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, 2001
                                    Commission File No 0-21522


                  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: Common
Stock

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

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, 2001

Issuer's revenues for its most recent fiscal year:    $7,030,791

Aggregate market value of the voting stock held by
non-affiliates of the Issuer based upon the closing
bid price of such stock:                          $7,817,217

Number of shares of Common Stock outstanding:      4,464,981

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 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, which includes a
grafting of 8 acres to Pinot noir in 1999 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 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 farming the 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 $808,700 and the last
parcel, which contains the Tualatin Estate winery plus 115 acres, is priced at
$1,825,000.

The Company also leases O'Connor Vineyards on a ten-year contract adding an
additional 54 producing acres.  All of these highly regarded 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 2001, 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.  This brand's
mission 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, under a "Made in Oregon Cellars"
label.

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.  This brand's mission 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, $35 per bottle; Syrah, $35 per
bottle; Cabernet Sauvignon, $40 per bottle; Pinot gris, $18 per bottle;
Chardonnay, $30 per bottle; Viognier, $30 per bottle; and Pinot noir, $27 per
bottle.  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 2001, there were 164 commercial wineries licensed in
Oregon and over 11,100 acres of wine grape vineyards, 8,800 acres of which are
currently producing.  Total production of Oregon wines in 2001 is estimated by
the Company to be approximately 1,396,828 cases.  Oregon's entire 2001
production would have an estimated retail value of approximately $209.5
million, assuming a retail price of $150 per case, and a FOB value of
approximately one-half of the retail value, or $104.8 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, 2001, 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 O'Connor Vineyard for which the Company has a
10-year lease.  Any planting, training, and care of new plants at the O'Connor
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.

Several significant developments in the Oregon wine industry have taken place
over the past ten years.  Robert J. Drouhin, a well-known producer of French
wines, purchased vineyard land near Dundee, Oregon on which he has planted a
vineyard and constructed a winery.  The former owners of Napa Valley's Girard
and Stag's Leap Wineries have formed a partnership and purchased vineyard land
in the Willamette Valley where they have planted a vineyard and begun
harvesting Pinot noir grapes.  Brian Croser (a noted Australian winemaker), in
partnership with Cal Knudsen (an original investor in Erath Vineyards) and the
French Champagne firm, Taittinger, established the Dundee Wine Company.  Their
wines, under the Argyle label, have received recognition for sparkling wines,
Dry Riesling, Chardonnay and Pinot noir.  In 1992, a California vineyard
investor planted a vineyard consisting of over 200 acres of Pinot noir grapes
across Interstate 5 and within sight of the Company's Winery.

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 42 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 (Dijon and Espiguette clones) vines in 1993.
In 1996, the Company planted its remaining 11 acres in Chardonnay (Dijon
clones) 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.

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 two to four years.

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

In 1999, the Company purchased 33 acres of vineyard land adjoining Tualatin
Estate for future plantings 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 2001, the Company's 42 acres of producing estate vineyard
yielded approximately 205 tons of grapes for the Winery's twelfth crush.
Tualatin Vineyards produced 524 tons of grapes in 2001.  O'Connor Vineyards
produced 187 tons of which about 5% were sold by the Company to other wineries
because of previous commitments.  In 2001, the Company purchased an additional
836 tons of grapes from other growers. The Winery's 2001 total wine production
was 200,340 gallons (84,265 cases) from its 2000 crush, and 3,065 gallons
(1,289 cases) from its 2001 crush. The Company expects to produce an
additional 260,477 gallons in 2002 (109,559 cases) from its 2001 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 Company's property is located at the same latitude as the famous
Haut Brion vineyards in Bordeaux, France.

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 2001, the Winery produced 200,340 gallons (84,265
cases) from its 2000 crush, and 3,065 gallons (1,289 cases) from its 2001
crush.  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 if 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 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 $3,228,749 at December 31, 2001 and
$3,422,675 at December 31, 2000. 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 $2,510,342 on December 31, 2001. 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
$718,408 on December 31, 2001, after the Company made an additional payment of
approximately $471,000 in December 1999. The additional payment was made as a
result of the Company selling a parcel of the Tualatin Valley property under a
sale-leaseback agreement.

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 the latest
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
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
2001, direct sales make up approximately 23% 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 market the Company's wine exclusively, 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 a few 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 1,000
restaurant and retail accounts established as of December 31, 2001.  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 2001, approximately 37% 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 3,100 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 California's second-largest tourist attraction with
over 2.5 million visitors in 1987.  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 1985, was Oregon's eleventh
most visited tourist attraction (fifth among those charging admission).  The
Enchanted Forest, which operates from March 15 to September 30 each year,
attracts approximately 200,000 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 good reviews in tastings of its wines and believes its prices are
competitive with other Oregon wineries.  Large 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.

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, 2001 the Company had 54 full-time employees and 13
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.



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, 2001.



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, 2001, there were 3,139 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

           3/31/01       6/30/01       9/30/01         12/31/01
High        $1.75          $2.40         $2.30           $2.30
Low         $1.44          $1.19         $1.80           $1.61

Quarter Ended

           3/31/00       6/30/00       9/30/00         12/31/00
High        $2.25          $2.00         $2.28           $2.06
Low         $1.50          $1.50         $1.50           $1.47

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.



ITEM 6.     MANAGEMENT'S DISCUSSION AND ANALYSIS

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.


SIGNIFICANT ACCOUNTING POLICIES

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 principle sources of revenue are derived from product sales and
distribution of wine.  Revenue is recognized from product 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.

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 Management is continuing the transition to higher quality, higher gross
margin wines.  A careful selection and recruitment of top Oregon winegrowers
has lead to quality improvements in purchased grapes and in the offering of
single vineyard designated bottlings.  The recent plantings of new Pinot noir
clones at Tualatin Estate, Willamette Valley Vineyards, and O'Connor Vineyards
are nearing maturity. Improvements in production staffing and barrels and
eliminating high volume, lower priced product lines have sharpened winemaking
focus on the Company's flagship wines.  A higher level of professionalism in
the sales staff has improved the Company's ability to present and sell high
quality, high margin wines.

The Company consolidated much of its national wine markets under the Charmer
Sunbelt Distribution system at the beginning of 2001.  These distributors
constitute one of the largest distribution organizations in the country
covering over 50% of the nation's wine market.  The Company terminated
distribution agreements with its former distributors in the states of Arizona,
Colorado, Florida, New York, Pennsylvania, South Carolina and Washington D.C.
beginning January 1, 2001 and began using the Charmer Sunbelt distribution
companies in those markets.  The Company opened new markets in Maryland and
changed distributors in Massachusetts, Nevada and New Jersey.  The Company
hired a National Sales Manager to facilitate these distribution changes and to
launch the Company's brands in the Charmer Sunbelt system and other new
distributors.

The Company experienced an increase in sales expenses from $269,426 in 2000 to
$489,096 in 2001, an increase of 82%.  These costs relate to the new position
of National Sales Manager and related travel and entertainment expenses.  The
Company experienced significant delays in setting up distribution and
launching sales and marketing efforts in some markets due to the scale and
complexity of the distribution transfers as well as state licensing
requirements.

Depletions (wine sales) from distributor to the retail trade began exceeding
the Company's former depletions by September of 2001.  As a result of
temporary loss of depletions and slower than expected sales during this
period, the Company has high inventory levels both at the winery and in the
Charmer Sunbelt houses.  Management has substantially reduced its fixed sales
costs and begun engaging local professional wine brokers, paid on performance,
to assist distributors with account placements and local sales programs.

In fiscal year 2001, the Retail, and Out-of-state Sales Departments showed
increases in net profit contribution, after direct departmental expenses, of
2%, and 6%, respectively, from the previous year.  These increases resulted
from increased sales revenues.  The Self-Distribution Department showed an
increase in sales by its independent sales force of 15% but a decline of 54%
from direct shipments by the Company to a large chain retailer.  This sales
decline was due to a harvest shortage of Riesling faced by the Company caused
by an unusual frost during the spring of 2000. Profits were depressed by
higher selling, general and administrative expenses, particularly sales
salaries and professional accounting fees.


Wine Quality

The Company's wine ratings are among the highest given to Oregon produced
wines.  In the November 2001 issue, "The Wine Enthusiast" magazine rated the
1998 Willamette Valley Vineyard Freedom Hill Vineyard Pinot Noir a score of
"91".  The Company's standard bearer, the 1999 vintage Pinot noir, sold in
many fine dining establishments and bottle shops across the nation, received a
score of "89" from Wine & Spirits magazine and a "87 - Best in Market" rating
from the Wine Spectator, in the February 2002 issues.

The 2001 annual review of Oregon Pinot noirs by Clive Coates, Master of Wine
and publisher of The Vine rated the Willamette Valley Vineyards Estate and
Tualatin Estate bottlings tied for second place among all 1999 Oregon Pinot
noirs.  The prior year, Coates selected the '98 Willamette Valley Vineyards
Hoodview the leading Pinot noir of the 1998 vintage.  Both the Wine Spectator
and Wine Enthusiast gave this wine a score of "90".


Sales

Finished wine revenues increased 3% in 2001 from the previous year.  Unit
sales decreased 9% from the previous year.  Case sales from the Winery
decreased from 88,045 in 2000 to 80,229 in 2001.  The decrease in case
depletions is due to Management's success in reducing low demand white wine
inventories in 2000 and early 2001 resulting from long-term grape contracts in
prior years, and the sale of higher margin products.  The Company's
distributors experienced a collective increase of 3% in sales of Company
products to their retail customers in 2001.  Sales expenses increased $219,670
(82%) due to the hiring of a National Sales Manager in January 2001, and
increased expenses related to setting up new distribution and launching sales
and marketing efforts.  Management expects to reduce costs incurred in the
year 2002 by restructuring the sales organization, and focusing on in-market
sales efforts, with the prospect of achieving higher average margins on sales
over time.  In the past, long-term grape contracts caused the Company to incur
high costs for lower demand white wines.  These contracts expired at the end
of 2000.  As these wines were sold in bulk or as finished case goods, they
reduced average gross margins.


Wine Inventory

The Company has a substantial inventory of '99, '00 and '01 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 99,146 cases in 2001 from 93,821 the
previous year due to the decrease in case sales from the winery, and the
building of inventory items not released until later years.  We expect to see
this trend of increasing inventories continue through at least 2002.  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 2002.  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 2001 Quarter Ended  Fiscal 2000 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    $224  $314  $406   $465  $146  $255  $253   $284
On-site and off-site
festivals         50    49    51     56   133    77    91    149
In-state sales   620   597   646    804   418   715   755  1,011
Bulk/Grape sales 210    13   122      8     6     0   113    144
Out-of-state
sales            628   586   742    640   572   636   483    714
Total winery
revenues       1,732 1,559 1,967  1,973 1,275 1,683 1,695  2,302



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)
                                    2001        2000        1999
Tasting room and retail sales     $1,409       $ 938       $ 973
On-site and off-site festivals       206         450         503
In-state sales                     2,667       2,899       2,412
Bulk /Grape Sales                    353         263          69
Out-of-state sales                 2,596       2,405       2,169
Revenues from winery operations   $7,231      $6,955      $6,126

Less Excise Taxes                    200         238         212

Net  Revenue                      $7,031      $6,717      $5,914


2001 Compared to 2000.

Tasting room sales for the year ended December 31, 2001 increased 50% to
$1,408,955 from $938,303 for the same period in 2000.  In 2000, telephone and
mail order sales were part of the on-site and off-site festivals category, in
2001 they are accounted for in the tasting room and retail sales category.  By
adjusting for this difference, the tasting room sales for 2001 increased 13%
for the same period in 2000.  The Company experienced a decrease in revenue
during 2001 in on-site and off-site festivals revenue of $206,187 over
$449,558 in the same period in 2000.  By adjusting for the difference in the
handling of telephone and mail order sales, the on-site and off-site festivals
revenue for 2001 decreased 38% from $330,142 for the same period in 2000.
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, 2001 increased
196% to $353,210 from $119,416 for the same period in 2000.  By offering
higher quality wines in the tasting room and discontinuing events with low net
returns, the net contribution, after direct departmental expenses, from the
Retail Department increased by $8,390 in 2001, an improvement of over 2%.  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 profit
contribution by the retail department.

Wholesale sales in the state of Oregon for the year ended December 31, 2001,
through the Company's independent sales force and through direct sales from
the winery, decreased 8% to $2,666,883 from $2,898,870 for the same period in
2000.  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 $452,652 in 2001, down from $979,755
in 2000.  This sales decline was due to a harvest shortage of Riesling faced
by the Company due to an unusual frost during the spring of 2000.  With a very
successful 2001 harvest, the Company is refocusing sales efforts on this
customer in an attempt to regain the higher sales volumes of the prior year.
The net contribution, after direct expenses, from the In-state Self
Distribution Department decreased by $15,575, a decrease of 2%.

Out-of-state sales for the year ended December 31, 2001, increased 8% to
$2,595,426 from $2,404,863 for the same period in 2000.  The Pinot noir
variety led sales in 2001.  Higher sales and gross margin produced an increase
in the net contribution of $43,528 from the FOB Department, an increase of 6%
from the prior year.

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, and
$18,526 in 2000.  It sold $13,628 of grapes under contract 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 2001, the Company's
bulk wine sales totaled $332,165, and bulk wine costs totaled $295,101.  The
Company was also forced to write off $19,305 in 2001 due to a bankruptcy
filing by a California bulk wine customer to which extended terms were
granted.  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 began removing 6.9 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.

The total excise taxes collected in 2001 were $200,078 as compared to $238,072
in 2000.  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 49% for fiscal year 2001 as
compared to 47% for 2000.  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 50% in 2001 compared to 51% in
2000.  The sales price increased in 2001 for many varieties, though the
average sales price did not increase proportionally due to the sale of low
demand inventory at significant reductions from frontline pricing to alleviate
excess inventories. The Company has seen significant increases in the cost of
grapes, packaging and labor cost in the past several years.  The Company has
taken several steps to decrease all of these costs, and plans to see
stabilization during the next several years.

Selling, general, and administrative expenses for the year ended December 31,
2001, increased approximately 7.3% to $2,978,799 compared to $2,775,782 for
the same period in 2000.  As a percentage of revenue from winery operations,
the selling, general, and administrative expenses were 42% in 2001 as compared
to 41% in 2000. The largest part of the increase in expenses in 2001 over 2000
was increased expenses related to out-of-state sales and increases in
professional accounting fees related to the annual audit.

Other income for the year ended December 31, 2001 was $58,539 as compared to
$169,305 for the year ended December 31, 2000.  Interest income increased to
$4,811 in fiscal year 2001 from $3,894 in fiscal year 2000.  Interest expense
decreased to $441,629 in fiscal year 2001 from $547,216 in fiscal year 2000.

The provision for income taxes and the Company's effective tax rate were
$54,015 and 48% of pre-tax income in fiscal year 2001 with $19,595 or 57% of
pre-tax income recorded for fiscal year 2000.

As a result of the above factors, net income increased to $58,845 in fiscal
2001 from $15,062 for fiscal year of 2000.  Earnings/(loss) per share were
$.01, $.00, and $(.02), in fiscal years 2001, 2000, and 1999, respectively.


2000 Compared to 1999.

Tasting room sales for the year ended December 31, 2000 decreased 3.6% to
$938,303 from $973,028 for the same period in 1999.  By offering higher
quality wines in the tasting room and discontinuing events with low net
returns, the net contribution, after direct departmental expenses, from the
Retail Department increased by $70,024 in 2000. The Company experienced a
decrease in revenue during 2000 in Hospitality rental income of $160,826
(included in the tasting room and retail sales category) over $227,452 in the
same period in 1999.

On-site and off-site festival sales and telephone sales for the year ended
December 31, 2000 decreased 11% to $449,558 from $502,960 for the same period
in 1999.  The Company eliminated several on and off-site festivals by
analyzing each event to determine if the event was going to return a certain
profit percentage. The Company eliminated all on-site and off-site events that
were not profitable.  Despite greater competition from new event
establishments, and a reduction in retail revenues, the net contribution from
the Retail Department improved by 25%.

Wholesale sales in the state of Oregon for the year ended December 31, 2000,
through the Company's independent sales force, increased 20% to $2,898,870
from $2,412,266 for the same period in 1999.  Oregon's retail wine environment
is dominated by large chain retailers.  For example, one large retailer,
remains the largest in-state customer of the Company.  The sales to this
retailer were $979,755 in 2000, up from $639,000 in 1999.  The net
contribution, after direct expenses, from the In-state Self Distribution
Department increased by $71,360, an increase of 13%.

Out-of-state sales for the year ended December 31, 2000, increased 11% to
$2,404,863 from $2,168,897 for the same period in 1999.  The Pinot noir
variety led sales in 2000.  Higher sales and lower related expenses produced
an increase in the net contribution of $232,172 from the FOB Department, an
increase of 44% from the prior year.

The Company contracted in early 1997 on a long-term basis for more grapes than
needed to meet the revised sales forecasts in the following few years.  The
Company sold some of its own grapes and some of its contracted grapes for
$465,030 in 1997, $454,281 in 1998 and $22,000 in 1999. It sold $18,526 of
grapes under contract in 2000.  These long-term grape contracts expired at the
end of 2000.  What the Company couldn't sell as grapes was produced as bulk
wine.  The losses the Company suffered from bulk wine sales totaled $104,888
in 2000.  The only remaining winegrape 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 3,000 cases of Chardonnay, annually.

The total excise taxes collected in 2000 were $238,072 as compared to $211,824
in 1999.  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 47% for fiscal year 2000 as
compared to 54% for 1999.  The sales of bulk wine at a loss and grapes at
harvest at a slim margin reduced the gross margin in 2000.  After adjusting
for these sales, the gross margin would be 51% in 2000 compared to 54% in
1999.  Even though the sales price increased in 2000 for many varieties, the
average sales price decreased due to the sale of low demand inventory to
institutional buyers at significant reductions from frontline pricing. The
Company has seen significant increases in the cost of grapes, packaging and
labor cost in the past several years.

Selling, general, and administrative expenses for the year ended December 31,
2000, decreased to $2,775,782 compared to $2,901,594 for the same period in
1999.  As a percentage of revenue from winery operations, the selling,
general, and administrative expenses were 41% in 2000 as compared to 49% in
1999. The selling, general, and administrative expenses decreased 4.3% in 2000
against expenses recorded in 1999.  The largest part of the decrease in
expenses in 2000 over 1999 was improved management of sales expenses.  The
retirement of our Controller of 8 years lead to temporary increases in
accounting costs of $90,000 as the new Controller transitioned and instituted
new accounting systems.

Other income for the year ended December 31, 2000 was $169,305 as compared to
$85,963 for the year ended December 31, 1999. This increase was due in part to
the settlement of litigation regarding cork failures, and to rebates received
from Farm Credit Services.  Interest income decreased to $3,894 in fiscal year
2000 from $7,807 in fiscal year 1999.  Interest expense increased to $547,216
in fiscal year 2000 from $483,723 in fiscal year 1999.

The provision (benefit) for income taxes and the Company's effective tax rate
were $19,595 and 57% of pre-tax income in fiscal year 2000 with $(22,880) or
(20)% of pre-tax loss recorded for fiscal year 1999.

As a result of the above factors, net income/(loss) increased to $15,062 in
fiscal 2000 from $(92,232) for fiscal year of 1999.  Earnings/(loss) per share
were $.00, $(.02), and $(.02), in fiscal years 2000, 1999, and 1998,
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 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.

In 2001, the Company sold 200,000 shares of Common Stock at a price of $1.59
per share and net proceeds to the Company of $316,000.


Cash and cash equivalents increased to $504,510 at December 31, 2001 from
$252,876 at December 31, 2000.


Inventories increased 8% as of December 31, 2001, to $7,490,790 from the
December 31, 2000 level of $6,921,014. As the Company ramps up to improve the
quality of its wine, the Company has seen a significant increase in its higher
cost wines as shown below:
                                         In Cases units
                                      12/31/00    12/31/01

Willamette Valley Vineyards
Vineyard Designate Pinot noir           8,178      10,385

Griffin Creek Label
Cabernet Sauvignon                        207       1,509
Merlot                                  1,852       3,338

Total                                  10,237      15,232


Property, plant, and equipment, net, decreased 6% as of December 31, 2001, to
$5,652,067 from $5,989,169 as of December 31, 2000.


Long-term debt decreased to $3,426,680 as of December 31, 2001, from
$3,627,602 as of December 31, 2000.


The Company has a line of credit from Farm Credit Services with a limit of
$1,500,000.  As of December 31, 2001 the outstanding balance of the line was
$1,352,500 as compared to $2,616,549 in 2000.  On December 1, 2001 the Company
obtained an extension of its line of credit from Farm Credit Services.  This
extended the maturity date of the line of credit from December 1, 2001 to
March 1, 2002.  It also reduced the limit from $2,750,000 to $1,500,000.  As
of this date, Farm Credit Services has extended the Company's line of credit
until June 1, 2002.  The Company was not in compliance with 1 of 5 debt
covenants, but obtained a waiver letter from Farm Credit Services at December
31, 2001. The Company is currently negotiating an agreement with another
financial institution and management expects a final agreement to be in place
in the near future.  Management expects the financing agreement to provide for
maximum borrowings of $2,700,000 with an interest rate of the bank's prime
plus .8 percent.  Management also expects the agreement to include, among
other things, certain restrictive financial covenants with respect to total
equity, debt-to-equity and debt coverage.  If the Company is unable to
refinance the debt with another institution, the Company may be unable to
continue its normal operations, except to the extent permitted by Northwest
Farm Credit Services.



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 9.     DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS

Directors, nominees for election as a director, and each such person's age at
March 31, 2001 and position with the Company.

Name                         Position(s) with the Company    Age
James W. Bernau ***              Chairperson of the Board,
                                 President and Director      48
James L. Ellis * ***             Secretary and Director      57
Terry Emmert                     Director                    57
Betty M. O'Brien*                Director                    58
Delna L. Jones**  ****           Director                    61
Stan G. Turel * **  ***    ****  Director                    55
_______________________________

*Member of the Compensation Committee
**Member of the Audit Committee
***Member of the Executive Committee
****Member of the Affiliated Transaction 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.

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.  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 Advisory 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.

Delna L. Jones.  Ms. Jones has served as a Director since November 1994.  Ms.
Jones is semi-retired.  Ms. Jones was elected in 1998 and served as a County
Commissioner for Washington County, Oregon from 1998 to 2000.  Ms. Jones has
served as project director for the CAPITAL Center, an education and business
consortium from 1990 to 1998.  From 1985 to 1990, Ms. Jones served as Director
of Economic Development with US West Communications.  Beginning in 1982, she
was elected six times to the Oregon House as the State Representative for
District 6.  During her tenure, she served as the Assistant Majority Leader;
she also chaired the Revenue and School Finance committee, and served on the
Legislative Rules and Reorganization committee and the Business and Consumer
Affairs committee.  In addition, Ms. Jones presently serves on many community
and business boards and advisory panels.

Stan G. Turel.  Mr. Turel has served as a Director since November of 1994.
Mr. Turel is part owner and the CEO of Columbia Turel, Inc., (formerly
Columbia Bookkeeping, Inc.) a position he has held since 1974.  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, 2001, conducted one meeting.  The elected members of the Audit
Committee are Delna L. Jones and Stan G. Turel.  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, 2001, the Compensation Committee held two meetings.
The members of the Compensation Committee currently are Betty M. O'Brien,
Chair, Stan Turel, and James Ellis.  In 1994, the Board of Directors created
an Affiliated Transactions Committee that reviewed transactions deemed to
involve a conflict of interest between the Company and its former affiliates,
current members of the Affiliated Transaction Committee are Delna Jones and
Stan Turel.  The Committee held no meetings in 2001.  In 1997 the Board
appointed an Executive Committee, members are: James Bernau, James Ellis, and
Stan Turel.  The Executive Committee held no meetings during 2001.



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, 1999, 2000, and 2001.

Name and Principal Position       Year      Annual Compensation
                                            Salary ($)  Bonus ($)

James W. Bernau
President and Chairperson of      1999      91,512      10,000
the Board of Directors            2000      93,000         -0-
                                  2001      95,357         -0-

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, 2001.

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

James W. Bernau           75,000(1.65)
                           1,500(1.81)
                           4,000(1.5625)
                         Exercisable         Unexercisable

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

James W. Bernau		   7,500
                               0
                             750
                         Exercisable       Unexercisable



(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, 2001
($1.75 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

The following table sets forth certain information with respect to beneficial
ownership of the Company's Common Stock as of December 31, 2001, 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.

                                   Number of                 Percent of
                          Shares Outstanding Stock   Shares Beneficially Owned

James W. Bernau     President/CEO, Chair of the Board
2545 Cloverdale Road              1,038,350.5 (1)              23.3%
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                200,000                     4.5%
Clackamas, OR 97015

Delna L. Jones      Director
44307 Mesquite Drive                  8,700   (3)                **
Indian Wells, CA 92210

Betty M. O'Brien    Director
22500 Ingram Lane NW                 13,950   (4)                **
Salem, OR  97304

Stan G. Turel       Director
604 SE 121 Street                   131,885   (5)               3.0%
Vancouver, WA  98683

All Directors, executive          1,445,629                    32.4%
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 80,500 shares issuable upon exercise of options.

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

(3) Includes 6,100 shares issuable upon the exercise of options.

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

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



ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

During 2001, 2000 and 1999, the Company purchased grapes from Elton Vineyards
for $108,672, $74,585 and $62,068 respectively.  Betty M. O'Brien, a Director
of the Company, is a principal owner of Elton Vineyards.

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, 2001, the outstanding balance of the loan was $61,048 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.)



(b) Reports on Form 8-K

Not applicable.



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 15, 2002.       By:__/s/ James W. Bernau_____________
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/ James W. Bernau_  Chairperson of the Board,   April 15, 2002
James W. Bernau        President    (Principal Executive Officer)


_/s/ Sean M. Cary____  Controller                  April 15, 2002
Sean M. Cary           (Principal Accounting Officer)


_/s/ James L. Ellis__  Director and Vice-President April 15, 2002
James L. Ellis         and Secretary


_/s/ Terry W. Emmert_  Director                    April 15, 2002
Terry W. Emmert

_/s/Betty M. O'Brien_  Director                    April 15, 2002
Betty M. O'Brien

_/s/_Stan G. Turel___  Director                    April 15, 2002
Stan G. Turel

_/s/ Delna Jones_____  Director                    April 15, 2002
Delna Jones














CONSENT OF INDEPENDENT ACCOUNTANTS


We hereby consent to the incorporation by reference in the Registration
Statement on   Form S-8 (No. 333-69188) of Willamette Valley Vineyards, Inc.
of our report dated March 8, 2002, except for Notes 5,6, and 13, as to which
the date is April 15, 2002, relating to the financial statements and financial
statement schedules, which appears in this Form 10-K.


PricewaterhouseCoopers LLP

Portland, OR
April 15, 2002















Willamette Valley
Vineyards, Inc.
Report and Financial Statements
For the Years Ended December 31, 2001, 2000 and 1999.









Willamette Valley Vineyards, Inc.
Index to Financial Statements


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

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.
at December 31, 2001 and 2000, and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 2001, 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.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern.  As more fully discussed in Note 13
to the financial statements, the Company has not renewed its operating line of
credit with the bank, which expires June 1, 2002.  Management's plans with
respect to this matter are also described in Note 13.  This matter raises
substantial doubt about the Company's ability to continue as a going concern.
The financial statements do not include any adjustments that might result from
the outcome of this uncertainty.

PricewaterhouseCoopers LLP

Portland, Oregon
March 8, 2002 except for Notes 5, 6 and 13, as to
	Which the date is April 3, 2002






                                     F-1




Willamette Valley Vineyards, Inc.
Balance Sheets
December 31, 2001 and 2000


                                                  2001          2000

         ASSETS
Current assets:
  Cash and cash equivalents                  $    504,510  $    252,876
  Accounts receivable, net (Note 2)               746,678       564,020
  Inventories (Note 3)                          6,905,865     6,921,014
  Prepaid expenses and other current assets        87,512        45,954
  Deferred income taxes (Note 9)                  146,054       118,951
                                               -----------   -----------
    Total current assets                        8,390,619     7,902,815

Vineyard development costs, net (Note 1)        1,697,452     1,608,365
Inventory (Notes 3 and 12)                        584,925            -
Property and equipment, net (Notes 1 and 4)     5,652,067     5,989,169
Note receivable (Note 10)                          77,378        56,869
Debt issuance costs                                64,910        50,061
Other assets                                      205,884       190,593
                                               -----------   -----------
                                             $ 16,673,235  $ 15,797,872
                                               ___________   ___________

     LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
  Line of credit (Note 5)                    $  1,352,500  $  2,616,549
  Current portion of long-term debt and
    capital lease obligations (Note 6)            242,649       220,921
  Accounts payable                              1,002,501       847,883
  Accrued commissions and payroll costs           138,486       143,662
  Income taxes payable                             17,969            -
  Grape payables                                1,136,487       914,366
                                               -----------   -----------
    Total current liabilities                   3,890,592     4,743,381

Long-term debt and capital lease
  obligations (Note 6)                          3,184,031     3,406,681
Distributor obligation (Note 12)                1,500,000            -
Deferred rent liability                            60,392        31,634
Deferred gain (Note 11)                           449,711       474,695
Deferred income taxes (Note 9)                    209,968       146,819
                                               -----------   -----------
Total liabilities                               9,294,694     8,803,210
                                               -----------   -----------
Commitments and contingencies (Note 11)

Shareholders' equity (Notes 7 and 8):
  Common stock, no par value - 10,000,000
    shares authorized, 4,464,981 and
    4,254,481 shares issued and
    outstanding at December 31, 2001
    and 2000, respectively                      7,142,647     6,817,613
  Retained earnings                               235,894       177,049
                                               -----------   -----------
Total shareholders' equity                      7,378,541     6,994,662
                                               -----------   -----------
                                             $ 16,673,235  $ 15,797,872
                                               ___________   ___________


    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, 2001, 2000 and 1999


                                            2001         2000         1999

Net revenues                            $ 7,030,791  $ 6,716,857  $ 5,914,208
Cost of goods sold                        3,560,853    3,532,401    2,737,773
                                        ------------ ------------ ------------
    Gross margin                          3,469,938    3,184,456    3,176,435

Selling, general and
  administrative expenses                 2,978,799    2,775,782    2,901,594
                                        ------------ ------------ ------------
    Income from operations                  491,139      408,674      274,841
                                        ------------ ------------ ------------
Other income (expenses):
  Interest income                             4,811        3,894        7,807
  Interest expense                         (441,629)    (547,216)    (483,723)
  Other income                               58,539      169,305       85,963
                                        ------------ ------------ ------------
                                           (378,279)    (374,017)    (389,953)
                                        ------------ ------------ ------------

    Income (loss) before income taxes       112,860       34,657     (115,112)

Income tax (benefit) provision (Note 9)      54,015       19,595      (22,880)
                                        ------------ ------------ ------------

Net income (loss)                       $    58,845  $    15,062  $   (92,232)
                                        ____________ ____________ ____________

Basic net income (loss)
  per common share                      $       .01  $        -   $      (.02)
                                        ____________ ____________ ____________
Diluted net income (loss)
  per common share                      $       .01  $        -   $      (.02)
                                        ____________ ____________ ____________




    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, 2001, 2000 and 1999

                              Common stock               Retained
                                 Shares       Dollars    earnings     Total
                              ----------- ------------ ---------- -----------
Balances at December 31, 1998  4,232,681  $ 6,781,256  $ 254,219  $ 7,035,475

Stock issuance for compensation   20,750       34,716         -        34,716

Net loss                              -            -      (92,232)    (92,232)
                              ----------- ------------ ---------- -----------

Balances at December 31, 1999  4,253,431    6,815,972    161,987    6,977,959

Stock issuance for compensation    1,050        1,641         -         1,641

Net income                            -            -      15,062       15,062
                              ----------- ------------ ---------- -----------

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
                              ___________ ____________ __________ ___________



    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, 2001, 2000 and 1999


                                            2001         2000         1999

Cash flows from operating activities:
  Net income (loss)                      $ 58,845     $ 15,062    $ (92,232)
  Reconciliation of net income (loss)
    to net cash (used for) provided by
    operating activities:
      Depreciation and amortization       778,752      719,046      729,770
      Gain on disposal of fixed assets     (3,043)          -            -
      Deferred income taxes                36,046       27,868      (65,880)
      Bad debt expense                         -            -        27,730
      Stock issued for compensation            -            -        13,622
      Changes in assets and liabilities:
        Accounts receivable              (182,658)    (134,525)     (85,688)
        Inventories                      (565,791)    (776,676)  (1,519,795)
        Prepaid expenses and
          other current assets            (41,558)      33,148        7,884
        Note receivable                    (7,169)      (3,894)      (6,038)
        Other assets                      (15,291)     (43,964)          -
        Accounts payable                  154,618     (112,596)     645,294
        Accrued commissions and
          payroll costs                    (5,176)      17,287      (86,835)
        Income taxes receivable/payable    17,969      (42,429)      66,865
        Grape payables                    222,121       86,523      246,549
        Deferred rent liability            28,758       31,634           -
        Deferred gain                     (24,984)     (33,359)          -
                                        ------------ ------------ ------------
    Net cash provided by (used for)
      operating activities                451,439     (216,875)    (118,754)
                                        ------------ ------------ ------------

Cash flows from investing activities:
  Additions to property and equipment    (379,953)    (214,855)    (484,249)
  Vineyard development expenditures      (153,930)    (267,233)    (283,483)
  Proceeds from sale of property
    and equipment                              -            -     1,490,706
                                        ------------ ------------ ------------
    Net cash provided by (used for)
      investing activities               (533,883)    (482,088)     722,974
                                        ------------ ------------ ------------

Cash flows from financing activities:
  Debt issuance costs                     (22,000)          -       (71,058)
  Net increase in line of
    credit balance                     (1,264,049)     930,965       32,917
  Proceeds from distributor obligation  1,500,000           -            -
  Proceeds from common stock issued
    and stock options exercised           321,049           -            -
  Issuance of long-term debt               33,909        3,034      157,731
  Repayments of long-term debt           (234,831)    (201,201)    (654,170)
                                        ------------ ------------ ------------
    Net cash provided by (used for)
      financing activities                334,078      732,798     (534,580)
                                        ------------ ------------ ------------

Net increase in cash and cash equivalents 251,634       33,835       69,640


Cash and cash equivalents:
  Beginning of year                       252,876      219,041      149,401
                                        ------------ ------------ ------------

  End of year                             504,510    $ 252,876    $ 219,041
                                        ____________ ____________ ____________

    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, 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. During
fiscal years 2000 and 1999, revenues derived from one customer of $979,755 and
$639,466, respectively, represented 15% and 11% of the Company's revenues.
In 2001, no one customer represented more than 10% of revenues. Out-of-state
and foreign sales represented approximately 44%, 36%, and 37% of revenues for
2001, 2000 and 1999. 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.


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


Revenue recognition
The Company recognizes revenue when the product is shipped and title passes to
the customer. 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.


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(see Note 3).



                                     F-6.



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


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


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 $326,991 and $262,148 at December 31,
2001 and 2000, respectively.


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.


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.


Other income
Other income in the year ended December 31, 2000 includes approximately
$65,000 related to the settlement of legal proceedings in favor of the
Company.



                                     F-7




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


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


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 is computed
using the weighted average number of shares of common stock and dilutive
common equivalent shares outstanding during the year. Common equivalent shares
from stock options and other common stock equivalents are excluded from the
computation when their effect is antidilutive.


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. Options to purchase
510,670 shares of common stock were outstanding at December 31, 2000, but were
not included in the computation of diluted earnings per share because the
exercise prices were greater than the average market price of the common
shares at December 31, 2000. Options to purchase 474,000 shares of common
stock were outstanding at December 31, 1999, but were not included in the
computation of diluted earnings per share because the effect would have been
antidilutive due to the Company's loss in that year. In addition, the warrant
outstanding since 1992 (Note 8) was not included in the computation of diluted
earnings per share in 2001, 2000 or 1999 because the exercise price of $3.42
was greater than the average market price of the common shares during all
three years.


                      2001
                    Weighted
                     average    Earnings
                     shares       per
          Income   outstanding   share


Basic    $ 58,845    4,345,941     .01
Options        -        47,903      -
Warrants       -            -       -
         ---------   ---------   ------
Diluted  $ 58,845    4,393,844   $ .01
         =========   =========   ======

                      2000
                    Weighted
                     average    Earnings
                     shares       per
          Income   outstanding   share


Basic    $ 15,062    4,254,481      -
Options        -            -       -
Warrants       -            -       -
         --------    ---------   ------
Diluted  $ 15,062    4,254,481   $  -
         ========    =========   ======

                      1999
                    Weighted
                     average    Earnings
                     shares       per
          Income   outstanding   share


Basic    $(92,232)   4,253,431    (.02)
Options        -            -       -
Warrants       -            -       -
         ---------   ---------   ------
Diluted  $(92,232)   4,253,431   $(.02)
         =========   =========   ======




                                     F-8




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


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


Statement of cash flows
Supplemental disclosure of cash flow information:

                                            2001         2000         1999

Interest paid                           $ 442,000    $ 547,000    $ 492,000
Income tax refund received                     -         8,344           -
Supplemental schedule of noncash
  investing and financing activities:
    Capital leases                         16,740       29,260           -
    Issuance of common stock
      awards (Note 8)                       3,985        1,641       21,094
    Notes receivables issued in sale
      of fixed assets                      13,340           -            -


Fair market value of financial instruments
The fair market values of the Company's recorded financial instruments
approximate their respective recorded balances, as the recorded assets and
liabilities are stated at amounts expected to be realized or paid, or carry
interest rates commensurate with current rates for instruments with a similar
duration and degree of risk.


Deferred rent liability
The Company leases land under a sale-leaseback agreement (Note 12). 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,
2001 and 2000, rent cost recognized in excess of amounts paid totaled $28,758
and $31,634, respectively, which has been capitalized into vineyard
development costs and inventory.


Reclassifications
Certain reclassifications have been made to the prior year financial
statements to conform to the current year financial statement presentation.
These reclassifications have no effect on previously reported results of
operations or shareholders' equity.


                                    F-9




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


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, 2001 and 2000, the Company's
accounts receivable balance is net of an allowance for doubtful accounts of
$41,885 and $41,660, respectively.


3. Inventories

Inventories consist of:
                                                  2001          2000

Winemaking and packaging materials            $   252,828   $   273,189
Work-in-process (costs relating to unprocessed
  and/or unbottled wine products)               2,941,755     2,415,006
Finished goods (bottled wine
  and related products)                         4,296,207     4,232,819
                                               -----------   -----------
                                              $ 7,490,790   $ 6,921,014

Less: amounts designated for
distributor (Note 12)                            (584,925)           -
                                               -----------   -----------
Current inventories                           $ 6,905,865   $ 6,921,014
                                               ___________   ___________





4. Property and Equipment
                                                  2001          2000

Land and improvements                         $   984,954   $   965,309
Winery building and hospitality center          4,561,118     4,549,081
Equipment                                       4,599,377     4,285,585
                                               -----------   -----------
                                               10,145,449     9,799,975

Less accumulated depreciation                  (4,493,382)   (3,810,806)
                                               -----------   -----------
                                              $ 5,652,067   $ 5,989,169
                                               ___________   ___________


                                     F-10


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


4. Property and Equipment (Continued)
The Company has capital lease arrangements for certain winery equipment and
vehicles. Future minimum capital lease payments as of December 31, 2001 are:

  2002                                                $ 22,677
  2003                                                  16,557
  2004                                                  12,899
  2005                                                   5,499
                                                      ---------
      Total minimum lease payments                      57,632

  Less interest portion                                 (7,414)
                                                      ---------
      Capital lease obligation (Note 7)                 50,218

  Less portion due within one year (Note 7)            (18,319)
                                                      ---------
                                                      $ 31,899
                                                      _________

The cost of the Company's leased equipment and related accumulated
depreciation aggregated $88,933 and $31,899, respectively, at December 31,
2001 and $88,933 and $19,320, respectively, at December 31, 2000.


5. Line of Credit Facility
The Company has a $1,500,000 credit facility with Northwest Farm Credit
Services (Farm Credit). Borrowings under the facility bear interest at 6.5%
and are collateralized by inventories and accounts receivable. At December 31,
2001 and 2000, $1,352,500 and $2,616,549 were outstanding, respectively. This
line of credit facility expired on May 1, 2001 and has been renewed until June
2002, pending refinancing with another financial institution (see Note 13).
The Company is currently negotiating an agreement with another financial
institution and management expects a final agreement to be in place in the
near future.  Management expects the financing agreement to provide for
maximum borrowings of $2,700,000 with an interest rate of the bank's prime
plus .8 percent.  Management also expects the agreement to include, among
other things, certain restrictive financial covenants with respect to total
equity, debt-to-equity and debt coverage.



                                     F-11




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


6. Long-Term Debt
Long-term debt consists of:
                                                  2001          2000

Northwest Farm Credit Services Loan           $ 3,212,489   $ 3,422,675
Real property loan, 8.5% interest,
  monthly payments of $1,055 through 2019         115,198       117,938
Capital lease obligations                          50,218        67,709
Vehicle financing                                  48,775        19,280
                                               -----------   -----------
                                                3,426,680     3,627,602

Less current portion                             (242,649)     (220,921)
                                               -----------   -----------
                                              $ 3,184,031   $ 3,406,681
                                               ___________   ___________

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, 2001, the
Company was not in compliance with one of these covenants but has obtained a
waiver letter thereon (Note 13).


Future minimum principal payments of long-term debt mature as follows:

Year ending
December 31,
   2002                                             $   242,649
   2003                                                 244,662
   2004                                                 264,780
   2005                                                 273,979
   2006                                                 266,285
Thereafter                                            2,124,325
                                                     -----------
                                                    $ 3,426,680
                                                     ___________


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.




                                     F-12



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


7. Shareholders' Equity(Continued)

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 Northwest Farm Credit
services (Notes 6 and 7). The warrant is exercisable through June 1, 2012 at
an exercise price of $3.42 per share. As of December 31, 2001 and 2000, no
warrants had been exercised.

In each of the years ended December 31, 2001, 2000 and 1999, the Company
granted 2,500, 1,050 and 12,500 shares of stock valued at $3,985, $1,641, and
$21,094, respectively, as compensation to employees. The cost of these grants
were capitalized as inventory. The effects of these non-cash 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.

At December 31, 2001, 2000 and 1999, the following transactions related to
stock options occurred:

                                2001              2000            1999
                           _______________ _________________  ________________
                                  Weighted          Weighted          Weighted
                                   average           average           average
                                  exercise          exercise          exercise
                           Shares   price    Shares   price    Shares   price

Outstanding at
    beginning of year     510,670  $ 1.72   474,000  $ 1.75   402,000  $ 1.73
  Granted                   5,500    1.65   135,900    1.62   120,500    1.83
  Exercised                (8,000)   1.56        -       -         -       -
  Forfeited               (33,000)   1.62   (99,230)   1.75   (48,500)   1.75
                          --------          --------          --------
Outstanding at
    end of year           475,170  $ 1.73   510,670  $ 1.72   474,000  $ 1.75
                          ________          ________          ________



                                     F-13


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


8. Stock Incentive Plan (Continued)
Weighted-average options outstanding and exercisable at December 31, 2001 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       2001           life           price       2001          price

  $ 1.50      115,710          6.04         $ 1.50      115,710       $ 1.50
    1.56       49,500          9.41           1.56       29,500         1.56
    1.60        3,000          9.29           1.60        1,000         1.60
    1.65       75,000          7.00           1.65       75,000         1.65
    1.69       41,000          9.50           1.69       11,000         1.69
    1.70        2,500          9.96           1.70          500         1.70
    1.75      105,500          8.25           1.75       84,400         1.75
    1.81       35,500          8.71           1.81       25,500         1.81
    1.88       25,000          8.71           1.88        5,000         1.88
    2.75        7,200          6.50           2.75        5,100         2.75
    3.00        9,260          6.08           3.00        7,868         3.00
    3.62        4,000          5.56           3.62        4,000         3.62
    4.50        2,000          4.08           4.50        2,000         4.50
   ------    ---------        ------         ------     --------       ------
$ 1.50-4.50   475,170          7.56         $ 1.73      366,578       $ 1.72

The Company adopted Statement of Financial Accounting Standards No. 123 (SFAS
123) in 1996 and has elected to account for its stock-based compensation under
Accounting Principles Board Opinion 25. As required by SFAS 123, the Company
has computed for pro forma disclosure purposes the value of options granted
during each of the three years ended December 31, 2001 using the Black-Scholes
option-pricing model with the following weighted-average assumptions used for
the grants in 2001, 2000 and 1999:

                                            2001         2000         1999
Risk-free interest rate                     5.38 %       6.12 %       5.56 %
Expected dividend yield                       -            -            -
Expected lives                             10 years      8 years      8 years
Expected volatility                           55 %         70 %         70 %

Adjustments are made for options forfeited prior to vesting. For the years
ended December 31, 2001, 2000 and 1999, the total value of the options granted
was computed to be $6,445, $173,689 and $173,815, respectively, which would be
amortized on the straight-line basis over the vesting period of the options.



                                     F-14





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


8. Stock Incentive Plan (Continued)
For the years ended December 31, 2001, 2000 and 1999, the weighted average
fair value of options granted was computed to be $1.17, $1.30 and $1.44,
respectively.

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 123, the Company's net earnings would have been reduced to
the pro forma amounts indicated as follows:
                                            2001         2000         1999

Net income (loss) - as reported            $ 58,845     $ 15,062    $ (92,232)
Per share:
  Basic                                         .01           -          (.02)
  Diluted                                       .01           -          (.02)

Net income (loss) - pro forma                (8,824)    (112,570)    (181,201)
Per share:
  Basic                                          -          (.03)        (.04)
  Diluted                                        -          (.03)        (.04)


9. Income Taxes
The provision (benefit) for income taxes consists of:
                                            2001         2000         1999

Current tax expense (benefit):
  Federal                                  $ 17,969     $ (8,273)    $ 43,000
                                        ------------ ------------ ------------
                                             17,969       (8,273)      43,000
                                        ------------ ------------ ------------
Deferred tax expense (benefit):
  Federal                                    31,949       34,628      (68,319)
  State                                       4,097        4,440       (8,761)
                                        ------------ ------------ ------------
                                             36,046       39,068      (77,080)
                                        ------------ ------------ ------------
(Decrease) increase in valuation allowance       -       (11,200)      11,200
                                        ------------ ------------ ------------
    Total                                  $ 54,015     $ 19,595    $ (22,880)
                                        ____________ ____________ ____________


                                      F-15




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


9. Income Taxes (Continued)
The effective income tax rate differs from the federal statutory rate as
follows:
                                                Year ended December 31,
                                            2001         2000         1999

Federal statutory rate                      34.0 %       34.0 %      (34.0) %
State taxes, net of federal benefit          4.4          4.4         (4.4)
Permanent differences                        8.0         29.0         13.2
(Decrease) increase in valuation allowance     -        (32.3)         9.7
Other, primarily prior year taxes            1.5         21.3         (4.4)
                                        ------------ ------------ ------------
                                            47.9 %       56.4 %      (19.9) %
                                        ____________ ____________ ____________


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

Deferred tax assets and (liabilities) consist of:
                                                     December 31,
                                                  2001          2000

Accounts receivable                           $    16,067   $    15,981
Inventories                                        96,852        76,717
Other                                              33,135        26,253
                                               -----------   -----------
Net current deferred tax asset                    146,054       118,951
                                               -----------   -----------

Depreciation                                     (442,663)     (430,786)
Net operating loss carryforwards                    3,690        63,347
Deferred gain on sale-leaseback                   172,509       182,093
Alternative minimum tax credit carryforward        56,496        38,527
                                               -----------   -----------
Net noncurrent deferred tax liability            (209,968)     (146,819)
                                               -----------   -----------
Net deferred tax liability                    $   (63,914)  $   (27,868)
                                               ___________   ___________

The Company's net operating loss carryforwards, which are approximately
$10,000, expire between 2015 and 2020.


                                     F-16




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


10. Related Parties

During 2001, 2000 and 1999, the Company purchased grapes from certain
shareholders for an aggregate price of $108,672, $74,585 and $62,068,
respectively. At December 31, 2001 and 2000, grape payables included $54,336
and $37,293, respectively, owed to these shareholders.

The Company has a loan to its president with a balance of $61,048 at December
31, 2001. 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.


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 of the Company's financial position or results of
operations, 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.

As of December 31, 2001, future minimum lease payments are as follows:

    Year ending
    December 31,
       2002                                          $   201,625
       2003                                              204,199
       2004                                              210,089
       2005                                              213,257
       2006                                              216,503
    Thereafter                                         2,074,932
                                                      ===========
         Total                                       $ 3,120,605


                                     F-17



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


11. Commitments and Contingencies (Continued)

Operating leases (continued)
The Company is also committed to lease payments for various office equipment.
Total rental expense for all operating leases excluding the vineyards,
amounted to $9,891, $14,364 and $27,372 in 2001, 2000, and 1999, respectively.
In addition, payments for the leased vineyards have been included in inventory
and vineyard developments costs and aggregate approximately $187,769 and
$196,308, respectively, for each of the years ended December 31, 2001 and
2000.

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 are susceptible to phylloxera.
The Company has not detected any phylloxera at its Turner Vineyard.


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 585,000. The agreement calls for the Company to retain possession of this
base amount of wine, with any draw-downs by the distributor to be
simultaneously replenished by another purchase. The Company has recorded a
Distributor Obligation liability to recognize the future obligation to deliver
this amount of wine to the distributor. 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                                                -

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 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 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-18




13. Going Concern

The accompanying financial statements have been prepared assuming the Company
will continue as a going concern.  The Company's $1.5 million credit facility
with Farm Credit expired May 1, 2001 and has been renewed until June 1, 2002,
pending refinancing with another financial institution.  In addition, the
Company was not in compliance with one of the Farm Credit financial covenants,
but has received a waiver thereon.  In light of the Company's current
projected earnings and cash flow, cash generated from operations will not be
sufficient to pay back the bank debt on a current basis.  The Company is
currently negotiating an agreement with another financial institution and
management expects a final agreement to be in place in the near future.
Management expects the financing agreement to provide for maximum borrowings
of $2,700,000 with an interest rate of the bank's prime plus .8 percent.
Management also expects the agreement to include, among other things, certain
restrictive financial covenants with respect to total equity, debt-to-equity
and debt coverage.  If the Company is unable to refinance the debt with
another institution, the Company may be unable to continue its normal
operations, except to the extent permitted by Northwest Farm Credit Services.




                                     F-19