during the calendar year are allowed a
graduated tax credit of up to $0.90 per gallon on the first 100,000
gallons of wine (other than sparkling wines) removed from the bonded
area during that year.  The Company also pays the state of Oregon an
excise tax of $0.67 per gallon on all wine sold in Oregon.  In
addition, all states in which the Company's wines are sold impose
varying excise taxes on the sale of alcoholic beverages.  As an
agricultural processor, the Company is also regulated by the Oregon
Department of Agriculture and, as a producer of wastewater, by the
Oregon Department of Environmental Quality.  The Company has secured
all necessary permits to operate its business.  The Company estimates
that its costs of compliance with federal and state environmental
laws is $3,000 per year.

Prompted by growing government budget shortfalls and public reaction
against alcohol abuse, Congress and many state legislatures are
considering various proposals to impose additional excise taxes on
the production and sale of alcoholic beverages, including table
wines.  Some of the excise tax rates being considered are
substantial.  The ultimate effects of such legislation, if passed,
cannot be assessed accurately since the proposals are still in the
discussion stage.  Any increase in the taxes imposed on table wines
can be expected to have a potentially adverse impact on overall sales
of such products.  However, the impact may not be proportionate to
that experienced by producers of other alcoholic beverages and may
not be the same in every state.  Recently, there have been national
efforts to reduce the legal blood alcohol level to .08 to combat
driving under the influence.  The Company believes that if such
legislation is passed, it may discourage wine consumption in
restaurants.  Although the .08 rule is in effect in Oregon, the
Company's principal sales territory, it has not yet affected local
restaurant sales although it is possible that it will on a national
level.


Employees

As of December 31, 2003 the Company had 49 full-time employees and
31 part-time employees.  In addition, the Company hires additional
employees for seasonal work as required.  The Company's employees are
not represented by any collective bargaining unit.  The Company
continues to believe it maintains positive relations with its
employees.

Additional Information

The Company files quarterly and annual reports with the Securities
and Exchange Commission. The public may read and copy any material
that the Company files with the SEC at the SEC's Public Reference
Room at 450 Fifth Street, N.W., Washington D.C. 20549. The public may
also obtain information on the operation of the Public Reference Room
by calling the SEC at 1-800-SEC-0330. As the Company is an electronic
filer, filings may be obtained via the SEC website at (www.sec.gov.).
Also visit the Company's website (www.wvv.com) for links to stock
position and pricing.


ITEM 2.     DESCRIPTION OF PROPERTY.

See "DESCRIPTION OF BUSINESS -- Winery" and "-- Vineyard".


ITEM 3.     LEGAL PROCEEDINGS.

There are no material legal proceedings pending to which the Company
is a party or to which any of its property is subject, and the
Company's management does not know of any such action being
contemplated.


ITEM 4.     SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

There were no matters submitted to a vote of security holders during
the Company's Fourth Quarter ended December 31, 2003.

ITEM 5.     MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

The Company's Common Stock is traded on the NASDAQ Small Cap Market
under the symbol "WVVI."  As of December 31, 2003, there were 3,091
stockholders of record of the Common Stock.

The table below sets forth for the quarters indicated the high and
low bids for the Company's Common Stock as reported on the NASDAQ
Small Cap Market.  The Company's Common Stock began trading publicly
on September 13, 1994.

Quarter Ended

           3/31/03       6/30/03       9/30/03         12/31/03
High        $1.74          $1.53         $2.05           $2.30
Low         $1.26          $1.08         $1.18           $1.64

Quarter Ended

           3/31/02       6/30/02       9/30/02         12/31/02
High        $1.94          $1.84         $1.60           $1.77
Low         $1.51          $1.10         $1.18           $1.00

The Company has not paid any dividends on the Common Stock, and it is
not anticipated that the Company will pay any dividends in the
foreseeable future. The Company intends to use its earnings to grow
the distribution of its brands, improve quality and reduce debt.  The
Management does not intend to use earnings to pay dividends and if it
chooses to recommend to the Board it approve such an action,
management would first seek approval of it lender providing the
credit facility.


ITEM 6.     MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.

Forward Looking Statement

This Management's discussion and Analysis of Financial Condition and
Results of Operation and other sections of this Form 10KSB contain
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995.  Words such as "expects",
"anticipates", "intends", "plans", "believes", "seeks", "estimates",
and variations of such words and similar expressions are intended to
identify such forward-looking statements.  Such forward-looking
statements include, for example, statements regarding general market
trends, predictions regarding growth and other future trends in the
Oregon wine industry, expected availability of adequate grape
supplies, expected positive impact of the Company's Hospitality
Center on direct sales effort, expected positive impacts on future
operating results from restructuring efforts, expected increases in
future sales, expected improvements in gross margin.  These forward-
looking statements involve risks and uncertainties that are based on
current expectations, estimates and projections about the Company's
business, and beliefs and assumptions made by management.  Actual
outcomes and results may differ materially from what is expressed or
forecasted in such forward-looking statements due to numerous factors,
including, but not limited to:  availability of financing for growth,
availability of adequate supply of high quality grapes, successful
performance of internal operations, impact of competition, changes in
wine broker or distributor relations or performance, impact of
possible adverse weather conditions, impact of reduction in grape
quality or supply due to disease, impact of governmental regulatory
decisions, and other risks detailed below as well as those discussed
elsewhere in this Form 10KSB and from time to time in the Company's
Securities and Exchange Commission filing and reports.  In addition,
such statements could be affected by general industry and market
conditions and growth rates, and general domestic economic conditions.




CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Management's Discussion and Analysis of Financial Condition and
Results of Operations discusses Willamette Valley Vineyards'
consolidated financial statements, which have been prepared in
accordance with generally accepted accounting principles. As such,
management is required to make certain estimates, judgments and
assumptions that are believed to be reasonable based upon the
information available. On an on-going basis, management evaluates its
estimates and judgments, including those related to product returns,
bad debts, inventories, investments, income taxes, financing
operations, and contingencies and litigation. Management bases its
estimates and judgments on historical experience and on various other
factors that are believed to be reasonable under the circumstances,
the results of which form the basis for making judgments about the
carrying values of assets and liabilities that are not readily
apparent from other sources. Actual results may differ from these
estimates under different assumptions or conditions.

The Company's principal sources of revenue are derived from sales and
distribution of wine.  Revenue is recognized from wine sales at the
time of shipment and passage of title.  Our payment arrangements with
customers provide primarily 30 day terms and, to a limited extent,
60, 90 or 120 day terms.  Shipping and handling costs are included in
general and administrative expenses.

The Company values inventories at the lower of actual cost to produce
the inventory or market value.  We regularly review inventory
quantities on hand and adjust our production requirements for the
next twelve months based on estimated forecasts of product demand.
A significant decrease in demand could result in an increase in the
amount of excess inventory quantities on hand.  In the future, if our
inventory cost is determined to be greater than the net realizable
value of the inventory upon sale, we would be required to recognize
such excess costs in our cost of goods sold at the time of such
determination. Therefore, although we make every effort to ensure the
accuracy of our forecasts of future product demand, any significant
unanticipated changes in demand could have a significant impact on
the ultimate selling price and, therefore, the carrying value of our
inventory and our reported operating results.

We capitalize internal vineyard development costs subsequent to the
developing vineyard land becoming fully productive.  These costs
consist primarily of the costs of the vines and expenditures related
to labor and materials to prepare the land and construct vine
trellises.  Amortization of such costs as annual crop costs is done
on a straight-line basis for the estimated economic useful life of
the vineyard, which is estimated to be 30 years.  The Company
regularly evaluates the recoverability of capitalized costs.
Amortization of vineyard development costs are included in
capitalized crop costs that in turn are included in inventory costs
and ultimately become a component of cost of goods sold.

The Company pays depletion allowances to the Company's distributors
based on their sales to their customers.  The Company sets these
allowances on a monthly basis, and the Company's distributors bill
them back on a monthly basis.  All depletion expenses associated with
a given month are expensed in that month as a reduction of revenues.
The Company also pays a sample allowance to the Company's
distributors in the form of a 1.5% discount applied to invoices for
product sold to the Company's distributors.  The expenses for samples
are expensed at the time of sale in the selling, general and
administrative expense.  The Company's distributors use the allowance
to sample product to prospective customers.

Amounts paid by customers to the Company for shipping and handling
expenses are included in the net revenue.  Expenses incurred for
shipping and handling charges are included in selling, general and
administrative expense.  The Company's gross margins may not be
comparable to other companies in the same industry as other companies
may include shipping and handling expenses as a cost of goods sold.

In connection with its ongoing transition to a national network of
affiliated distributors, the Company has entered into an agreement
with fourteen affiliated distributors under which the Company's
products are distributed in certain states.  As part of that
agreement, the distributors paid the company $1,500,000 for a base
amount of bottled wine to be retained by the Company, which was not
recorded as a sale.  The Company recorded a Distributor Obligation
liability to recognize the future obligation of the Company to
deliver the wine to the distributors, and recorded the wine as an
asset at cost.  The Company will hold the base amount of $1,500,000
of wine until 2006, when the balance will be depleted on a straight-
line basis until 2010.  Also as part of that agreement, the Company
has agreed to pay the distributors incentive compensation if certain
sales goals are met over the next five years.  The incentive
compensation will be paid only in the event of a transaction in
excess of $12 million in value in which either the Company sells all
or substantially all of its assets or a merger, sale of stock, or
other similar transaction occurs, the result of which is that the
Company's current shareholders do not own at least a majority of the
outstanding shares of capital stock of the surviving entity.  Assuming
the $12 million threshold is met and the distributors meet certain
sales goals, the distributors will be entitled to incentive
compensation equal to 20% of the total proceeds from the sale or
transaction and up to 17.5% of the difference between the transaction
value and approximately $8.5 million.

OVERVIEW


RESULTS OF OPERATIONS

The Company's net income in the first three Quarters of 2003 is
primarily a result of increased margins from the sale of wines that
have lower production costs.  Since Management reduced production
volumes due to higher inventories, per unit costs are increasing,
reducing gross margins and net income per case in the final quarter
of 2003.  Production costs were reduced in 2003 and are expected to
decline over the next several years due to new lower cost winegrape
contracts.  Per unit costs will not decline until bottled inventory
is reduced and wine production returns to current sales levels.

Annual operating performance was affected significantly by Fourth
Quarter events.  A large portion of the higher expenses was the
result of planned investment by the Company.  Management took
advantage of the stronger net profits and recent federal business tax
incentives by making substantial repairs to the winery buildings and
equipment, adding delivery vehicles to its Wholesale Department, a
warehouse office, new network servers, group software, accounting
software upgrades permitting wholesale sales orders to be entered
contemporaneously with remote handheld devices, a new Retail Point of
Sale system and new computers for the Retail Key Customer Service
Representatives for recording sales and customer information.

Management chose the Fourth Quarter to expand the sales and delivery
infrastructure of its Oregon Wholesale Department named Bacchus Fine
Wines.  The Company is increasing its representation of brands other
than its own through its Oregon sales force.  The Company expects to
increase its inventories of these wines, which will place additional
demands on the use of cash.  The Company is protecting the loyalty
and focus of its sales force by limiting representation of only
Oregon brands the Company owns and out-of-state brands which fill
other product needs of retail licensees the Company does not
produce.  The Company is engaging in this strategy to provide more
value to its retail licensees, improve sales management and
representation and increase profits.

Although the Bacchus Fine Wines department experienced record growth
of 42% in the Fourth Quarter, net results declined from the same
period in the prior year due to this expansion.  This department
finished the year contributing the most increase in net operating
results as compared to other departments.  Bacchus gross margins were
expected to decline and are expected to continue to decline as sales
of wines purchased from other suppliers and resold to retail accounts
at lower margins increase.

During the first part of 2003, many of the lower cost 2001 Willamette
Valley Vineyards vintage wines were sold and replaced later in the
year by new higher cost vintages reducing gross margins, particularly
in the Retail Department. Combined with unplanned and substantially
higher expenses, Retail posted its weakest financial performance in
the Fourth Quarter in some time.  Management has identified the
causes of the higher sample use, higher sales commissions and
inventory losses and has taken corrective action.  Prior to the
Fourth Quarter, Retail outperformed the prior year.

Out-of-state sales to distributors grew in the Fourth Quarter by 30%.
This sales growth more than offset the higher cost of goods.  The CEO
continued in 2003 the extensive travel schedule making sales
presentations to distributor staffs and their retail customers.  The
Company increased its role in the industry's Oregon Pinot Camp and
conducted a national sales contest for selected distributor sales
staffs that resulted in a trip to Oregon.  Among the winners was top
performer Premier Beverage of Florida increasing sales 93% earning
nine places on the trip.

During 2003 Company officials discovered a significant loss of wine
inventory in the control of a now former sales representative of
approximately $100,000 at wholesale prices.  This inventory was WVV
wines and was not a result of the new distribution enterprise,
Bacchus Fine Wines. The Company filed an insurance claim, which was
accepted, paid and is recorded under Other Income.

Management has strengthened inventory controls in the wake of this
significant loss of wine inventory.  Sales representative handling
of inventory is physically inspected at random and all samples
reviewed by the General Sales Manager.  Tasting Room daily sales and
sampling are reconciled against daily deliveries from the warehouse.
Management is implementing a system where all inventory movements in
and out of the warehouse are to be recorded in the Company's
accounting system contemporaneously with the movement.

Management is planning to reduce wine inventories and its
accompanying credit line requirements by reducing the 2004 and 2005
crush volumes from historic highs and focus its production operations
by reducing the number of products to those that most contribute to
the reputation of its core brand and product, Willamette Valley
Vineyards vintage Pinot noir and the Company's earnings and sales
growth.



Wine Quality

The Company's wine ratings are among the highest given to Oregon
produced wines.  By focusing on expanding vineyard plantings at
Tualatin Estate over the last several years, the Company has greatly
enhanced control over producing high quality fruit in that unique
microclimate.

Plantings of the new French Pinot noir clones (113, 114, 115, 667
& 777) on selected resistant rootstock have accelerated ripening and
improved flavor attributes.  The Company now has 55 acres of young,
closely spaced Pinot noir vines, including these new clones on
computer controlled drip irrigation at the Forest Grove vineyard,
and 8 acres of 667 & 777 clones on self-rooted, grafted vines at the
Turner vineyard.  The management believes this investment will begin
to be realized as these vines mature and their fruit find there way
into the market through the distribution of Willamette Valley
Vineyards Pinot noir.  The Tualatin Estate Pinot noir is made from a
small, designated block of 25-year-old Pommard clone vines and a
designated block in the new French clone planting.

As noted below, the following publications review wines according to
the testing procedures described.

WINE SPECTATOR
The Wine Spectator is one of the most popular magazines for wine
connoisseurs.  It is a monthly magazine with thorough reports on
wineries, restaurants and travel, along with a highly reputable wine
rating system.  The wine writers are among the most experienced and
knowledgeable and their goals are to cover every aspect of wine, from
buying to tasting, with descriptions of different varietals and
wine-growing regions.
Their wine rating system is as follows:
95-100: Classic
90-94: Outstanding
85-89: Very good
80-84: Good
70-79: Average
Below 70: Below Average

WINE ENTHUSIAST
As the fastest growing wine publication in the world today, Wine
Enthusiast's mission is to promote the wine "lifestyle" and to
educate its readers on how to buy, taste, and appreciate wine.  It is
also a catalog, which sells anything related to wine, from cellars
to cork screws.  They provide and in-depth wine descriptions and a
reputable rating scale.  Within their rating system, they note their
"Best Buys", which incorporates both price and taste, to ensure the
best value.  Both wine novices and experience connoisseurs enjoy and
respect this monthly publication.
Rating system:
96-100: Classic, Highest Recommendation
90-95: Superb, Highly Recommended
85-89: Very good, Recommended
There are over 100,000 paid subscriptions to Wine Enthusiast today.

BEVERAGE TESTING INSTITUTE
This is a journal strictly for wine ratings.  They have a very
technical rating system and numerous tasters are involved in one
score.  First they start with a 4-point scale:
1) <80: Not recommended (self-explanatory)
2) 80-84: Recommended (sound, commercial)
3) 85-89: Highly recommended (very good)
4) 90+: Potentially outstanding

All wines given a 4 are reviewed again and rated on the following
scale:
88-89: Very good, but not outstanding
90-92: Excellent, a wine of distinction
93-95: Outstanding, short of world class
96-100: World-class, unparalleled

The ratings are designed to depict the general quality of the wines,
considering color, ageability, and intensity.  All tastings are blind
and the reviews are published bimonthly.

THE VINE
The Vine is the world's leading independent wine magazine.  Written
out of London, England, author Clive Coates was a wine executive for
20 years before becoming an author and winning awards including Wine
Writer of the Year.  He as written for nearly all major wine
publications and wine books, which are considered "classics".  The
Vine concentrates on fine wines only and is written from personal
tasting experience.  Coates focuses on many aspects of wine, such as
when to buy and consume, and tasting comparisons.  He rates wines
from 1 to 20, 20 being a perfect score:
14 - Average
15 - Good
16 - Very Good
17.5 - A fine one
18 and up - Grande Annee

Please note the following list of some of the Company's wines that
are currently in distribution:

Willamette Valley Vineyards

Red Wines
1998 Signature Cuvee Pinot Noir           93 points, Top 100 -
                                             Wine Enthusiast

1999 Signature Cuvee Pinot Noir           91 points, Cellar Selection -
                                             Wine Enthusiast

1998 Estate Vineyard Pinot Noir           89 points - Wine Spectator

1999 Estate Vineyard Pinot Noir           92 points - Beverage Tasting
                                             Institute
                                          Top 10 out of 76 rated
                                             Oregon Pinots - The Vine

1998 O'Connor Vineyard Pinot Noir         91 points - Wine Enthusiast

1998 Freedom Hill Vineyard Pinot Noir     91 points - Wine Enthusiast

2000 Freedom Hill Vineyard Pinot Noir     89 points - Wine Spectator

1998 Karina Vineyard Pinot Noir           90 points - Wine Spectator

1999 Karina Vineyard Pinot Noir           90 points - Wine Enthusiast

1998 Hoodview Vineyard Pinot Noir         90 points - Wine Spectator
                                          Top 3 out of 83 rated Oregon
                                             Pinots - The Vine

1999 Hoodview Vineyard Pinot Noir         90 points - Wine Spectator

1999 Founders' Reserve Pinot Noir         90 points - Wine Spectator

2000 Pinot Noir                           Top 25 under $25 - Bon
                                             Appetit

2001 Whole Cluster Pinot Noir             87 points & Best Buy - Wine
                                             Enthusiast
White Wines
1998 Estate Vineyard Chardonnay           90 points - Wine Spectator

2000 Chardonnay                           88 points/Best Buy - Wine
                                             Enthusiast

2000 Founders' Reserve Pinot Gris         88 points - Wine Enthusiast

2001 Pinot Gris                           87 points - Wine Spectator

2002 Pinot Gris                           89 points/Best Buy - Wine
                                             Enthusiast

2002 Gewurztraminer                       88 points/Best Buy - Wine
                                             Enthusiast

2002 Riesling                             88 points - Wine Enthusiast

2002 Founders' Reserve Sauvignon Blanc    90 points - Wine Enthusiast


Tualatin Estate Vineyards

Red Wines
1999 Pinot Noir                           88 points - Wine Enthusiast
                                          Top 10 out of 76 rated
                                             Oregon Pinots - The Vine
White Wines
1999 Late Harvest Gewurztraminer          91 points - Wine Spectator

2000 Late Harvest Gewurztraminer          88 points - Wine Spectator

1999 Pinot Blanc                          88 points, Best Buy - Wine
                                             Enthusiast

1998 Chardonnay                           87 points - Wine Spectator


Griffin Creek

Red Wines
1996 Merlot                               91 points - Wine Spectator

1997 Merlot                               91 points - Beverage Tasting
                                             Institute

1998 Merlot                               89 points - Wine Spectator

1999 Merlot                               90 points - Wine Spectator

1999 Cabernet Sauvignon                   89 points - Wine Spectator

1999 Cabernet Franc                       88 points - Wine Enthusiast

2000 Syrah                                90 points - Wine Spectator

1999 Pinot Noir                           88 points - Wine Spectator


Sales

Finished wine revenues increased 20% in 2003 from the previous year.
Unit sales increased 22% from the previous year.  Case sales from the
Winery increased from 73,854 in 2002 to 90,294 in 2003 for product
manufactured by the Company.  The Company also experienced an
increase of 163% in unit sales for products other than its own
through Bacchus Fine Wines, from 1,066 in 2002 to 5,233 in 2003.  The
Company's distributors experienced a collective increase of 15% in
sales of Company products to their retail customers in 2003.  This
helped the distributors sell through the substantial volume of wines
they acquired in 2001, reducing the amount of wines held in their
inventory to be sold in 2004.

Wine Inventory

The Company has a substantial inventory of '99, '00, '01 and '02
vintage super premium, and ultra premium wines like Vintage Pinot
noir, Single Vineyard Designated Pinot noirs, and Griffin Creek
Bordeaux and Rhone varietals.  Total finished wine inventory
increased to 137,399 cases in 2003 from 133,369 the previous year
due to the building of inventory items not released until later
years, and the purchasing of other brand's product for resale by
Bacchus Fine Wines.  There are many factors that will affect the
Company's successful marketing of these wines, including whether the
wines maintain their quality through the time they are sold and
consumed, whether consumers will continue to enjoy these varieties
and to be willing to pay higher prices for these wines, whether
increased supply of these types of wines from the Company and other
sources will put downward pressure on prices, as well as other
factors, many of which management cannot control.  In addition,
factors that affect the Company's ability to operate profitably and
implement the sales and marketing strategy may affect the successful
marketing of these wines.  Management believes if these factors are
successfully addressed, the Company can profitably market these wines.

Seasonal and Quarterly Results.  The Company has historically
experienced and expects to continue experiencing seasonal fluctuations
in its revenues and net income.  In the past, the Company has
reported a net loss during its first quarter and expects this trend
to continue in future first quarters, including the first quarter of
2004.  Sales volumes increase progressively beginning in the second
quarter through the fourth quarter because of consumer buying habits.

The following table sets forth certain information regarding the
Company's revenues, excluding excise taxes, from Winery operations
for each of the last eight fiscal quarters:

              Fiscal 2003 Quarter Ended  Fiscal 2002 Quarter Ended
                     (in thousands)          (in thousands)
                3/31  6/30  9/30  12/31  3/31  6/30  9/30  12/31
Tasting room and
retail sales    $296  $351  $446   $485  $340  $383  $411   $432
On-site and off-site
festivals         43    22    21     22    46    33    46     19
In-state sales   591   756   915  1,292   564   613   668    934
Bulk/Grape sales 155     9    70     26     -    28     -      2
Out-of-state
sales            447   481   535    679   344   355   439    523
Total winery
revenues       1,532 1,619 1,987  2,504 1,294 1,412 1,564  1,910


Period-to-Period Comparisons

Revenue.  The following table sets forth, for the periods indicated,
select revenue data from Company operations:

Year Ended December 31
(in thousands)
                                    2003        2002        2001
Tasting room and retail sales     $1,578      $1,566      $1,409
On-site and off-site festivals       108         144         206
In-state sales                     3,554       2,779       2,802
Bulk /Grape Sales                    260          30         353
Out-of-state sales                 2,142       1,661       2,461
Revenues from winery operations   $7,642      $6,180      $7,231

Less Excise Taxes                    340         191         200

Net  Revenue                      $7,302      $5,989      $7,031

2003 Compared to 2002.

Tasting room sales for the year ended December 31, 2003 increased 1%
to $1,577,622 from $1,566,349 for the same period in 2002. This was
primarily due to telephone and mail order sales for the year ended
December 31, 2003 increasing 12% to $444,714 from $398,360 for the
same period in 2002.  The focus on telephone, mail order and retail
sales will continue with the goal of expanding the customer base and
continuing the trend of increasing revenue generation by the retail
department.  The Company experienced a decrease in revenue during
2003 in on-site and off-site festivals revenue of $107,666 over
$143,887 in the same period in 2002.  This decrease is due primarily
to the continuing focus away from on-site and off-site events, and
towards telephone, mail order and retail sales.

In prior periods, direct sales from the winery to independent
distributors in the state of Oregon were included in out-of-state
sales category.  Beginning in the quarter ended June 30, 2003, these
sales are accounted for in the in-state sales category.  For the year
ended December 31, 2003, these sales increased 124% to $367,857 from
$164,317 over the same period of 2002.  The higher sales are a result
of increased sales focus on these distributors by the new Bacchus
management.

Wholesale sales in the state of Oregon for the year ended December 31,
 2003, through the Company's independent sales force and through
direct sales from the winery, increased 28% to $3,554,499 from
$2,779,335 for the same period in 2002.  Large chain retailers
dominate Oregon's retail wine environment.  For example, one large
retailer remains the largest in-state customer of the Company.  The
sales to this retailer were $339,022 in 2003, down from $343,876 in
2002.

Out-of-state sales for the year ended December 31, 2003, increased
29% to $2,141,989 from $1,661,184 for the same period in 2002.
Depletions of wine through the Company's distributors to their
customers increased in 2003 by 15%, to 27,042 units, from 23,602
units in 2002.  After adjusting for deeply discounted, non-continuing
Chardonnay sales in 2003, these depletions increased 11% to 26,244
from 23,602.  The Pinot noir variety led sales in 2003.

The Company pays alcohol excise taxes based on product sales to both
the Oregon Liquor Control Commission and to the U.S. Department of
the Treasury, Alcohol and Tobacco Tax and Trade Bureau.  The Company
is liable for the taxes upon the removal of product from the Company's
warehouse on a per gallon basis.  The Company also pays taxes on the
grape harvest on a per ton basis to the Oregon Liquor Control
Commission for the Oregon Wine Board.  The total excise taxes
incurred in 2003 was $339,608, as compared to $191,325 in 2002.
Sales data in the discussion above is quoted before the exclusion of
excise taxes.

In February and March of 2004, the Alcohol and Tobacco Tax and Trade
Bureau of the U.S. Treasury Department audited the Company's excise
tax.  Due to the formation of Homeland Security and the transfer of
Alcohol, Tobacco and Firearms criminal investigators to the
Department of Justice, Congress funded a new audit function in the
new Tobacco and Trade Bureau in the Department of Treasury.  The
Company was their first winery audit in the Northwest.  The lead
auditor reported studying the Company's public SEC filings, which
included gallonage production numbers.

The result of this audit was a substantial amount of back excise
taxes due principally to the Company's incorrect application of the
federal small winery tax credit.  Congress previously increased wine
taxes from 17 cents to $1.07 per gallon but provided a 90-cent
exemption for small wineries on the first 100,000 gallons produced.
This credit declines when production surpasses 150,000 gallons by 1%
for every additional 1,000 gallons.  The Company's error in the
applicatiin of this credit may also result in considerable penalty
and interest assessments due in part to the requirement that tax
returns must be accurately filed every two weeks.  Although sales
declined in 2002, the tax rate on those sales, unknown to Management,
actually rose rapidly due to the processing of the large amount of
grape tonnage in the past several years.  Although the exact amount
of any back taxes, accrued interest and penalties, if any, is not
known, included in accrued expenses for December 31, 2003 is an
estimate of $80,000 for such expenses.

The federal auditors did assist the Management in identifying
exemptions to the tax, which had not been previously claimed.  While
the results of this audit depressed earnings in 2003, Management
believes the clarification of federal tax provisions could lead to
lower per gallon costs in the near future and procedures that result
in biweekly tax return filings that will not result in underreported
tax.  Due to the small size of the winery and accounting staff, the
Management closes its books monthly and will choose to overpay the
federal excise tax timely on the mid-month returns to escape the
federal penalties.

As a percentage of net revenue (i.e., gross sales less related excise
taxes), gross margin for all winery operations was 48% for fiscal
year 2003 as compared to 54% for 2002.  The sales of bulk wine, and
revenue from custom crush services, as well as increased Bacchus
sales of distributed products at slim margins, reduced the gross
margin in 2003.  The cost of sales increased in 2003 for many
varieties, though the average sales price did not change.  The
Company had significant decreases in the cost of production as a
result of the highly successful 2001 crush.  As the Company sold
through products from this vintage, and moved into products from
subsequent vintages, the cost of goods resulted in decreased margins.
The Company has taken several steps to emulate the low cost of the
2001 vintage products including purchasing fewer grapes, and
purchasing the fruit from lower cost growers for its lower priced
wines.  Also, the Company plans to provide custom crush services to
help offset the fixed costs of production by increasing the tonnage
of grapes crushed without increasing the Company's inventory.

Beginning in 2002, The Company continued to focus on the maintenance
of lower production costs by scaling back its harvest volumes to 917
tons in 2003, from 1091 and 1859 in 2002 and 2001 respectively.  The
Company also began soliciting growers for custom crush work to
maintain the costs of production.  This solicitation resulted in
custom crush revenue of $181,475, and processing costs totaled
$156,020.  In 2003, the Company's bulk wine sales totaled $68,620,
and bulk wine costs totaled $54,648.  The only remaining wine grape
production that exceeds sales plans is Chardonnay from the leased
Belle Provenance Vineyard and the purchased Tualatin Vineyard.  The
significance of this imbalance between fruit and sales forecasts is
now reduced to approximately 1,500 cases of Chardonnay, annually
because the Company removed approximately 6.5 acres of Chardonnay
from the Tualatin Estate Vineyard.  This imbalance is expected to
continue until the end of the Belle Provenance Vineyard lease
agreement, or until the Company can allocate the resources to replant
or graft-over the remaining Tualatin grapes to Pinot noir.  The
excess inventory created by this imbalance will be sold through
normal channels with increased sales allowances to speed distributor
case sales.  These sales allowances will cause small decreases in
gross profit margins until the Company can overcome the imbalance.

Amortization of vineyard development costs are included in
capitalized crop costs that in turn are included in inventory costs
and ultimately become a component of cost of goods sold.  For the
years ending December 31, 2003 and 2002 approximately $72,000 and
$69,000 were amortized into inventory costs, respectively.

Selling, general, and administrative expenses for the year ended
December 31, 2003, increased approximately 13% to $3,018,164 compared
to $2,660,039 for the same period in 2002.  As a percentage of
revenue from winery operations, the selling, general, and
administrative expenses were 41% in 2003 as compared to 44% in 2002.
The primary reasons for the increase in expenses in 2003 over 2002
were increased expenses related to in-state sales and the building of
the Bacchus sales force, and the focus on facilities repairs and
maintenance in the fourth quarter of 2003.  The Company invested
heavily in delivery vehicles and drivers to support the in-state
sales force, as well as increased the marketing expenses provided for
their accounts.

The Company's other income (expense) is summarized as follows:

                                                Year Ended December 31
                                                 2003          2002
                                              __________    __________
Insurance settlement for
 inventory loss                              $    95,369   $         -
Miscellaneous rebates                              1,511           122
Gain on Tualatin
 bare land sale                                    3,004             -
Farm Credit interest
 rebate                                           22,617             -
Refunded interest and penalties                                  5,572
                                              __________    __________
Other income
 (expense)                                   $    93,078   $     5,694

Other income for the year ended December 31, 2003 was $93,078 as
compared to $5,694 for the year ended December 31, 2002.  This
increase is primarily due to insurance proceeds received related to
an inventory loss.

The Company discovered a significant loss of inventory in the control
of a now former independent sales representative with a wholesale
value of approximately $100,000, and an inventory cost of $29,423
that the Company expensed as cost of sales.  The Company filed an
insurance claim and notified local law enforcement officials.  The
insurance company paid $95,369 for claim and the Company recorded it
as other income in the third quarter of 2003.

Interest income increased to $5,070 in fiscal year 2003 from $4,469
in fiscal year 2002.  Interest expense decreased to $341,177 in
fiscal year 2003 from $357,444 in fiscal year 2002.

The provision for income taxes and the Company's effective tax rate
were $104,265 and 43% of pre-tax income in fiscal year 2003 with
$90,837 or 40% of pre-tax income recorded for fiscal year 2002.

As a result of the above factors, net income increased to $138,220 in
fiscal 2003 from $136,475 for fiscal year of 2002.  Earnings per
share were $.03, $.03, and $.01, in fiscal years 2003, 2002, and
2001, respectively.


2002 Compared to 2001.

Tasting room sales for the year ended December 31, 2002 increased 11%
to $1,566,349 from $1,408,955 for the same period in 2001.  In 2000,
telephone and mail order sales were part of the on-site and off-site
festivals category, in 2001 and 2002 they are accounted for in the
tasting room and retail sales category.  The Company experienced a
decrease in revenue during 2002 in on-site and off-site festivals
revenue of $143,887 over $206,187 in the same period in 2001.  This
decrease is due primarily to the continuing focus away from on-site
and off-site events, and towards telephone, mail order and retail
sales.  Telephone and mail order sales for the year ended December
31, 2002 increased 13% to $398,360 from $353,210 for the same period
in 2001.  The focus on telephone, mail order and retail sales will
continue with the goal of expanding the customer base and continuing
the trend of increasing revenue generation by the retail department.


Wholesale sales in the state of Oregon for the year ended December
31, 2002, through the Company's independent sales force and through
direct sales from the winery, decreased 1% to $2,779,735 from
$2,801,754 for the same period in 2001.  Large chain retailers
dominate Oregon's retail wine environment.  For example, one large
retailer remains the largest in-state customer of the Company.  The
sales to this retailer were $343,876 in 2002, down from $452,652 in
2001.  This sales decline was due to a change in the product mix sold
in the retailer starting in 2001, due to an unusual frost during the
spring of 2000, the 2000 Riesling harvest was very small, which
resulted in a shortage of Riesling to sell at high volumes through
this retailer.  Once the Company lost the placement in the retailer,
the Company focused on the placement of other varieties in an attempt
to regain the higher sales volumes of the prior years.  This change
has resulted in declining gross sales but improved margins, and the
Company plans to continue to focus on the retailer in order to
improve sales.

Out-of-state sales for the year ended December 31, 2002, decreased
32% to $1,660,784 from $2,460,555 for the same period in 2001.  The
Pinot noir variety led sales in 2002.

The Company contracted in early 1997 on a long-term basis for more
grapes than needed to meet the Company's then current sales forecasts.
The Company subsequently reduced its sales forecasts but had already
committed to acquiring the grapes.  The Company sold some of its own
grapes and some of its contracted grapes for $465,030 in 1997,
$454,281 in 1998, $22,000 in 1999, $18,526 in 2000, and $13,628 in
2001.  These long-term grape contracts expired at the end of 2000.
What the Company couldn't sell as grapes was produced as bulk wine.
In 2002, the Company's bulk wine sales totaled $30,026, and bulk wine
costs totaled $28,405.  The only remaining wine grape production that
exceeds sales plans is Chardonnay from the leased O'Connor Vineyard
and the purchased Tualatin Vineyard.  The significance of this
imbalance between fruit and sales forecasts is now reduced to
approximately 1,500 cases of Chardonnay, annually because the Company
removed approximately 6.5 acres of Chardonnay from the Tualatin
Estate Vineyard.  This imbalance is expected to continue until the
end of the O'Connor Vineyard lease agreement, or until the Company
can allocate the resources to replant or graft-over the remaining
Tualatin grapes to Pinot noir.  The excess inventory created by this
imbalance will be sold through normal channels with increased sales
allowances to speed distributor case sales.  These sales allowances
will cause small decreases in gross profit margins until the Company
can overcome the imbalance.

Amortization of vineyard development costs are included in
capitalized crop costs that in turn are included in inventory costs
and ultimately become a component of cost of goods sold.  For the
years ending December 31, 2002 and 2000 approximately $69,000 and
$65,000 were amortized into inventory costs, respectively.

Amounts paid by customers to the Company for shipping and handling
expenses are included in the net revenue.  Expenses incurred for
shipping and handling charges are included in selling, general and
administrative expense.  The Company's gross margins may not be
comparable to other companies in the same industry as other companies
may include shipping and handling expenses as a cost of goods sold.

The Company pays alcohol excise taxes based on product sales to both
the Oregon Liquor Control Commission and to the U.S. Department of
the Treasury, Alcohol and Tobacco Tax and Trade Bureau.  The Company
is liable for the taxes upon the removal of product from the Company's
warehouse on a per gallon basis.  The Company also pays taxes on the
grape harvest on a per ton basis to the Oregon Liquor Control
Commission for the Oregon Wine Board.  The total excise taxes
incurred in 2002 was $191,325, as compared to $200,078 in 2001.
Sales data in the discussion above is quoted before the exclusion of
excise taxes.

As a percentage of net revenue (i.e., gross sales less related excise
taxes), gross margin for all winery operations was 54% for fiscal
year 2002 as compared to 49% for 2001.  The sales of bulk wine at a
loss and grapes at harvest at a slim margin reduced the gross margin
in 2001.  After adjusting for these sales, the gross margin would
be 54% in 2002 compared to 50% in 2001.  The cost of sales decreased
in 2002 for many varieties, though the average sales price did not
change.  The Company has seen significant decreases in the cost of
production as a result of the highly successful 2001 crush.  As the
Company sells through products from this vintage, the cost of goods
will result in improved margins.  The Company has taken several steps
to emulate the low cost of the 2001 vintage products including
purchasing fewer grapes, and purchasing the fruit from lower cost
growers.  Also, the Company plans to provide custom crush services to
help offset the fixed costs of production by increasing the tonnage
of grapes crushed without increasing the Company's inventory.

Selling, general, and administrative expenses for the year ended
December 31, 2002, decreased approximately 10% to $2,660,039 compared
to $2,953,815 for the same period in 2001.  During 2002 the Company
disposed of approximately 6.5 acres of unproductive vines at the
Tualatin Estate Vineyard and recorded an expense of $35,465 included
in selling, general and administrative expenses.  As a percentage of
revenue from winery operations, the selling, general, and
administrative expenses were 44% in 2002 as compared to 42% in 2001.
The largest part of the decrease in expenses in 2002 over 2001 was
decreased expenses related to out-of-state sales and tight
restrictions on all aspects of spending due to the lack of a line of
credit.  Management reduced fixed sales costs by eliminating the
national sales manager position and his remote office, decreasing
compensation, office, travel and entertainment expenses.  With the
CEO as the lead, the Company embarked on extensive distributor sales
staff training in the field, and retained, in selected markets,
local, professional wine brokers paid on case depletions made by the
distributor to retail accounts.  The Company's ability to spend was
hampered by the lack of an external source of liquidity caused by the
reduction in available borrowing demanded by the Company's former
operating lender, Northwest Farm Credit Services.  This restriction
forced the Company to closely watch spending to ensure maximum
return, and delay some spending until alternate financing was
arranged.

The Company's other income (expense) is summarized as follows:

                                                Year Ended December 31
                                                 2002          2001
                                              __________    __________
Miscellaneous rebates                        $       122   $     4,384
Refunded interest and penalties                    5,572             -
Northwest Farm Credit Services
 patronage rebate                                               29,171
                                              __________    __________
Other income
 (expense)                                   $     5,694   $    33,555

Other income for the year ended December 31, 2002 was $5,694 as
compared to $33,555 for the year ended December 31, 2001.  The
Company filed an amended tax return for the year ended December 31,
1999 and received a refund for interest and penalties paid for the
1999 tax year totaling $5,572.  In the year ended December 31, 2001,
the Company received a patronage rebate from Northwest Farm Credit
Services that was not received in 2002.  Interest income decreased to
$4,469 in fiscal year 2002 from $4,811 in fiscal year 2001.  Interest
expense decreased to $357,444 in fiscal year 2002 from $441,629 in
fiscal year 2001.

The provision for income taxes and the Company's effective tax rate
were $90,837 and 40% of pre-tax income in fiscal year 2002 with
$54,015 or 48% of pre-tax income recorded for fiscal year 2001.

As a result of the above factors, net income increased to $136,475 in
fiscal 2002 from $58,845 for fiscal year of 2001.  Earnings per share
were $.03, $.01, and $.00, in fiscal years 2002, 2001, and 2000,
respectively.


Liquidity and Capital Resources

Prior to April 1990 when it sold its first wine, the Company's
working capital and Vineyard development and Winery construction
costs were principally funded by cash contributed by James Bernau
and Donald Voorhies, the Company's co-founders, and by $1,301,354 in
net proceeds received from the Company's first public stock offering,
which began in September 1988 and was completed in June 1989 with the
sale of 882,352 shares of common stock at a price of $1.70 per share.

Since April 1990, the Company has operated on revenues from the sale
of its wine and related products and the net proceeds from three
additional stock offerings.  The Company's second public stock
offering began in July 1990 and was completed in July 1991 with the
sale of 731,234 shares at prices of $2.65 and $2.72 per share
exclusively to Oregon residents, resulting in net proceeds to the
Company of $1,647,233.

In 1992, the Company conducted two public stock offerings.  The
Company commenced an offering on July 18, 1992 that was completed on
September 30, 1992, with the sale of 428,216 shares of Common Stock
at a price of $3.42 per share and net proceeds to the Company of
$1,290,364.  On October 2, 1992, as a result of the over-subscription
of the first offering in 1992, the Company commenced another offering
of Common stock which was completed on October 31, 1992 with the sale
of 258,309 shares at a price of $3.42 per share, resulting in net
proceeds to the Company of $775,726.

Cash and cash equivalents decreased to $213,681 at December 31, 2003
from $632,183 at December 31, 2002.

Inventories decreased 3% as of December 31, 2003, to $7,335,378 from
the December 31, 2002 level of $7,550,291. As the Company moved
through the significant 2001 vintage products, the inventory began to
decline and come into balance with sales.  Combined with the
reduction in production, inventories have begun the decline towards
current sales levels.

Property, plant, and equipment, net, decreased 7% as of December 31,
2003, to $4,698,915 from $5,046,893 as of December 31, 2002.

The Company has a line of credit from GE Commercial Distribution
Finance Corporation, formerly known as Deutsche Financial Services
Corporation, which had provided for maximum borrowings of $2,700,000
for operations during the year ended December 31, 2003.  The
agreement calls for an interest rate equal to the Prime Rate plus
eighty one hundredths of one percent (0.80%) per year.  The agreement
also contains, among other things, certain restrictive financial
covenants with respect to total equity, debt-to-equity and debt
coverage.  At December 31, 2003, the Company was in compliance with
all debt covenants.  The borrowings are collateralized by the bulk
and case goods inventory, and the proceeds from the sales thereof, as
well as a second lien against the Turner, Oregon property.  The
agreement replaced the existing $1,500,000 line of credit the Company
had with Northwest Farm Credit Services.  As of December 31, 2003 the
outstanding balance of the GE Commercial Distribution Finance line
was $1,130,516 as compared to $2,050,170 as of December 31, 2002.
The outstanding balance of the GE Commercial Distribution Finance
line as of December 31, 2003 is net of a $435,248 depository cash
balance in a depository cash account maintained by the Company in the
name of GE Commercial Distribution Finance.

The Company's lender, GE Commercial Distribution Finance, announced
to its winery clients that it would be exiting the wine industry.  It
was noted that GE Commercial Distribution Finance was unable to build
a client base to justify their costs of servicing the industry.
Pursuant to this announcement, the Company was notified that its line
of credit with GE Commercial Distribution Finance would not be
renewed in 2005, and the current line would be reduced to $2,000,000,
and the equipment portion of the line would be eliminated.

The Company's ability to fund operations and obtain financing on the
line of credit facility could be impaired due to a variety of factors
including unanticipated capital expenditures, fluctuations in
operating results, financing activities and inventory management. To
the extent any one of these factors causes the Company to be unable
to fund its operations or borrow on all or part of the line of
credit, the Company could be forced to seek and obtain alternative
financing in the form of debt or equity. There can be no assurance
that the Company would be successful in obtaining alternative
financing on favorable terms, or at all. The Company's failure to
obtain such financing or to obtain such financing on favorable terms
could have a material adverse effect on the Company s business,
financial condition and results of operations.  However, management
believes existing cash and cash flow from operations, combined with
the Company's $2,000,000 line of credit facility will be sufficient
to satisfy all debt service obligations and fund the Company's
operating needs and capital expenditures through 2004.

Long-term debt decreased to $2,943,399 as of December 31, 2003, from
$3,182,349 as of December 31, 2002.  The Company has a loan agreement
with Farm Credit Services that contains certain restrictive financial
covenants, which require the Company to maintain certain financial
ratios and balances.  At December 31, 2003, the Company was in
compliance with all five debt covenants.

The Company's contractual obligations as of December 31, 2003
including long-term debt, grape payables, commitments for future
payments under non-cancelable lease arrangements, and commitments
for future payments under the Distributor Obligation, are summarized
below:

                                     Payments Due by Period
                   __________________________________________________________
                      Total    Less than   1-3 years   4-5 years     After 5
                                 1 year                               years
                   __________  __________  __________  __________  __________

Long-term debt and
 capital lease
 obligations      $ 2,943,399 $   250,291 $   581,094 $   652,684 $ 1,459,330
Grape Payables        669,714     260,158     200,000     150,000      59,556
Operating Leases    2,682,134     200,609     410,799     276,272   1,794,454
Distributor
 Obligation         1,500,000           -     300,000     600,000     600,000
                   __________  __________  __________  __________  __________
Total Contractual
 Obligations      $ 7,795,247 $   711,058 $ 1,491,893 $ 1,678,956 $ 3,913,340
                   ==========  ==========  ==========  ==========  ==========



                            Amount of Commitment Expiration Per Period
                   __________________________________________________________
                      Total    Less than   1-3 years   4-5 years     After 5
                                 1 year                               years
                   __________  __________  __________  __________  __________

Operating Line
 of credit        $ 1,130,516 $         - $ 1,130,516 $         - $         -
                   __________  __________  __________  __________  __________
Total Commercial
 Commitments      $ 1,130,516 $         - $ 1,130,516 $         - $         -
                   ==========  ==========  ==========  ==========  ==========



ITEM 7.     FINANCIAL STATEMENTS.

The financial statements required by this item are presented at page F-1.


ITEM 8.     CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE.

Not applicable.


ITEM 8A.    CONTROLS AND PROCEDURES.

Based on their evaluation as of the end of the period covered by this Annual
Report on Form 10-K, the Company's Chief Executive Officer, and Principal
Accounting Officer have concluded that the Company's  disclosure controls and
procedures  (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities
Exchange Act of 1934 (the Exchange Act)) are effective to ensure that
information required to be disclosed by the Company in the reports that it
files or submits under the Exchange Act is recorded, processed, summarized,
and reported within the time periods specified in the Securities and Exchange
Commission's rules and forms.

During the Company's fiscal quarter ended December 31, 2003, no change
occurred in the Company s internal control over financial reporting that has
materially affected, or is reasonably likely to materially affect, the
Company's internal control over financial reporting.



ITEM 9.     DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT.

Directors, nominees for election as a director, and each such person's age at
March 30, 2004 and position with the Company.

Name                         Position(s) with the Company    Age
James W. Bernau ***              Chairperson of the Board,
                                 President and Director      50
James L. Ellis * ***             Secretary and Director      59
Terry Emmert**                   Director                    59
Betty M. O'Brien*                Director                    60
Stan G. Turel * **  ***          Director                    57
_______________________________
*Member of the Compensation Committee
**Member of the Audit Committee
***Member of the Executive Committee

All directors hold office until the next annual meeting of Shareholders or
until their successors have been elected and qualified.  Executive officers
are appointed by the Board of Directors and serve at the pleasure of the
Board of Directors.  Set forth below is additional information as to each
director and executive officer of the Company.

James W. Bernau.  Mr. Bernau has been President and Chairperson of the Board
of Directors of the Company since its inception in May 1988.  Willamette
Valley Vineyards was originally established as a sole proprietorship by
Oregon winegrower Jim Bernau in 1983, and he co-founded the Company in 1988
with Salem grape grower, Donald Voorhies.  From 1981 to September 1989, Mr.
Bernau was Director of the Oregon Chapter of the National Federation of
Independent Businesses ("NFIB"), an association of 15,000 independent
businesses in Oregon.  Mr. Bernau has served as the President of the Oregon
Winegrowers Association, Treasurer of the association's Political Action
Committee (PAC), and Chair of the Promotions Committee of the Oregon Wine
Advisory Board, the State of Oregon's agency dedicated to the development of
the industry.  In March 2004, Mr. Bernau received the industry's Founder's
Award for his service.

James L. Ellis.  Mr. Ellis has served as a Director since July 1991 and
Secretary since June 1997.  Mr. Ellis has served as the Company's Director of
Human Resources from January 1993, and Vice President/Corporate since 1998.
From 1990 to 1992, Mr. Ellis was a partner in Kenneth L. Fisher, Ph.D. &
Associates, a management-consulting firm.  From 1980 to 1990, Mr. Ellis was
Vice President and General Manager of R.A. Kevane & Associates, a Pacific
Northwest personnel-consulting firm.  From 1962 to 1979, Mr. Ellis was a
member of and administrator for the Christian Brothers of California, owner
of Mont La Salle Vineyards and producer of Christian Brothers wines and
brandy.

Terry W. Emmert.  Mr. Emmert has served as a Director since October 2001.
Mr. Emmert is founder and President of Emmert Industrial Corporation.  The
company was founded in 1968.  Mr. Emmert has received many letters for
recommendation and awards in his industry.  These include the Rigging Job of
the Year from Specialized Carriers & Rigging Association.   The Emmert
history is highlighted with innovative solutions to monumental problems. Mr.
Emmert currently serves on the Boards of Directors for Christie School,
Warehouse Project, Oregon Business Committee for the Arts, and Elected
Multnomah County Sheriff Advisory Board, as well as chairing the Police
Activity League fundraiser for 2002.

Betty M. O'Brien.  Ms. O'Brien has served as a Director since July 1991.
Ms. O'Brien is the Executive Director of the Oregon Wine Board.  Ms. O'Brien
was employed by Willamette University as its Director of News and
Publications from 1988 to 2000.  Ms. O'Brien is a partner in Elton Vineyards,
a commercial vineyard located in Eola Hills in Yamhill County, Oregon.  She
is a member of the Oregon Winegrowers' Association, having previously served
as its President and Treasurer and as a director.  Ms. O'Brien also serves on
several community boards.

Stan G. Turel.  Mr. Turel has served as a Director since November of 1994.
Mr. Turel currently manages a multimillion-dollar real estate portfolio.
Prior to his current activities, Mr. Turel was part owner and the CEO of
Columbia Turel, Inc. (formerly Columbia Bookkeeping, Inc.) a position he
assumed in 1974.  Prior to 2001, Columbia Turel, Inc. has fifteen offices in
Oregon and Washington, servicing 4,000 small business and 26,000 tax clients
annually.  In 2001, Columbia Turel, Inc. sold its offices to Fiducial, one
of Europe's largest accounting firms.  Mr. Turel is a licensed tax
consultant, a member of the National Association of Public Accountants, a
private pilot, and a former delegate to the White House Conference on Small
Business.  In addition, Mr. Turel serves his community on a number of
advisory boards and panels.


Board of Directors Committees.  The Board of Directors acts as a nominating
committee for selecting nominees for election as directors.  The Board of
Directors has appointed a standing Audit Committee that, during the year
ended December 31, 2003, conducted one meeting.  The elected members of the
Audit Committee are Terry W. Emmert and Stan G. Turel.  Mr. Turel is
designated by the Board of Directors as the "audit committee financial
expert" under SEC rules.  The Audit Committee reviews the scope of the
independent annual audit, the independent accountants' letter to the Board of
Directors concerning the effectiveness of the Company's internal financial
and accounting controls and the Board of Directors' response to that letter,
if deemed necessary.  The Board of Directors also has appointed a
Compensation Committee, which reviews executive compensation and makes
recommendations to the full Board regarding changes in compensation, and also
administers the Company's 1992 Stock Incentive Plan.  During the fiscal year
ended December 31, 2003, the Compensation Committee held three meetings.
The members of the Compensation Committee currently are Betty M. O'Brien,
Chair, Stan Turel, and James Ellis.  In 1997 the Board appointed an Executive
Committee, members are: James Bernau, James Ellis, and Stan Turel.  The
Executive Committee held one meeting during 2003.

Code of Ethics. The Company adopted a code of ethics applicable to its chief
executive officer, controller and other finance leaders, which is a "code of
ethics" as defined by applicable rules of the Securities and Exchange
Commission. A copy of the code of ethics is attached as an exhibit to this
Annual Report on Form 10-KSB. Amendments to the code of ethics or any grant
of a waiver from a provision of the code of ethics requiring disclosure under
applicable SEC rules, if any, will be disclosed on our website at www.WVV.com.
Any person may request a copy of the code of ethics, at no cost, by writing
to us at the following address:

Willamette Valley Vineyards, Inc.
8800 Enchanted Way SE
Turner, OR 97392
Attention: Corporate Secretary


ITEM 10.  EXECUTIVE COMPENSATION.

Summary of Cash and Certain Other Compensation

The following table provides certain summary information concerning
compensation paid or accrued by the Company, to or on behalf of the Company's
Chief Executive Officer, James W. Bernau (the "named executive officer") for
the years ending December 31, 2001, 2002, and 2003.


                                Annual Compensation
Name             Year   Salary ($)  Bonus ($)  Other Annual
                                              Compensation ($)
James W. Bernau  2001   95,357          -                -
                 2002   97,027          -                -
                 2003  120,318          -                -
                              Long Term Compensation
                                Awards          Payouts
Name             Year   Restricted  Securities   LTIP         All Other
                           Stock    Underlying  Payouts ($)  Compensations
                          Award(s)   Options/
                            ($)      SARs (#)

James W. Bernau  2001        -        82,000       -              -
                 2002        -       112,000       -              -
                 2003        -       112,000       -              -

Bernau Employment Agreement

The Company and Mr. Bernau are parties to an employment agreement dated
August 3, 1988 and amended in February 1997 and again amended in January of
1998.  Under the amended agreement, Mr. Bernau is paid an annual salary of
$90,000 with annual increases tied to increases in the consumer price index.
Pursuant to the terms of the employment agreement, the Company must use its
best efforts to provide Mr. Bernau with housing on the Company's property.
Mr. Bernau and his family live in the house free of rent and must continue to
reside there for the duration of his employment in order to provide
additional security and lock-up services for late evening events at the
Winery and Vineyard.  The employment agreement provides that Mr. Bernau's
employment may be terminated only for cause, which is defined as non-
performance of his duties or conviction of a crime.


Stock Options

In order to reward performance and retain high-quality employees, the Company
often grants stock options to its employees.  The Company does not ordinarily
directly issue shares of stock to its employees.  Options are typically
issued at a per share exercise price equal to the closing price as reported
by NASDAQ at the time the option is granted.  The options vest to the
employee over time.  Three months following termination of the employee's
employment with the Company, any and all unexercised options terminate.

Option Exercises and Holdings
The following table provides information, with respect to the named executive
officer, concerning exercised options during the last fiscal year and
unexercised options held as of December 31, 2003.

			     Options exercised in the last fiscal year
Name					 Number		  Value
					Of shares		Realized(1)
James W. Bernau		  	  -0-		         -0-

			    Number of Securities Underlying
			     Unexercised Options at FY-End
                         Exercisable             Unexercisable

James W. Bernau	       75,000(1.65)
                          1,500(1.81)
                          1,500(1.50)
                          4,000(1.5625)
                         30,000(1.507)

				     Value of Unexercised
			     In-the-Money Options at FY-End(2)

                         Exercisable             Unexercisable

James W. Bernau		   35,250
                              465
                              930
                            2,230
                           18,390


(1) The value realized is based on the difference between the market price
at the time of exercise of the options and the applicable exercise price.

(2) Options are "in the money" at the fiscal year-end if the fair market
value of the underlying securities on such date exceeds the exercise price of
the option.  The amounts set forth represent the difference between the fair
market value of the securities underlying the options on December 31, 2003
($2.12 per share based on the NASDAQ closing price for the Company's Common
Stock on the NASDAQ Small Cap Market on that date), and the exercise price of
the option, multiplied by the applicable number of options.


Director Compensation
The members of the Company's Board of Directors do not receive cash
compensation for their service on the Board, but are reimbursed for
out-of-pocket and travel expenses incurred in attending Board meetings.
Under the Company's Stock Incentive Plan adopted by the shareholders in 1992
and further amended by the shareholders in 1996, beginning in 1997 an option
to purchase 1,500 shares of Common Stock is granted to each Director for
service on the Board during the year.  This option was increased to 4,000
per year when the 50-share grant per Director's meeting was discontinued for
the year 2000 and beyond.


Section 16(a) Beneficial Ownership Reporting Compliance

None


ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT AND RELATED STOCKHOLDER MATTERS.

The following table sets forth certain information with respect to beneficial
ownership of the Company's Common Stock as of December 31, 2002, by  (i) each
person who beneficially owns more than 5% of the Company's Common Stock  (ii)
each Director of the Company  (iii) each of the Company's named executive
officers, and  (iv) all directors and executive officers as a group.

James W. Bernau     President/CEO, Chair of the Board
2545 Cloverdale Road                    1,071,160.5 (1)            23.9%
Turner, OR  97392

James L. Ellis      Secretary, Director
7850 S.E. King Road                        52,743   (2)             1.2%
Milwaukie, OR  97222

Terry W. Emmert        Director
11811 SE Highway 212                      281,200                   6.3%
Clackamas, OR 97015

Betty M. O'Brien    Director
22500 Ingram Lane NW                       13,950   (3)              **
Salem, OR  97304

Stan G. Turel       Director
604 SE 121 Street                         131,885   (4)             3.0%
Vancouver, WA  98683

All Directors, executive                1,550,939                  34.6%
officers and persons owning
5% or more as a group (6 persons)
______________________________
**         Less than one percent.

(1) Includes 15,000 shares issuable upon the exercise of an outstanding
warrant and 112,000 shares issuable upon exercise of options.

(2) Includes 47,643 shares issuable upon the exercise of options.

(3) Includes 8,500 shares issuable upon the exercise of options.

(4) Includes 8,500 shares issuable upon the exercise of options.


ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.


During 2003, 2002, 2001 and 2000, the Company purchased grapes from Elton
Vineyards for $122,780, $120,589, $108,672 and $74,585 respectively.  Betty
M. O'Brien, a Director of the Company, is a principal owner of Elton
Vineyards.

On November 26, 2002, Mr. Bernau was granted 30,000 employee stock options
for his personal guarantee of $1,000,000 of the Company's Line of Credit from
GE Commercial Distribution Finance.  The options, which were issued pursuant
to the stock incentive plan and are, accounted for as non-compensatory
employee stock options.  The options are exercisable anytime through November
26, 2012, at an exercise price of $1.507 per share.

On June 1, 1992, the Company granted Mr. Bernau a warrant to purchase 15,000
shares of the Company's Common Stock as consideration for his personal
guarantee of the Real Estate Loan and the Line of Credit from Farm Credit
Services pursuant to which the Company borrowed $1.2 million.  The warrant
is exercisable anytime through June 1, 2012, at an exercise price of $3.42
per share.

On December 3, 1992, James W. Bernau borrowed $100,000 from the Company.  The
loan is secured by Mr. Bernau's stock in the Company, and is payable,
together with interest at a rate of 7.35% per annum, on March 14, 2009.  At
December 31, 2003, the outstanding balance of the loan was $61,134 including
accrued interest.

The Company believes that the transactions set forth above were made on terms
no less favorable to the Company than could have been obtained from
unaffiliated third parties.  All future transactions between the Company and
its officers, directors, and principal shareholders will be approved by a
disinterested majority of the members of the Affiliated Transactions
Committee of the Company's Board of Directors, and will be on terms no less
favorable to the Company than could be obtained from unaffiliated third
parties.



ITEM 13.     EXHIBITS AND REPORTS ON FORM 8-K.

(a) Exhibits

(3) Articles of Incorporation and Bylaws:

(a) Articles of Incorporation of Willamette Valley Vineyards, Inc.
(incorporated by reference from the Company's Regulation A Offering Statement
on Form 1-A [File No. 24S-2996])

(b) Bylaws of Willamette Valley Vineyards, Inc.(incorporated by reference
from the Company's Regulation A Offering Statement on Form 1-A [File No.
24S-2996])


(10) Material Contracts

(a) Employment Agreement between Willamette Valley Vineyards, Inc. and James
W. Bernau dated August 3, 1988 (incorporated by reference from the Company's
Regulation A Offering Statement on Form 1-A [File No. 24S-2996])

(b) Indemnity Agreement between Willamette Valley Vineyards, Inc. and James
W. Bernau dated May 2, 1988 (incorporated by reference from the Company's
Regulation A Offering Statement on Form 1-A [File No. 24S-2996])

(c) Indemnity Agreement between Willamette Valley Vineyards, Inc. and Donald
E. Voorhies dated May 2, 1988 (incorporated by reference from the Company's
Regulation A Offering Statement on Form 1-A [File No. 24S-2996])

(d) Shareholders Agreement among Willamette Valley Vineyards, Inc. and its
founders, James Bernau and Donald Voorhies, dated May 2, 1988 (incorporated
by reference from the Company's Regulation A Offering Statement on Form 1-A
[File No. 24S-2996])

(h) Revolving Note and Loan Agreement dated May 28, 1992 by and between
Northwest Farm Credit Services, Willamette Valley Vineyards, Inc. and James
W. and Cathy Bernau (incorporated by reference from the Company's Regulation
A Offering Statement on Form 1-A [File No. 24S-2996])

(i) Founders' Escrow Agreement among Willamette Valley Vineyards, Inc., James
W. Bernau, Donald Voorhies and First Interstate Bank of Oregon, N.A. dated
September 20, 1988 (incorporated by reference from the Company's
Regulation A Offering Statement on Form 1-A [File No. 24S-2996])

(j) Amendment to Founders' Escrow Agreement dated September 20, 1988
(incorporated by reference from the Company's Regulation A Offering Statement
on Form 1-A [File No. 24S-2996])

(k) Stock Escrow Agreement among Willamette Valley Vineyards, Inc., Betty M.
O'Brien and Charter Investment Group, Inc. dated July 7, 1992 (incorporated
by reference from the Company's Regulation A Offering Statement on Form 1-A
[File No. 24S-2996])

(l) Stock Escrow Agreement among Willamette Valley Vineyards, Inc., Daniel S.
Smith and Piper Jaffray & Hopwood, Inc. dated July 7, 1992 (incorporated by
reference from the Company's Regulation A Offering Statement on Form 1-A
[File No. 24S-2996])

(m) Acquisition of Tualatin Vineyards, Inc. dated April 15, 1997. (File No.
000-21522)

(n) Business Financing Agreement dated July 2, 2002 by and between GE
Commercial Distribution Finance and Willamette Valley Vineyards, Inc.
(File No. 000-21522)


(b) Reports on Form 8-K

Not applicable.

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES.

The information contained under the caption entitled "Audit and Related
Fees" in the Proxy Statement is incorporated herein by reference.


SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.

WILLAMETTE VALLEY VINEYARDS, INC.
(Registrant)


Date: April 14, 2004.       By:______/s/_________________________
James W. Bernau,
Chairperson of the Board,
President

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed below by the following
persons on behalf of the registrant and in the capacities and on the dates
indicated.

Signature                       Title                  Date


__/s/________________  Chairperson of the Board,   April 14, 2004
James W. Bernau        President
                       (Principal Executive Officer)

__/s/________________  Controller                  April 14, 2004
Sean M. Cary           (Principal Accounting Officer)


__/s/________________  Director and Vice-President April 14, 2004
James L. Ellis         and Secretary

__/s/________________  Director                    April 14, 2004
Terry W. Emmert

__/s/________________  Director                    April 14, 2004
Betty M. O'Brien

__/s/________________  Director                    April 14, 2004
Stan G. Turel



EXHIBIT INDEX

Exhibit

23.1 Consent of Independent Accountants

31.1 Certification by James W. Bernau pursuant to Rule 13a-14(a) of the
Securities Exchange Act of 1934

31.2 Certification by Sean M. Cary pursuant to Rule 13a-14(a) of the
Securities Exchange Act of 1934

32.1 Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2 Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002.

99.77D Code of Ethics for CEO and Finance Leaders





Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO RULE 13a-14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934

I, James W. Bernau, certify that:

1. I have reviewed this annual report on Form 10-KSB of Willamette Valley
Vineyards, Incorporated;

2. Based on my knowledge, this report does not contain any untrue statement
of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;

3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects
the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this report;

4. The small business issuer's other certifying officer(s) and I are
responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e) for the
small business issuer and have:
a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our supervision, to
ensure that material information relating to the small business issuer,
including its consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this report is being
prepared;
b) Evaluated the effectiveness of the small business issuer's disclosure
controls and procedures and presented in this report our conclusions about
the effectiveness of the disclosure controls and procedures, as of the end
of the period covered by this report based on such evaluation; and
c) Disclosed in this report any change in the small business issuer's
internal control over financial reporting that occurred during the small
business issuer's most recent fiscal quarter that has materially affected, or
is reasonably likely to materially affect, the small business issuer's
internal control over financial reporting; and

5. The small business issuer's other certifying officer(s) and I have
disclosed, based on our most recent evaluation of internal control over
financial reporting, to the small business issuer's auditors and the audit
committee of the small business issuer's board of directors (or persons
performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are reasonably
likely to adversely affect the small business issuer's ability to record,
process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the small business issuer's internal
control over financial reporting.

Date: April 14, 2004
    _/s/_
    James W. Bernau,
    Chief Executive Officer



Exhibit 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO RULE 13a-14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934

I, Sean M. Cary, certify that:

1. I have reviewed this annual report on Form 10-KSB of Willamette Valley
Vineyards, Incorporated;

2. Based on my knowledge, this report does not contain any untrue statement
of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;

3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects
the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this report;

4. The small business issuer's other certifying officer(s) and I are
responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e) for the
small business issuer and have:
a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our supervision, to
ensure that material information relating to the small business issuer,
including its consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this report is being
prepared;
b) Evaluated the effectiveness of the small business issuer's disclosure
controls and procedures and presented in this report our conclusions about
the effectiveness of the disclosure controls and procedures, as of the end
of the period covered by this report based on such evaluation; and
c) Disclosed in this report any change in the small business issuer's
internal control over financial reporting that occurred during the small
business issuer's most recent fiscal quarter that has materially affected, or
is reasonably likely to materially affect, the small business issuer's
internal control over financial reporting; and

5. The small business issuer's other certifying officer(s) and I have
disclosed, based on our most recent evaluation of internal control over
financial reporting, to the small business issuer's auditors and the audit
committee of the small business issuer's board of directors (or persons
performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are reasonably
likely to adversely affect the small business issuer's ability to record,
process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the small business issuer's internal
control over financial reporting.

Date: April 14, 2004
     _/s/_
    Sean M. Cary
    Chief Financial Officer



Exhibit 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, James W. Bernau, certify, pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Annual
Report of Willamette Valley Vineyards Inc. on Form 10-KSB for the annual
period ended December 31, 2003 fully complies with the requirements of
Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that
information contained in such 10-K fairly presents in all material respects
the financial condition and results of operations of Willamette Valley
Vineyards Inc.

By:  /s/ James W. Bernau
Name: James W. Bernau
Title:   Chief Executive Officer



Exhibit 32.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Sean M. Cary, certify, pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Annual
Report of Willamette Valley Vineyards Inc. on Form 10-KSB for the annual
period ended December 31, 2003 fully complies with the requirements of
Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that
information contained in such 10-K fairly presents in all material respects
the financial condition and results of operations of Willamette Valley
Vineyards Inc.

By:    /s/ Sean M. Cary
Name: Sean M. Cary
Title:   Chief Financial Officer


Willamette Valley
Vineyards, Inc.
Report and Financial Statements
For the Years Ended December 31, 2003, 2002 and 2001.








Willamette Valley Vineyards, Inc.
Index to Financial Statements


Report of Independent Accountants .................................... F-1

Financial Statements

Balance Sheets ....................................................... F-2

Statements of Operations ............................................. F-3

Statements of Shareholders' Equity.................................... F-4

Statements of Cash Flows.............................................. F-5

Notes to Financial Statements ........................................ F-6







                     Report of Independent Accountants

To the Board of Directors and Shareholders of
Willamette Valley Vineyards, Inc.


In our opinion, the accompanying balance sheets and the related statements of
operations, of shareholders' equity and of cash flows present fairly, in all
material respects, the financial position of Willamette Valley Vineyards,
Inc. (the "Company") at December 31, 2003 and 2002, and the results of its
operations and its cash flows for each of the three years in the period ended
December 31, 2003, in conformity with accounting principles generally
accepted in the United States of America.  These financial statements are the
responsibility of the Company's management; our responsibility is to express
an opinion on these financial statements based on our audits.  We conducted
our audits of these statements in accordance with auditing standards
generally accepted in the United States of America, which require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement.  An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation.  We believe that our audits provide a reasonable
basis for our opinion.


PricewaterhouseCoopers LLP


Portland, Oregon
March 24, 2004







                                     F-1


Willamette Valley Vineyards, Inc.
Balance Sheets
December 31, 2003 and 2002


                                                  2003          2002

         ASSETS
Current assets:
  Cash and cash equivalents                  $    213,681  $    632,183
  Accounts receivable, net (Note 2)               796,836       519,861
  Inventories (Note 3)                          7,335,378     7,550,291
  Prepaid expenses and other current assets        46,565        47,908
  Income taxes receivable (Note 9)                 81,670             -
  Deferred income taxes (Note 9)                  174,323       148,212
                                               -----------   -----------
    Total current assets                        8,648,453     8,898,455

Vineyard development costs, net                 1,698,970     1,707,274
Inventory (Notes 3 and 12)                        552,414       520,408
Property and equipment, net (Note 4)            4,698,915     5,046,893
Notes receivable from officer and
  other (Note 10)                                  66,134        61,948
Debt issuance costs                                62,805        73,628
Other assets                                      215,148       238,647
                                               -----------   -----------
                                             $ 15,942,839  $ 16,547,253
                                               ___________   ___________

     LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
  Line of credit (Note 5)                    $  1,130,516  $  2,050,171
  Current portion of long-term debt and
    capital lease obligations (Note 6)            250,291       237,838
  Accounts payable                                752,219       371,253
  Accrued expenses                                459,219       214,029
  Income taxes payable                                  -        33,805
  Grape payables                                  669,714       870,058
                                               -----------   -----------
    Total current liabilities                   3,261,959     3,777,154

Long-term debt and capital lease
  obligations (Note 6)                          2,693,108     2,944,511
Distributor obligation (Note 12)                1,500,000     1,500,000
Deferred rent liability                           108,995        86,203
Deferred gain (Note 11)                           399,743       424,727
Deferred income taxes (Note 9)                    300,856       287,127
                                               -----------   -----------
Total liabilities                               8,264,661     9,019,722
                                               -----------   -----------
Commitments and contingencies (Note 11)

Shareholders' equity (Notes 7 and 8):
  Common stock, no par value - 10,000,000
    shares authorized, 4,479,478 and
    4,469,444 shares issued and
    outstanding at December 31, 2003
    and 2002, respectively                      7,167,589     7,155,162
  Retained earnings                               510,589       372,369
                                               -----------   -----------
Total shareholders' equity                      7,678,178     7,527,531
                                               -----------   -----------
                                             $ 15,942,839  $ 16,547,253
                                               ___________   ___________


    The accompanying notes are an integral part of the financial statements.


                                     F-2


Willamette Valley Vineyards, Inc.
Statements of Operations
For the Years Ended December 31, 2003, 2002 and 2001


                                            2003         2002         2001

Net revenues                            $ 7,301,781  $ 5,989,456  $ 6,030,791
Cost of goods sold                        3,827,526    2,754,824    3,560,853
                                        ------------ ------------ ------------
    Gross margin                          3,474,255    3,234,632    3,469,938

Selling, general and
  administrative expenses                 3,018,164    2,685,023    2,978,799
                                        ------------ ------------ ------------
    Income from operations                  456,091      549,609      491,139
                                        ------------ ------------ ------------
Other income (expenses):
  Interest income                             5,070        4,469        4,811
  Interest expense                         (341,177)    (357,444)    (441,629)
  Other income                              122,501       30,678       58,539
                                        ------------ ------------ ------------
                                           (213,606)    (322,297)    (378 279)
                                        ------------ ------------ ------------

    Income before income taxes              242,485      227,312      112,860

Income tax provision (Note 9)               104,265       90,837       54,015
                                        ------------ ------------ ------------

Net income                              $   138,220  $   136,475  $    58,845
                                        ____________ ____________ ____________

Basic net income
  per common share                      $      0.03  $      0.03  $      0.01
                                        ____________ ____________ ____________
Diluted net income
  per common share                      $      0.03  $      0.03  $      0.01
                                        ____________ ____________ ____________




    The accompanying notes are an integral part of the financial statements.


                                     F-3.


Willamette Valley Vineyards, Inc.
Statements of Shareholders' Equity
For the Years Ended December 31, 2003, 2002 and 2001

                              Common stock               Retained
                                 Shares       Dollars    earnings     Total
                              ----------- ------------ ---------- -----------


Balances at December 31, 2000  4,254,481    6,817,613    177,049    6,994,662

Stock issuance for compensation    2,500        3,985         -         3,985

Common stock issued and
  options exercised              208,000      321,049         -       321,049

Net income                            -            -      58,845       58,845
                              ----------- ------------ ---------- -----------

Balances at December 31, 2001  4,464,981    7,142,647    235,894    7,378,541

Stock issuance for compensation    2,463        3,941         -         3,941

Common stock issued and
  options exercised                2,000        8,574         -         8,574

Net income                            -            -     136,475      136,475
                              ----------- ------------ ---------- -----------

Balances at December 31, 2002  4,469,444  $ 7,155,162  $ 372,369  $ 7,527,531

Stock issuance for compensation   10,034       12,427         -        12,427

Net income                            -            -     138,220     138,220
                              ----------- ------------ ---------- -----------
Balances at December 31, 2003  4,479,478  $ 7,167,589  $ 510,589  $ 7,678,178
                              ___________ ____________ __________ ___________



    The accompanying notes are an integral part of the financial statements.


                                     F-4


Willamette Valley Vineyards, Inc.
Statements of Cash Flows
For the Years Ended December 31, 2003, 2002 and 2001


                                            2003         2002         2001

Cash flows from operating activities:
  Net income                             $138,220     $136,475     $ 58,845
  Reconciliation of net income
    to net cash (used in) provided by
    operating activities:
      Depreciation and amortization       713,817      763,077      778,752
      Gain on disposal of fixed assets     (3,003)          -        (3,043)
      Loss on disposal of vines                -        35,465           -
      Deferred income taxes               (12,382)      (3,031)      36,046
      Bad debt expense                      6,198        8,303           -
      Stock issued for compensation        12,427        3,941           -
      Changes in assets and liabilities:
        Accounts receivable              (283,173)     235,120     (182,658)
        Inventories                       182,907     (579,909)    (565,791)
        Prepaid expenses and
          other current assets              1,343       39,604      (41,558)
        Note receivable                    (4,186)      15,430       (7,169)
        Other assets                       18,389      (32,763)     (15,291)
        Accounts payable                  380,966     (631,248)     154,618
        Accrued commissions and
          payroll costs                   245,190       75,543       (5,176)
        Income taxes receivable/payable  (115.475)      93,868       17,969
        Grape payables                   (200,344)    (266,429)     222,121
        Deferred rent liability            22,792       25,811       28,758
        Deferred gain                     (24,984)     (24,984)     (24,984)
                                        ------------ ------------ ------------
    Net cash provided by (used for)
      operating activities              1,078,702     (122,333)     451,439
                                        ------------ ------------ ------------

Cash flows from investing activities:
  Additions to property and equipment    (273,214)     (77,087)    (379,953)
  Vineyard development expenditures       (63,275)    (114,443)    (153,930)
  Proceeds on sale of fixed assets         15,128           -            -
                                        ------------ ------------ ------------
    Net cash used in
      investing activities               (321,361)    (191,530)    (533,883)
                                        ------------ ------------ ------------

Cash flows from financing activities:
  Debt issuance costs                     (17,237)     (20,378)     (22,000)
  Net increase (decrease) in line of
    credit balance                       (919,655)     697,671   (1,264,049)
  Proceeds from distributor obligation         -            -     1,500,000
  Proceeds from common stock issued
    and stock options exercised                -         8,574      321,049
  Issuance of long-term debt                   -            -        33,909
  Repayments of long-term debt           (238,951)    (244,331)    (234,831)
                                        ------------ ------------ ------------
    Net cash (use in) provided by
      financing activities             (1,175,843)     441,536      334,078
                                        ------------ ------------ ------------

Net (decrease) increase in cash
  and cash equivalents                   (418,502)     127,673      251,634


Cash and cash equivalents:
  Beginning of year                       632,183      504,510      252,876
                                        ------------ ------------ ------------

  End of year                           $ 213,681    $ 632,183    $ 504,510
                                        ____________ ____________ ____________

    The accompanying notes are an integral part of the financial statements.


                                     F-5


Willamette Valley Vineyards, Inc.
Notes to Financial Statements


1.	Summary of Operations, Basis of Presentation and Significant
Accounting Policies

Organization and Operations
Willamette Valley Vineyards, Inc. (the "Company") owns and operates vineyards
and a winery located in the state of Oregon, and produces and distributes
premium and super premium wines, primarily Pinot noir, Pinot gris,
Chardonnay, and Riesling.  The majority of the Company's wine is sold to
grocery stores and restaurants in the state of Oregon through the Company's
sales force.  In 2003, 2002 and 2001 no one customer represented more than
10% of revenues.  Out-of-state sales represented approximately 30%, 30% and
37% of revenues for 2003, 2002 and 2001.  Foreign sales represent less than
1% of total sales.  The Company also sells its wine from the tasting room at
its winery.

Basis of Presentation
The accompanying financial statements have been prepared in accordance with
accounting principles generally accepted in the United States of America,
which require management to make certain estimates and assumptions.  These
estimates and assumptions affect the reported amounts of assets and
liabilities and the disclosure of contingent assets and liabilities as of
the date of the financial statements, and the reported amounts of revenues
and expenses during the reporting period.  The Company bases its estimates
on historical experience and on various assumptions that are believed to be
reasonable under the circumstances at the time.  Actual results could differ
from those estimates under different assumptions or conditions.

Segment Reporting
The Company has a single operating segment consisting of the retail, instate
self-distribution and out of state sales departments.  These departments have
similar economic characteristics, offer the same products to customers,
utilize the same production facilities and processes and have similar
customer types and distribution methods.

Fair Value of Financial Instruments
The following methods and assumptions were used to estimate the fair value of
each class of financial instrument for which it is practicable to estimate
that value:

Cash and Cash Equivalents, Accounts Receivables, Prepaid Expenses and Other
Current Assets, Accounts Payable, Accrued Expenses and Other Current
Liabilities
The carrying amounts of these items are a reasonable estimate of their fair
values.

Notes Receivable from Officer and Other
The carrying amounts of these items are a reasonable estimate of their fair
values.

Line of Credit
Borrowings under the line of credit arrangement have variable interest rates
that reflect currently available terms and conditions for similar debt.  The
carrying amount of this debt is a reasonable estimate of its fair value.

Long-Term Debt
The fair value of the Company's long-term debt, including the current portion
thereof, is estimated based on the present value method using AA rates
provided by Farm Credit Services for the Northwest Farm Credit Services debt
and estimated current rates for similar borrowing arrangements


                                     F-6.


Willamette Valley Vineyards, Inc.
Notes to Financial Statements, Continued


for all other long term debt.  The carrying value and estimated fair value of
long term debt, including current portion is as follows:

                             2003                       2002
                    Carrying        Fair       Carrying        Fair
                      Value        Value         Value        Value
                   __________    __________   __________    __________
Northwest Farm
  Credit Services $ 2,777,780   $ 2,903,215  $ 3,003,720   $ 3,153,000
Real Property Loan    108,968       121,874      112,215       126,000
Other                  56,651        62,000       66,414        73,000


Other Comprehensive Income
The nature of the Company's business and related transactions do not give
rise to other comprehensive income.

Cash and Cash Equivalents
Cash and cash equivalents include highly liquid short-term investments with
an original maturity of less than 90 days.

Inventories
After a portion of the vineyard becomes commercially productive, the annual
crop and production costs relating to such portion are recognized as work-in-
process inventories.  Such costs are accumulated with related direct and
indirect harvest, wine processing and production costs, and are transferred
to finished goods inventories when the wine is produced, bottled, and ready
for sale.  The cost of finished goods is recognized as cost of sales when the
wine product is sold.  Inventories are stated at the lower of first-in,
first-out ("FIFO") cost or market by variety.  In accordance with general
practices in the wine industry, wine inventories are generally included in
current assets in the accompanying balance sheet, although a portion of such
inventories may be aged for more than one year (Notes 3 and 12).

Vineyard Development Costs
Vineyard development costs consist primarily of the costs of the vines and
expenditures related to labor and materials to prepare the land and construct
vine trellises.  The costs are capitalized until the vineyard becomes
commercially productive, at which time annual amortization is recognized
using the straight-line method over the estimated economic useful life of the
vineyard, which is estimated to be 30 years.  Accumulated amortization of
vineyard development costs aggregated $467,727 and $396,147 at December 31,
2003 and 2002, respectively.

Amortization of vineyard development costs are included in capitalized crop
costs that in turn are included in inventory costs and ultimately become a
component of cost of goods sold.  For the years ending December 31, 2003,
2002 and 2001 approximately $72,000, $69,000 and $65,000 were amortized into
inventory costs, respectively.

During the year ended December 31, 2002, the Company disposed of
approximately 6.5 acres of vines.  These vines were determined to be of a
variety, chardonnay, not in sufficient demand to support the cost of high
quality, low yield, farming that resulted from declining production from
these vines due to an infestation of phylloxera, an aphid-like insect
(Note 11).  As a result of this disposal, the Company recorded a loss on
vineyard development costs in the amount of $35,465.


                                     F-7


Willamette Valley Vineyards, Inc.
Notes to Financial Statements, Continued


This loss is included in selling, general and administrative expenses in the
statement of operations.  The Company intends to replant this land with
French clones of Pinot noir (clone # 777) on phylloxera resistant rootstock.

Property and Equipment
Property and equipment are stated at cost or the historical cost basis of the
contributing shareholders, as applicable, and are depreciated on the straight-
line basis over their estimated useful lives as follows:
Land improvements      15 years
Winery building	       30 years
Equipment	      5-7 years

Expenditures for repairs and maintenance are charged to operating expense as
incurred.  Expenditures for additions and betterments are capitalized.  When
assets are sold or otherwise disposed of, the cost and related accumulated
depreciation are removed from the accounts, and any resulting gain or loss is
included in operations.  The Company reviews the carrying value of
investments for impairment whenever events or changes in circumstances
indicate the carrying amounts may not be recoverable.

Debt Issuance Costs
Debt issuance costs are amortized on the straight-line basis, which
approximates the effective interest method, over the life of the debt.
Amortization of debt issuance costs was approximately $28,000, $12,000 and
$7,000 in 2003, 2002 and 2001, respectively.

Other Assets
Included in other assets are package and design costs related to the 1997
acquisition of Tualatin Valley Vineyards and subsequent redesign of packaging,
labeling and related materials.  These costs have been amortized on a
straight-line basis over the estimated period of time for which the benefit
will be derived of five years.  For each of the years ended 2003, 2002 and
2001 amortization of these costs of approximately $14,400 has been included
in selling, general and administrative expenses.  The net book value of
capitalized package design costs included in other assets was $13,928 and
$28,328 at December 31, 2003 and 2002, respectively.

Income Taxes
The Company accounts for income taxes using the asset and liability approach
whereby deferred income taxes are calculated for the expected future tax
consequences of temporary differences between the book basis and tax basis of
the Company's assets and liabilities.

Deferred Rent Liability
The Company leases land under a sale-leaseback agreement.  The long-term
operating lease has minimum lease payments that escalate every year.  For
accounting purposes, rent expense is recognized on the straight-line basis by
dividing the total minimum rents due during the lease by the number of months
in the lease.  In the early years of a lease with escalation clauses, this
treatment results in rental expense recognition in excess of rents paid, and
the creation of a long-term deferred rent liability.  As the lease matures,
the deferred rent liability will decrease and the rental expense recognized
will be less than the rents actually paid.  For the period ended December 31,
2003, 2002


                                     F-8


Willamette Valley Vineyards, Inc.
Notes to Financial Statements, Continued


and 2001, rent costs recognized in excess of amounts paid totaled $22,109,
$26,057 and $28,758, respectively.

Revenue Recognition
The Company recognizes revenue when the product is shipped and title passes
to the customer.  The Company's standard terms are 'FOB' shipping point, with
no customer acceptance provisions.  The cost of price promotions and rebates
are treated as reductions of revenues.  No products are sold on consignment.
Credit sales are recorded as trade accounts receivable and no collateral is
required.  Revenue from items sold through the Company's retail locations is
recognized at the time of sale.

Other Income
Other income was income of $122,501 for the year ended December 31, 2003
compared to income of $5,694 and $33,555 for the year ended December 31, 2002
and 2001 respectively.  This increase in 2003 is primarily due to insurance
proceeds received related to an inventory loss.  The Company discovered a
significant loss of inventory in the control of a now former independent
sales representative with a wholesale value of approximately $100,000.  The
Company filed an insurance claim and notified local law enforcement officials.
The insurance company paid $95,369 for the claim, which the Company recorded
as other income in the third quarter of 2003.

Cost of Goods Sold
Costs of goods sold include costs associated with grape growing, external
grape costs, packaging materials, winemaking and production costs, vineyard
and production administrative support and overhead costs, purchasing and
receiving costs and warehousing costs.

Selling, General and Administrative Expenses
Selling, general and administrative expenses consist primarily of
nonmanufacturing administrative and overhead costs, advertising and other
marketing promotions.  Advertising costs are expensed as incurred or the
first time the advertising takes place.

The Company provides an allowance to distributors for providing sample of
products to potential customers.  These costs, which are included in selling,
general and administrative expenses totaled approximately $48,000, $33,000
and $52,000 in 2003, 2002 and 2001, respectively.

Shipping and Handling Costs
Amounts paid by customers to the Company for shipping and handling costs are
included in the net revenue.  Costs incurred for shipping and handling charges
are included in selling, general and administrative expense.  Such costs
totaled approximately $190,000, $145,000 and $131,000 in 2003, 2002 and 2001,
respectively.  The Company's gross margins may not be comparable to other
companies in the same industry as other companies may include shipping and
handling costs as a cost of goods sold.

Excise Taxes
The Company pays alcohol excise taxes based on product sales to both the
Oregon Liquor Control Commission and to the U.S. Department of the Treasury,
Alcohol and Tobacco Tax and Trade Bureau.  The Company is liable for the
taxes upon the removal of product from the Company's warehouse on a per
gallon basis.  The federal tax rate is affected by a small winery tax credit
provision which declines based upon the number of gallons of wine production
in a year rather than the quantity sold.  The Company also pays taxes on the
grape harvest on a per ton basis to the Oregon



                                     F-9


Willamette Valley Vineyards, Inc.
Notes to Financial Statements, Continued



Liquor Control Commission for the Oregon Wine Advisory.  Excise taxes incurred
approximated $340,000 in 2003, $191,000 in 2002 and $200,000 in 2001.

Stock Based Compensation
The Company accounts for the employee and director stock options in accordance
with provisions of Accounting Principles Board ("APB") Opinion No. 25,
Accounting for Stock Issued to Employees.  Pro forma disclosures as required
under Statement of Financial Accounting Standards ("SFAS") No. 123,
Accounting for Stock Based Compensation, and as amended by SFAS No. 148,
Accounting for Stock Based Compensation - Transition and Disclosure, are
presented below (Note 8).

Had compensation cost for the Company's stock option plans been determined
based on the fair value at the grant date for awards consistent with the
provisions of SFAS No. 123, the Company's net earnings would have been
reduced to the pro forma amounts indicated as follows for the year ended
December 31 (Note 8 for certain assumptions with respect to this computation):

                                            2003         2002         2001

Net income, as reported                $  138,220   $  136,475   $   58,845
Add: Stock-based compensation expense
  inlcuded in reported net income,
  net of tax                                7,463        2,365        2,391

Deduct: Total stock-based employee
  compensation expense under fair value
  based method for all awards,
  net of tax                               (31,213)    (25,892)     (70,060)
                                        ------------ ------------ ------------

Pro Forma net income (loss)            $   114,470 $   112,948   $   (8,824)
                                        ____________ ____________ ____________

Earnings per share:
  Basic - as reported                  $      0.03  $     0.01   $     0.01
  Basic - pro forma                           0.03        0.03           -

  Diluted - as reported                       0.03        0.03         0.01
  Diluted - pro forma                         0.03        0.03           -


Basic and Diluted Net Income per Share
Basic earnings per share are computed based on the weighted-average number of
common shares outstanding each year.  Diluted earnings per share are computed
using the weighted average number of shares of common stock and potentially
dilutive securities assumed to be outstanding during the year.  Potentially
dilutive shares from stock options and other common stock equivalents are
excluded from the computation when their effect is antidilutive.

Options to purchase 288,600 shares of common stock were outstanding at
December 31, 2003 and diluted weighted-average shares outstanding at December
31, 2003 include the effect of 5,298 stock options.  Options to purchase
421,670 shares of common stock were outstanding at December 31, 2002 and
diluted weighted-average shares outstanding at December 31, 2002 include the
effect of 2,745 stock options.  Options to purchase 475,170 shares of common
stock were outstanding at December 31, 2001 and diluted weighted-average
shares outstanding at December 31, 2001 include the effect of 47,903 stock
options.  In addition, the warrant outstanding since 1992 was not included in
the computation of diluted earnings per share in 2003, 2002 or 2001 because
the exercise price of $3.42 was greater than the average market price of the
common shares during all three years.


                                    F-10


Willamette Valley Vineyards, Inc.
Notes to Financial Statements, Continued

                      2003
                    Weighted
                     average    Earnings
                     shares       per
          Income   outstanding   share


Basic    $138,220    4,477,043    0.03
Options        -         5,298      -
         --------    ---------   ------
Diluted  $138,220    4,482,341   $0.03
         ========    =========   ======

                      2002
                    Weighted
                     average    Earnings
                     shares       per
          Income   outstanding   share


Basic    $136,475    4,468,783    0.03
Options        -         2,745      -
         ---------   ---------   ------
Diluted  $136,475    4,471,528   $0.03
         =========   =========   ======

                      2001
                    Weighted
                     average    Earnings
                     shares       per
          Income   outstanding   share


Basic    $ 58,845    4,345,941    0.01
Options        -        47,903      -
         ---------   ---------   ------
Diluted  $ 58,845    4,393,844   $0.01
         =========   =========   ======



Statement of cash flows
Supplemental disclosure of cash flow information:

                                            2003         2002         2001

Interest paid                           $ 341,000    $ 357,000    $ 442,000
Income tax refund received                 33,378           -            -
Supplemental schedule of noncash
  investing and financing activities:
    Capital leases                         14,413       18,479       16,740
    Issuance of common stock(Note 7)       12,427        3,941        3,985
    Notes receivables issued in sale
      of fixed assets                          -            -        13,340


Liquidity
The Company's ability to fund operations and obtain financing on the line of
credit facility discussed in Note 5 could be impaired due to a variety of
factors including unanticipated capital expenditures, fluctuations in
operating results, financing activities and inventory management.  To the
extent any one of these factors causes the Company to be unable to fund its
operations or borrow on all or part of the line of credit, the Company could
be forced to seek and obtain alternative financing in the form of debt or
equity.  Additionally, the Company has been notified by GE Commercial
Distribution Finance Corporation that they do not intend to renew the line
of credit agreement when it expires in January 2005.  There can be no
assurance that the Company will be successful in obtaining alternative
financing on favorable terms, or at all.  The Company's failure to obtain
such financing or to obtain such financing on favorable terms could have a
material adverse effect on the Company's business, financial condition and
results of operations.  Management believes existing cash and cash flow from
operations, combined with the Company's $2,000,000 line of credit facility
will be sufficient to satisfy all debt service obligations and fund the
Company's operating needs and capital expenditures through 2004.

Reclassifications
Certain reclassifications have been made to the 2002 and 2001 financial
statements to conform to the financial statement presentation for the year
ended December 31, 2003.  These reclassifications have no effect on
previously reported results of operations or shareholders' equity.

2.	Accounts Receivable

Oregon law prohibits the sale of wine in Oregon on credit; therefore, the
Company's accounts receivable balances are the result of sales to out-of-state
and foreign distributors.  At December 31,


                                    F-11


Willamette Valley Vineyards, Inc.
Notes to Financial Statements, Continued


2003 and 2002, the Company's accounts receivable balance is net of an
allowance for doubtful accounts of $41,885.

Changes in the allowance for doubtful accounts is as follows:

                   Balance at  Charged to  Charged to  Write-offs  Balance at
                   Beginning   costs and     other       net of      end of
                   Of period    expenses    accounts   recoveries    period
                   __________  __________  __________  __________  __________

Fiscal year ended December 31, 2001:
Allowance for
 Doubtful accounts  $  41,660   $  19,260   $       -   $ (19,035)  $  41,885
                   ==========  ==========  ==========  ==========  ==========

Fiscal year ended December 31, 2002:
Allowance for
 Doubtful accounts  $  41,885   $   8,303   $       -   $  (8,303)  $  41,885
                   ==========  ==========  ==========  ==========  ==========

Fiscal year ended December 31, 2003:
Allowance for
 Doubtful accounts  $  41,885   $   6,198   $       -   $  (6,198)  $  41,885
                   ==========  ==========  ==========  ==========  ==========



3. Inventories

Inventories consist of:
                                                  2003          2002

Winemaking and packaging materials            $    80,886   $    96,123
Work-in-process (costs relating to unprocessed
  and/or unbottled wine products)               1,982,469     2,773,750
Finished goods (bottled wine
  and related products)                         5,824,437     5,200,826
                                               -----------   -----------
                                              $ 7,887,792   $ 8,070,699

Less: amounts designated for
distributor (Note 12)                            (552,414)     (520,408)
                                               -----------   -----------
Current inventories                           $ 7,335,378   $ 7,550,291
                                               ___________   ___________





4. Property and Equipment
                                                  2003          2002

Land and improvements                         $   976,838   $   984,954
Winery building and hospitality center          4,577,467     4,567,076
Equipment                                       4,933,329     4,670,506
                                               -----------   -----------
                                               10,487,634    10,222,536

Less accumulated depreciation                  (5,788,719)   (5,175,643)
                                               -----------   -----------
                                              $ 4,698,915   $ 5,046,893
                                               ___________   ___________


                                    F-12


Willamette Valley Vineyards, Inc.
Notes to Financial Statements, Continued


The Company has capital lease arrangements for certain winery equipment and
vehicles. Future minimum capital lease payments as of December 31, 2003 are:

  2004                                                  13,002
  2005                                                   5,463
                                                      ---------
      Total minimum lease payments                      18,465

  Less interest portion                                 (1,138)
                                                      ---------
      Capital lease obligation (Note 6)                 17,327

  Less portion due within one year (Note 6)            (12,029)
                                                      ---------
                                                      $  5,298
                                                      _________

The cost of the Company's leased equipment and related accumulated
depreciation aggregated $72,733 and $48,131, respectively, at December 31,
2003 and $72,733 and $36,772, respectively, at December 31, 2002.


5.	Line of Credit Facility

In July 2002 the Company entered into a revolving line of credit agreement
with GE Commercial Distribution Finance Corporation ("GE") that now allows
borrowings of up to $2,000,000 against eligible accounts receivables and
inventories as defined in the agreement.  The revolving line bears interest
at prime, plus 0.80%, and is payable monthly.  The interest rate was 5.55% at
December 31, 2003.  The Company's president has guaranteed up to $1,000,000
of this credit facility.  At December 31, 2003, there were borrowings of
$1,565,764 on the revolving line of credit offset by $435,248 depository cash
balance discussed in greater detail in the paragraph below.

The weighted-average interest rate on the aforementioned borrowings for the
fiscal years ended December 31, are as follows:

2003	5.55%
2002	6.17%
2001	8.58%

The new line of credit agreement includes various covenants, which among
other things, requires the Company to maintain minimum amounts of tangible
net worth, debt-to-equity, debt service coverage as defined and limits the
level of acquisitions of property and equipment.  As of December 31, 2003,
the Company was in compliance with these covenants.

The Company maintains a depository cash account that is in the name of GE.
For the year ended December 31, 2003, the line of credit balance was offset
by a depository cash balance of $435,248.  GE Capital borrowings are
collateralized by the bulk and case goods inventory and the proceeds from the
sales thereof, as well as a second lien against the Turner, Oregon property.


                                    F-13


Willamette Valley Vineyards, Inc.
Notes to Financial Statements, Continued


6. Long-Term Debt

Long-term debt consists of:
                                                  2003          2002

Northwest Farm Credit Services Loan           $ 2,777,780   $ 3,003,720
Real property loan, 8.5% interest,
  monthly payments of $1,055 through 2019         108,968       112,215
Capital lease obligations                          17,327        31,740
Vehicle financing                                  39,324        34,674
                                               -----------   -----------
                                                2,943,399     3,182,349

Less current portion                             (250,291)     (237,838)
                                               -----------   -----------
                                              $ 2,693,108   $ 2,944,511
                                               ___________   ___________


The Company has an agreement with Northwest Farm Credit Services containing
two separate notes bearing interest at a rate of 7.85%, which are
collateralized by real estate and equipment.  These notes require monthly
payments ranging from $7,687 to $30,102 until the notes are fully repaid in
2014.  The loan agreement contains covenants, which require the Company to
maintain certain financial ratios and balances.  At December 31, 2003, the
Company was in compliance with these covenants.  In the event of future
noncompliance with the Company's debt covenants, Northwest Farm Credit
Services ("FCS") would have the right to declare the Company in default, and
at FCS' option without notice or demand, the unpaid principal balance of the
loan, plus all accrued unpaid interest thereon and all other amounts due
shall immediately become due and payable.

Future minimum principal payments of long-term debt mature as follows for the
year ending December 31:

Year ending
December 31,

   2004                                                 250,291
   2005                                                 282,742
   2006                                                 298,352
   2007                                                 316,366
   2008                                             $   336,318
Thereafter                                            1,459,330
                                                     -----------
                                                    $ 2,943,399
                                                     ___________


7.	Shareholders' Equity

The Company is authorized to issue 10,000,000 shares of its common stock.
Each share of common stock is entitled to one vote.  At its discretion, the
Board of Directors may declare dividends on shares of common stock, although
the Board does not anticipate paying dividends in the foreseeable future.

On June 1, 1992, the Company granted its president a warrant to purchase
15,000 shares of common stock as consideration for his personal guarantee of
the real estate loans and the line of credit with


                                     F-14


Willamette Valley Vineyards, Inc.
Notes to Financial Statements, Continued

Northwest Farm Credit Services (Notes 6 and 8).  The warrant is exercisable
through June 1, 2012 at an exercise price of $3.42 per share.  As of December
31, 2003, no warrants had been exercised.

During 2001 the Company sold 200,000 shares of common stock for approximately
$307,500.

In each of the years ended December 31, 2003, 2002 and 2001, the Company
granted 10,034, 2,463 and 2,500 shares of stock valued at $12,427, $3,941 and
$3,985, respectively, as compensation to employees.  The cost of these grants
was capitalized as inventory.  The effects of these noncash transactions have
been excluded from the cash flow statements in each period.


8.	Stock Incentive Plan

In 1992, the Board of Directors adopted a stock incentive plan and reserved
175,000 shares of common stock for issuance to employees and directors of the
Company under the plan.  In 1996, 1998 and 2001, the Board of Directors
reserved an additional 150,000, 275,000 and 300,000 shares, respectively.
Administration of the plan, including determination of the number, term, and
type of options to be granted, lies with the Board of Directors or a duly
authorized committee of the Board of Directors.  Options are generally
granted based on employee performance with vesting periods ranging from date
of grant to five years.  The maximum term before expiration for all grants is
ten years.  As of December 31, 2003, there are approximately 601,400 shares
available for future issuance under this plan.

At December 31, 2003, 2002 and 2001, the following transactions related to
stock options occurred:



                                2003              2002              2001
                           _______________ _________________  ________________
                                  Weighted          Weighted          Weighted
                                   average           average           average
                                  exercise          exercise          exercise
                           Shares   price    Shares   price    Shares   price

Outstanding at
    beginning of year     421,670  $ 1.71   475,170  $ 1.73   510,670  $ 1.72
  Granted                  20,000    1.46    30,000    1.51     5,500    1.65
  Exercised                    -       -     (2,000)   1.56    (8,000)   1.56
  Forfeited              (153,070)   1.71   (81,500)   1.76   (33,000)   1.62
                          --------          --------          --------
Outstanding at
    end of year           288,600  $ 1.69   421,670  $ 1.71   475,170  $ 1.73
                          ________          ________          ________


                                     F-15


Willamette Valley Vineyards, Inc.
Notes to Financial Statements, Continued

Weighted-average options outstanding and exercisable at December 31, 2003 are
as follows:

                        Options outstanding             Options exercisable
                              Weighted
              Number          average       Weighted    Number        Weighted
            outstanding at   remaining      average   exercisable at  average
  Exercise   December 31,   contractual     exercise   December 31,   exercise
    price       2003           life           price       2003          price

  $ 1.46       20,000          9.00         $ 1.46        4,000       $ 1.46
    1.50       47,186          4.39           1.50       47,186         1.50
    1.51       30,000          8.90           1.51       30,000         1.51
    1.56       36,000          6.59           1.56       36,000         1.56
    1.60        3,000          9.29           1.60        2,700         1.60
    1.65       75,000          7.00           1.65       75,000         1.65
    1.69        8,000          9.50           1.69        8,000         1.69
    1.70        2,500          9.96           1.70        1,000         1.70
    1.75       41,500          8.25           1.75       41,500         1.75
    1.81        4,500          8.71           1.81        4,500         1.81
    2.75        2,000          6.50           2.75        2,000         2.75
    3.00        9,914          6.08           3.00        9,914         3.00
    3.62        6,000          5.56           3.62        6,000         3.62
    4.50        3,000          4.08           4.50        3,000         4.50
   ------    ---------        ------         ------     --------       ------
$ 1.46-$4.50  288,600          5.25         $ 1.69      270,800       $ 1.75

The Company adopted SFAS No. 123 in 1996 and has elected to account for its
stock-based compensation under Accounting Principles Board Opinion 25.  As
required by SFAS No. 123, the Company has computed for pro forma disclosure
purposes (Note 1) the value of options granted during each of the three years
ended December 31, 2003 using the Black-Scholes option-pricing model with the
following weighted-average assumptions used for the grants in 2003, 2002 and
2001:

                                            2003         2002         2001
Risk-free interest rate                     4.47 %       4.37 %       5.38 %
Expected lives                             10 years     10 years     10 years
Expected volatility                           52 %         53 %         55 %

Adjustments are made for options forfeited prior to vesting.  For the years
ended December 31, 2003, 2002 and 2001, the total value of the options
granted was computed to be approximately $19,600, $27,300 and $6,445,
respectively, which would be amortized on the straight-line basis over the
vesting period of the options.

For the years ended December 31, 2003, 2002 and 2001, the weighted average
fair value of options granted was computed to be $0.98, $0.91 and $1.17,
respectively.

On November 26, 2002, the Company granted its President 30,000 options from
the Stock Incentive Plan for his personal guarantee of $1,000,000 of the line
of credit with GE Commercial Distribution Finance (Note 5).  The options are
exercisable through November 27, 2012 at an exercise price of $1.51 per share.
As of December 31, 2003, no options had been exercised.


                                      F-16


Willamette Valley Vineyards, Inc.
Notes to Financial Statements, Continued

9. Income Taxes
The provision for income taxes consists of:
                                            2003         2002         2001

Current tax expense (benefit):
  Federal                                  $ 96,575     $ 11,139     $ 17,969
  State                                      20,072        4,697           -
                                        ------------ ------------ ------------
                                            116,647       15,836       17,969
                                        ------------ ------------ ------------
Deferred tax expense (benefit):
  Federal                                   (10,975)      66,465       31,949
  State                                      (1,407)       8,536        4,097
                                        ------------ ------------ ------------
                                            (12,382)      75,001       36,046
                                        ------------ ------------ ------------

    Total                                  $104,265     $ 90,837     $ 54,015
                                        ____________ ____________ ____________


The effective income tax rate differs from the federal statutory rate as
follows:
                                                Year ended December 31,
                                            2003         2002         2001

Federal statutory rate                      34.0 %       34.0 %       34.0  %
State taxes, net of federal benefit          4.4          6.3          4.4
Permanent differences                        4.1          3.6          8.0
Other, primarily prior year taxes            0.5         (3.9)         1.5
                                        ------------ ------------ ------------
                                            43.0 %       40.0 %       47.9  %
                                        ____________ ____________ ____________


Permanent differences consist primarily of nondeductible meals and
entertainment and life insurance premiums.

Deferred tax assets and (liabilities) at December 31 consist of:

                                                  2003          2002

Accounts receivable                           $    16,067   $    16,067
Inventories                                       111,856       129,268
Charitable contributions                           14,284            -
Excise tax accrual                                 30,688            -
Other                                               1,428         2,877
                                               -----------   -----------
Net current deferred tax asset                    174,323       148,212
                                               -----------   -----------

Depreciation                                     (448,855)     (450,052)
Deferred gain on sale-leaseback                   153,341       162,925
Other                                              (5,342)           -
                                               -----------   -----------
Net noncurrent deferred tax liability            (300,856)     (287,127)
                                               -----------   -----------
Net deferred tax liability                    $  (126,533)  $  (138,915)
                                               ___________   ___________


                                     F-17


Willamette Valley Vineyards, Inc.
Notes to Financial Statements, Continued


10.	Related Parties

During 2003, 2002 and 2001, the Company purchased grapes from certain
shareholders for an aggregate price of $122,780, $120,589 and $108,672,
respectively.  At December 31, 2003 and 2002, grape payables included $61,268
and $60,192, respectively, owed to these shareholders.

The Company has a loan to its president with a balance of $61,134 at December
31, 2003.  The loan was due on December 3, 1993, bearing interest at 7.35%.
On March 14, 1994, the loan was extended to March 14, 2009.  The loan is
collateralized by the common stock of the Company held by its president.
This note, including the related interest receivable, is classified as a
long-term note receivable in the accompanying balance sheet.  The Company's
loan to its president is collateralized by 75,000 shares of common stock.

11.	Commitments and Contingencies

Litigation
From time to time, in the normal course of business, the Company is a party
to legal proceedings.  Management believes that these matters will not have
a material adverse effect on the Company's financial position, results of
operations or cash flows, but due to the nature of the litigation, the
ultimate outcome cannot presently be determined.

Operating Leases
The Company entered into a lease agreement for approximately 45 acres of
vineyards and related equipment in 1997.  In December 1999, under a
sale-leaseback agreement, the Company sold a portion of the Tualatin Vineyards
property with a net book value of approximately $1,000,000 for approximately
$1,500,000 cash and entered into a 20-year operating lease agreement.  The
gain of approximately $500,000 is being amortized over the 20-year term of
the lease.

The amortization of the deferred gain totals approximately $25,000 per year
and is recorded as an offset to the related lease expense.

As of December 31, 2003, future minimum lease payments are as follows:



    Year ending
    December 31,
       2004                                          $   200,609
       2005                                              203,777
       2006                                              207,023
       2007                                              136,430
       2008                                              139,841
    Thereafter                                         1,794,453
                                                      -----------
         Total                                       $ 2,682,133
                                                      ===========

The Company is also committed to lease payments for various office equipment.
Total rental expense for all operating leases excluding the vineyards,
amounted to $8,858, $12,316 and $9,891 in 2003, 2002 and 2001, respectively.
In addition, payments for the leased vineyards have been included in
inventory and vineyard developments costs and aggregate approximately
$196,804 and $204,713, respectively, for each of the years ended December 31,
2003 and 2002.


                                     F-18


Willamette Valley Vineyards, Inc.
Notes to Financial Statements, Continued

Susceptibility of Vineyards to Disease
The Tualatin Vineyard, purchased during 1997, and the leased vineyards are
known to be infested with phylloxera, an aphid-like insect, which can destroy
vines.  Although management has begun planting with phylloxera-resistant
rootstock, a portion of the vines at the Tualatin vineyard is susceptible to
phylloxera.  The Company has not detected any phylloxera at its Turner
Vineyard.

It is not possible to estimate any range of loss that may be incurred due to
the phylloxera infestation of our vineyards.  The phylloxera at Tualatin
Estate Vineyard is believed to have been introduced on the roots of the vines
first planted on the property in the southern most section Gewurztraminer in
1971.  These vines, and all others infested, remain productive at low crop
levels.  The removal of the Chardonnay block in 2002 was done principally
because of the high cost of farming high quality, low yield wine grapes and
the low price Oregon Chardonnay is receiving in the market.

12.	Distributor Obligation

During 2001 the Company entered into a distribution agreement with a national
wine distributor group (the "distributor"), whereby the distributor paid the
Company $1,500,000 for a base amount of bottled wine with an approximate cost
of $552,000 and $520,000 at December 31, 2003 and 2002 respectively.  The
Company believed the best way to incentivize national distributors to focus
on a relatively small national brand such as the Company's was to provide the
distributors a special financial incentive to focus on the brand.  The Company
negotiated a way to incentivize its new distributor to provide a focus on the
Company's brand in a mutually beneficial way with the goal of greatly
increasing nationwide sales through the distribution agreement.  The agreement
calls for the Company to warehouse this base amount of wine at the Turner
location, calculated using standard out of state pricing, with any draw-downs
by the distributor to be simultaneously replenished by another purchase.  The
distribution agreement does not contain any restrictive covenants.  The
distribution agreement appoints the distributors the exclusive distributor of
its wines identified by the agreement to retail licensees in the regions
serviced by the distributors as identified by the agreement.  There are no
informal arrangements that impact the Company's obligations or the rights and
privileges of the distribution group.  Sales to members of the distributor
group totaled approximately $812,702, $457,221 and $1,022,084 in 2003, 2002
and 2001, respectively.


                                     F-19


Willamette Valley Vineyards, Inc.
Notes to Financial Statements, Continued

The Company has recorded a Distributor Obligation liability, and a long-term
inventory asset based on the actual cost of goods held in the base amount of
wine at year end, to recognize the future obligation to deliver this amount
of wine to the distributor.  The inventory held in the base amount of wine is
as follows:

Wine                                2003           2002
Willamette Valley
  Chardonnay                        952 cs.        952 cs.
  Estate Chardonnay                 180 pks.       180 pks.
  Pinot Gris                      1,064 cs.        952 cs.
  Pinot Noir                      6,748 cs.      4,480 cs.
  Pinot Noir-Whole Cluster           -           1,400 cs.
  Pinot Noir-Founders Reserve     1,008 pks.     1,008 pks.
  Pinot Noir-Estate               1,016 pks.       504 pks.
  Pinot Noir-Freedom Hill           180 pks.       180 pks.
  Pinot Noir-Hoodview               180 pks.       180 pks.
  Pinot Noir-Karina                  -             240 pks.
  Pinot Noir-Signature Cuvee        516 pks.       336 pks.
Tualatin Estate
  Chardonnay                        224 cs.        224 cs.
  Pinot Blanc                         -              -
  Pinot Noir                        392 cs.        392 cs.
Griffin Creek
  Merlot                            748 pks.       448 pks.
  Pinot Noir                        350 pks.       700 pks.
  Syrah                             224 pks.       116 pks.

The distributor obligation will be settled by the delivery of inventory based
on a predetermined depletion schedule.  The agreement calls for the base
amount of prepaid wine the Company holds for the distributor to remain at
$1,500,000 until 2006, when the balance is depleted to the following levels
in the following years:

           2006                                       $ 1,200,000
           2007                                           900,000
           2008                                           600,000
           2009                                           300,000
           2010                                                -

The agreement can be cancelled with or without cause as defined in the
agreement upon 30 or 90 days notice, respectively.  Upon termination of the
agreement the distributor obligation is to be repaid over the following 14
months.

Also as part of that agreement, the Company has agreed to pay the distributor
incentive compensation if certain sales goals are met over the next five
years and if a certain transaction occurs.  The incentive compensation will
be paid only in the event of a transaction in excess of $12 million in value
in which either the Company, at its option, sells all or substantially all of
its assets or a merger, sale of stock, or other similar transaction occurs,
at the Company's option, the result of which is that the Company's current
shareholders do not own at least a majority of the outstanding shares of


                                     F-20


Willamette Valley Vineyards, Inc.
Notes to Financial Statements, Continued

capital stock of the surviving entity.  Assuming the $12 million threshold is
met and the distributor meets certain sales goals, the distributor will be
entitled to incentive compensation equal to 20% of the total proceeds from
the sale or transaction and up to 17.5% of the difference between the
transaction value and approximately $8.5 million.


                                     F-21