________________________________________________________________________________


                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                    FORM 10-Q

    (MARK ONE)

    [X]    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
           SECURITIES EXCHANGE ACT OF 1934

                  For the quarterly period ended March 31, 2002

                                       OR

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

       For the transition period from                to

                         Commission file number: 0-13406


                          THE CHALONE WINE GROUP, LTD.

             (Exact Name of Registrant as Specified in Its Charter)




            California                                  94-1696731
  (State or Other Jurisdiction of
  Incorporation or Organization)           (I.R.S. Employer Identification No.)

          621 Airpark Road
          Napa, California                                 94558
(Address of Principal Executive Offices)                (Zip Code)

Registrant's Telephone Number, Including Area Code: 707-254-4200


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days.
                                          Yes  X     No
                                             _____     _____

The number of shares outstanding of Registrant's Common Stock on May 2, 2002 was
12,070,476.

________________________________________________________________________________


<PAGE>



                          The Chalone Wine Group, Ltd.


                         PART I. - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS                                                PAGE

         Consolidated Balance Sheets as of March 31, 2002, and
         December 31, 2001.                                                    3

         Consolidated Statements of Income for the three-month
         periods ended March 31, 2002 and 2001.                                4

         Consolidated Statements of Cash Flows for the three-month
         periods ended March 31, 2002 and 2001.                                5

         Notes to Consolidated Financial Statements.                           6

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
        AND RESULTS OF OPERATIONS                                              8

ITEM 3. DISCLOSURES ABOUT MARKET RISK                                         11



                          PART II. - OTHER INFORMATION

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K                                      15



<PAGE>

<TABLE>
<CAPTION>


                          THE CHALONE WINE GROUP, LTD.

                           CONSOLIDATED BALANCE SHEETS
                        (IN THOUSANDS, EXCEPT SHARE DATA)
                                     ASSETS
                                                                                  March 31,                 December 31,
                                                                                    2002                        2001
                                                                                  _________                 ____________
                                                                                 (unaudited)
<S>                                                                                <C>                         <C>

Current assets:
     Accounts receivable, net                                                     $  11,985                   $  11,475
     Notes receivable                                                                   181                         181
     Inventory                                                                       71,100                      76,658
     Prepaid expenses and other                                                         902                         700
     Deferred income taxes                                                            1,349                       1,442
                                                                                  _________                   _________
          Total current assets                                                       85,517                      90,456
Investment in Chateau Duhart-Milon                                                    7,903                       7,897
Property, plant and equipment - net                                                  73,054                      73,232
Goodwill and trademarks - net of accumulated
     amortization of $2,583 and $2,550, respectively                                 11,436                      11,379
Notes receivable, net of current portion                                                604                         653
Other assets                                                                          1,014                         852
                                                                                  _________                   _________
          Total assets                                                            $ 179,528                   $ 184,469
                                                                                  =========                   =========

                      LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
     Accounts payable and accrued liabilities                                     $   8,329                   $  23,882
     Revolving bank loan                                                             22,442                      12,086
     Current portion of related party note payable                                       18                          18
     Current portion of obligations under capital lease                                 716                         716
     Current maturities of long-term borrowings                                       2,034                       2,034
                                                                                  _________                   _________
          Total current liabilities                                                  33,539                      38,736
Long-term borrowings, less current maturities                                        47,066                      47,082
Obligations under capital lease, less current portion                                 1,926                       2,110
Related party note payable, less current portion                                        866                         869
Liability on interest rate swap contract                                                472                         664
Deferred income taxes                                                                   492                         492
                                                                                  _________                   _________
          Total liabilites                                                           84,361                      89,953
                                                                                  _________                   _________

Minority interest                                                                     3,406                       3,201

Shareholders' equity:
     Common stock - authorized 15,000,000 shares no par value;
          issued and outstanding: 12,069,608 and 12,067,504 shares,
          respectively                                                               76,410                      76,433
     Retained earnings                                                               19,972                      19,494
     Accumulated other comprehensive loss                                            (4,621)                     (4,612)
                                                                                  _________                   _________
          Total shareholders' equity                                                 91,761                      91,315
                                                                                  _________                   _________
          Total liabilities and shareholders' equity                              $ 179,528                   $ 184,469
                                                                                  =========                   =========
</TABLE>
                             See accompanying notes


                                       3

<PAGE>
<TABLE>
<CAPTION>


                          THE CHALONE WINE GROUP, LTD.


                        CONSOLIDATED STATEMENTS OF INCOME
                (UNAUDITED, IN THOUSANDS, EXCEPT PER SHARE DATA)



                                                           Three months ended
                                                                 March 31,
                                                        _________________________
                                                           2002            2001
                                                        _________        ________
<S>                                                     <C>              <C>

Gross revenues                                          $  16,658        $ 14,656
     Excise taxes                                            (460)           (400)
                                                        _________        ________
Net revenues                                               16,198          14,256
Cost of wines sold                                        (10,150)         (9,318)
                                                        _________        ________
     Gross profit                                           6,048           4,938
Other operating (expenses) revenues, net                     (407)             53
Selling, general and administrative expenses               (3,876)         (3,161)
                                                        _________        ________
     Operating income                                       1,765           1,830
Interest expense, net                                        (908)           (937)
Equity in net income of Chateau Duhart-Milon                  148              47
Other income                                                   20              23
Minority interests                                           (206)            (62)
                                                        _________        ________
     Income before income taxes                               819             901
Income taxes                                                 (341)           (428)
                                                        _________        ________
     Net income                                         $     478        $    473
                                                        =========        ========


     Earnings per share-basic & diluted                 $    0.04        $   0.05


Weighted average number of shares outstanding:
     Basic                                                 12,068          10,238
     Diluted                                               12,111          10,252

</TABLE>



                             See accompanying notes


                                       4
<PAGE>
<TABLE>
<CAPTION>

                          THE CHALONE WINE GROUP, LTD.


                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                            (UNAUDITED, IN THOUSANDS)

                                                                Three months ended
                                                                     March 31,
                                                               ___________________
                                                                  2002       2001
                                                               ________   ________
<S>                                                            <C>        <C>

Cash flows from operating activities:
    Net income                                                 $    478   $    473
    Adjustments to reconcile net income to net cash provided
      by operating activities:
    Depreciation and amortization                                 1,507        559
    Equity in net income of  Chateau Duhart-Milon                  (148)       (47)
    Increase in minority interests                                  205         62
    Other                                                             1          4
    Changes in:
      Accounts and other receivable                                (510)     3,000
      Inventory                                                   5,558      6,411
      Prepaid expenses and other assets                            (427)      (315)
      Deferred income taxes                                          15       (734)
      Accounts payable and accrued liabilities                  (15,569)    (7,502)
                                                               ________   ________
    Net cash provided by operating activities                    (8,890)     1,911
                                                               ________   ________
    Cash flows from investing activities:
      Capital expenditures                                       (1,296)    (4,379)
      Property and business acquisitions                              -         18
      Proceeds from disposal of property and equipment                7         18
      Net changes of notes receivable                                49       (470)
      Acquisition of minority interest in Canoe Ridge Vineyard        -     (3,960)
      Distributions from Chateau Duhart-Milon                         -        737
                                                               ________   ________
        Net cash used in investing activities                    (1,240)    (8,036)
                                                               ________   ________
    Cash flows from financing activities:
      Borrowings on revolving bank loan - net                    10,356      7,039
      Net change in capital lease obligation                       (184)         -
      Repayment of long-term and other debt                         (19)    (1,013)
      (Re-purchase of) proceeds from issuance of common stock       (23)       155
                                                               ________   ________
        Net cash provided by (used in) financing activities      10,130      6,181
                                                               ________   ________

    Net increase in cash and equivalents                              -         56
    Cash and equivalents at beginning of period                       -          -
                                                               ________   ________
    Cash and equivalents at end of period                      $      -   $     56
                                                               ========   ========

    Other cash flow information:
      Interest paid                                            $  1,177   $  1,206
      Income taxes paid                                             832        148
    Non-cash investing & financing activities:
      Interest swap flucuation, net                                 113          -

</TABLE>
                                See accompanying notes

                                       5
<PAGE>

                          THE CHALONE WINE GROUP, LTD.


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - CONSOLIDATED FINANCIAL STATEMENTS

     The unaudited  consolidated financial statements of the Chalone Wine Group,
Ltd.  ("the  Company") are prepared in  conformity  with  accounting  principles
generally  accepted  in the  United  States of  America  for  reporting  interim
financial  information,  and the rules and  regulations  of the  Securities  and
Exchange Commission. In the opinion of management, all adjustments necessary for
a fair presentation of the financial  position and results of operations for the
periods  presented  have been  included.  All such  adjustments  are of a normal
recurring nature.  These unaudited  consolidated  financial statements should be
read in conjunction with the audited consolidated  financial statements included
in the Company's Form 10-K for the nine-month  transition  period ended December
31, 2001.

     The consolidated  balance sheet at December 31, 2001, presented herein, has
been derived from the audited  consolidated  financial statements of the Company
for the fiscal year then ended,  included in the Company's annual report on Form
10-K.



NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES

USE OF ESTIMATES IN PREPARATION OF FINANCIAL STATEMENTS

     The  preparation of the financial  statements in conformity with accounting
principles   generally  accepted  in  the  United  States  of  America  requires
management to make estimates and assumptions that affect the reported  financial
statement  amounts  and  related  disclosures  at  the  date  of  the  financial
statements.  Actual results could differ from these  estimates.  See Item 2. for
the Company's critical accounting policies.



NOTE 3 - COMPREHENSIVE INCOME

     Comprehensive  income includes unrealized foreign currency gains and losses
related to the Company's  investment in Chateau Duhart-Milon and gains or losses
relating to derivative  instruments.  The following is a  reconciliation  of net
income and comprehensive income (UNAUDITED, IN THOUSANDS):

                                                            Three months ended
                                                                  March 31,
                                                            ____________________
                                                             2002          2001
                                                            ______       _______
 Net income                                                 $  478       $   473
 Changes in fair value of derivatives; net of tax effect       113             -
 Transition adjustment reclassified in earnings; net of
   tax effect                                                   20             -
 Foreign currency translation (loss) gain                     (142)          613
                                                            ______       _______
 Comprehensive income                                       $  469       $ 1,086
                                                            ======       =======



NOTE 4 - EARNINGS PER SHARE ("EPS")

     Basic EPS represents  net income divided by the weighted  average number of
common shares  outstanding  for the period.  Diluted EPS  represents  net income
divided by the weighted average number of common shares  outstanding  while also
giving effect to the potential  dilution that could occur if securities or other
contracts  to issue  common  stock  (e.g.  stock  options)  were  exercised  and
converted into stock. This effect is calculated using the treasury stock method.


                                       6

<PAGE>


                          THE CHALONE WINE GROUP, LTD.

NOTE 5 - INVENTORIES

Inventories  are  stated at lower of cost  (first-in,  first-out)  or market and
consist of the following (in thousands):

                                                     March 31,
                                              _____________________
                                                 2002        2001
                                              __________   ________
 Bulk wine                                    $ 43,346     $ 44,616
 Bottled wine                                   27,094       31,303
 Wine packaging supplies                           341          313
 Other                                             319          426
                                              __________   ________
 Total                                        $ 71,100     $ 76,658
                                              ==========   ========



NOTE 6 - DERIVATIVE FINANCIAL INSTRUMENTS

     The Company uses  derivative  instruments  to manage  exposures to interest
rate  risks in  accordance  with  its  risk  management  policy.  The  Company's
objectives  for holding  derivatives  are to  minimize  the risks using the most
effective  methods  to  eliminate  or  reduce  the  exposure  to  interest  rate
fluctuations.  The Company formally  documents the relationship  between hedging
instruments  and  hedged  items as well as its  risk  management  objective  and
strategy for undertaking its hedging activities. The Company formally designates
derivatives  as  hedging  instruments  on the date the  derivative  contract  is
entered  into.  The Company  assesses,  both at inception of the hedge and on an
ongoing  basis,  whether  derivatives  used as  hedging  instruments  are highly
effective  in  offsetting  the changes in the fair value or cash flows of hedged
items. If it is determined that a derivative is not highly  effective as a hedge
or ceases to be highly  effective,  the Company  discontinues  hedge  accounting
prospectively.

     Changes in the fair value of derivative instruments designated as cash flow
hedges,  to the extent the hedges are highly  effective,  are  recorded in other
comprehensive income, net of related tax effects. The ineffective portion of the
cash flow  hedge,  if any,  is  recognized  in  current-period  earnings.  Other
comprehensive  income is relieved  when  current  earnings  are  affected by the
variability of cash flows relating to the derivative  hedged.  During the period
ended March 31, 2002, the Company's  derivative  contracts  consisted only of an
interest rate swap used by the Company to convert a portion of its variable rate
long-term debt to fixed rate.

       The  Company  does not enter into  financial  instruments  for trading or
speculative purposes.  Payments or receipts on interest rate swap agreements are
recorded in interest  expense.  Forward  exchange  contracts  are used to manage
exchange  rate  risks on  certain  purchase  commitments,  generally  French oak
barrels,  denominated in foreign  currencies.  Gains and losses relating to firm
purchase  commitments are deferred and are recognized as adjustments of carrying
amounts of assets acquired or in income when the hedged transaction  occurs. The
nominal amounts and related foreign currency  transaction gains and losses,  net
of the impact of hedging,  were not  significant in the three months ended March
31, 2002 and the fiscal years 2001 and 2000.



NOTE 7-SUBSEQUENT EVENTS

           In April 2002, the Company successfully  completed the renewal of its
revolving bank loan with Rabobank. The bank facility negotiation involved (1) a
$55 million  revolving  credit facility  secured first by inventory and accounts
receivable and second by substantially  all of the Company's fixed assets (other
than certain specified assets),  and (2) a $17.5 million term loan secured first
by certain of the Company's fixed assets (other than certain  specified  assets)
and second by the Company's  inventory and accounts  receivable,  each on a pari
passu basis with the holders of the Company's $30 million  previously  unsecured
senior notes issued in September  2000 (the  "Notes").  In  connection  with the
finalization, the Company amended certain provisions applicable to the Notes.


                                       7

<PAGE>


                          THE CHALONE WINE GROUP, LTD.



ITEM 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS
           OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

FORWARD LOOKING STATEMENTS

     From time to time, information provided by the Company,  statements made by
its employees,  or  information  included in its filings with the Securities and
Exchange Commission  (including this Form 10-Q) may contain statements which are
not historical facts, so called "forward looking  statements" that involve risks
and  uncertainties.  Forward  looking  statements  are made pursuant to the safe
harbor provisions of the Private Securities  Litigation Reform Act of 1995. When
used in  this  Form  10-Q,  the  terms  "anticipates,"  "expects,"  "estimates,"
"intends,"  "believes," and other similar terms as they relate to the Company or
its  management  are intended to identify such forward  looking  statements.  In
particular,  statements  made  in  this  Item  2,  relating  to  projections  or
predictions  about the  Company's  future  investments  in  vineyards  and other
capital  projects are forward looking  statements.  The Company's  actual future
results  may differ  significantly  from  those  stated in any  forward  looking
statements. Factors that may cause such differences include, but are not limited
to (i) reduced  consumer  spending or a change in  consumer  preferences,  which
could reduce  demand for the Company's  wines;  (ii)  competition  from numerous
domestic and foreign wine producers which could affect the Company's  ability to
sustain volume and revenue  growth;  (iii) interest rates and other business and
economic  conditions  which could increase  significantly  the cost and risks of
borrowings  associated  with present and projected  capital  projects;  (iv) the
price and  availability  in the  marketplace  of grapes  meeting  the  Company's
quality   standards  and  other   requirements;   (v)  the  effect  of  weather,
agricultural  pests and disease and other natural  forces on growing  conditions
and, in turn, the quality and quantity of grapes  produced by the Company;  (vi)
regulatory  changes which might restrict or hinder the sale and/or  distribution
of alcoholic  beverages and (vii) the risks  associated with the assimilation of
acquisitions.  Each of these factors, and other risks pertaining to the Company,
the premium wine industry and general business and economic conditions, are more
fully  discussed  herein  and  from  time to  time in  other  filings  with  the
Securities  and Exchange  Commission,  including the Company's  annual report on
Form 10-K for the year ended December 31, 2001.


INTRODUCTION

      In the  ordinary  course of  business,  the  Company  has made a number of
estimates and assumptions relating to the reporting of results of operations and
financial condition in the preparation of its financial statements in conformity
with accounting  principles  generally accepted in the United States of America.
Actual results could differ  significantly  from those estimates under different
assumptions and conditions.  The Company believes that the following  discussion
addresses the Company's most critical accounting policies,  which are those that
are most  important to the  portrayal of the Company's  financial  condition and
results. The Company constantly re-evaluates these significant factors and makes
adjustments where facts and circumstances dictate. Historically,  actual results
have not  significantly  deviated  from  those  determined  using the  necessary
estimates  inherent in the  preparation of financial  statements.  Estimates and
assumptions include, but are not limited to, customer receivables,  inventories,
assets held for sale,  fixed asset  lives,  contingencies  and  litigation.  The
Company has also chosen certain accounting policies when options were available,
including:

     o   The  first-in,  first-out  (FIFO)  method  to value a  majority  of our
         inventories; and
     o   The intrinsic  value method,  or APB Opinion No. 25, to account for our
         common stock incentive awards; and
     o   We  record  an  allowance  for  credit  losses  based on  estimates  of
         customers' ability to pay. If the financial  condition of our customers
         were to deteriorate, additional allowances may be required.

      These  accounting   policies  are  applied   consistently  for  all  years
presented.  Our operating  results would be affected if other  alternatives were
used.  Information  about the impact on our operating results is included in the
footnotes to our consolidated financial statements.



                                       8


<PAGE>


                          THE CHALONE WINE GROUP, LTD.


DESCRIPTION OF THE BUSINESS


     The Company produces,  markets and sells super premium,  ultra premium, and
luxury-priced white and red varietal table wines, primarily Pinot Noir, Cabernet
Sauvignon,  Merlot, Syrah,  Chardonnay and Sauvignon Blanc. The Company owns and
operates  wineries in various  counties of California and Washington  State. The
Company's wines are made primarily from grapes grown at Moon Mountain  Vineyard,
Carmenet  Vineyards,  Edna  Valley  Vineyard,  Chalone  Vineyard,  Company-owned
vineyards  adjacent to the Acacia(TM)  Winery,  Hewitt Vineyard and Suscol Creek
Vineyard in California and the Canoe Ridge Vineyard in Washington State, as well
as from purchased grapes.

      The wines are primarily sold under the labels "Provenance  Vineyards(TM),"
"Chalone Vineyards(R)," "Edna Valley Vineyard(R),"  "Carmenet(R)," "Acacia(TM),"
"Canoe Ridge(R)  Vineyard," "Jade  Mountain(R),"  "Sagelands  Vineyard(R),"  and
"Echelon(TM)."
     In France,  the Company owns a minority interest in fourth-growth  Bordeaux
estate Chateau  Duhart-Milon  ("Duhart-Milon")  in partnership with Les Domaines
Barons de Rothschild (Lafite) ("DBR"). The vineyards of Duhart-Milon are located
adjacent  to  the  world-renowned  Chateau  Lafite-Rothschild  in  the  town  of
Pauillac.
     The Chalone Wine Group,  Ltd. was incorporated  under the laws of the State
of California  on June 27, 1969.  The Company  became a publicly held  reporting
company as the result of an initial public offering of common stock in 1984.



RESULTS OF OPERATIONS -FIRST QUARTER 2002 COMPARED TO FIRST QUARTER 2001

<TABLE>
<CAPTION>

                                                           Three months ended          Percent
                                                                March 31,               Change
                                                         ______________________       ____________
                                                           2002          2001         2002 vs 2001
                                                         ________      ________       ____________
<S>                                                       <C>           <C>                <C>

 Net revenues                                             100.0 %       100.0 %            0.0 %
 Cost of sales                                            (62.6)%       (65.3)%           (4.1)%
                                                         ________      ________
    Gross profit                                           37.4 %        34.7 %            7.8 %
 Other operating revenues (expenses), net                  (2.5)%         0.4 %         (725.0)%
 Selling, general and admin. expenses                     (23.9)%       (22.3)%            7.2 %
                                                         ________      ________
    Operating income                                       11.0 %        12.8 %          (14.1)%
 Interest expense                                          (5.6)%        (6.6)%          (15.2)%
 Equity in net income of Chateau Duhart-Milon               0.9 %         0.3 %          200.0 %
 Other income                                               0.1 %         0.2 %          (50.0)%
 Minority interests                                        (1.3)%        (0.4)%          225.0 %
                                                         ________      ________
    Income before income taxes                              5.1 %         6.3 %          (19.0)%
 Income taxes                                              (2.1)%        (3.0)%          (30.0)%
                                                         ________      ________
    Net income                                              3.0 %         3.3 %           (9.1)%
                                                         ========      ========
</TABLE>


NET REVENUES

     Net  revenues  for  the  three  months  ended  March  31,  2002   increased
approximately  13.6% over the comparable period in the prior year. This increase
was caused by changes in product mix and increased sales volume.

GROSS PROFIT

     Gross profit margin for the three months ended March 31, 2002, increased by
approximately  22%  over the  comparable  period  in the  preceding  year.  This
percentage  increase  primarily  resulted from lower costs  attributable  to the
release and sale of 2000 vintage wines.


                                       9

<PAGE>


                          THE CHALONE WINE GROUP, LTD.


SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

     Selling,  general and  administrative  expenses  for the three months ended
March 31, 2002,  increased  approximately  $714,000 or 22.6% over the comparable
period in the prior year.  This change was  primarily a result of  increases  in
sales and marketing infrastructure costs.

OPERATING INCOME

     Operating  income for the three  months  ended  March 31,  2002,  decreased
$65,000 or 4%  primarily  due to a  $458,000  loss on sale of bulk wine which is
recorded  in other  operating  expenses,  net and higher  selling,  general  and
administrative  expenses.  The bulk wine sales were part of management's plan to
manage inventory, both in quantity and quality.

INTEREST EXPENSE

     Interest  expense  decreased  $30,000 for the three  months ended March 31,
2002, primarily due to lower interest rates.

EQUITY IN NET INCOME OF DUHART-MILON

     The Company's 23.5% equity  interest in the net income of Duhart-Milon  for
the three months ended March 31, 2002 was $148,000, an increase of $101,000 over
the comparable  period in the preceding year. This change was primarily a result
of timing of product releases as compared to the prior year.

     The Company monitors its investment in Duhart-Milon  primarily  through its
on-going  communication  with DBR.  Such  communication  is  facilitated  by the
presence  of the  Company's  chairman  on DBR's  Board of  Directors,  and DBR's
representation  on the Company's Board of Directors.  Additionally,  various key
employees  of the Company make  periodic  visits to  Duhart-Milon's  offices and
production facilities.

     Since the investment in Duhart-Milon is a long-term investment  denominated
in a  foreign  currency,  the  Company  records  the gain or loss  for  currency
translation  in  other   comprehensive   income  or  loss,   which  is  part  of
shareholders' equity.

MINORITY INTEREST

     The financial  statements of Edna Valley Vineyard  ("EVV") are consolidated
with the Company's  financial  statements.  The interest in EVV  attributable to
parties  other than the Company is accounted for as a "minority  interest".  The
minority  interest in the net income of EVV for the three months ended March 31,
2002 was $206,000,  a $146,000  increase over the comparable period in the prior
year.  This increase was due to the higher net income of Edna Valley Vineyard as
compared to the prior year as a result of higher  sales volume and lower cost of
sales due to the release of 2000 vintage wines.

NET INCOME

     Net  income  for the  three  months  ended  March 31,  2002 and 2001,  were
$478,000  and  $473,000  respectively,  reflecting  an  increase  of 1% over the
comparable  period in the prior year.  This  increase was  primarily  due to the
lower cost of sales  attributable to the release of 2000 vintage wines offset by
higher  selling,  general and  administrative  expenses  and an other  operating
revenue (expense), net.

LIQUIDITY AND CAPITAL RESOURCES

     Working capital decreased approximately $.3 million during the three months
ended  March 31,  2002  primarily  as a result of a decrease  in  inventory  and
payables  offset by an increase  in the  revolving  bank debt to fund  property,
plant and equipment expenditures and other cash requirements.

     The Company's revolving bank loan expired March 31, 2002 and two extensions
were provided  extending the maturity date to April 30, 2002. On April 22, 2002,
the Company  finalized the borrowing  arrangement  with its bank.  The borrowing
arrangement  with its bank involves (1) a $55 million  revolving credit facility
secured first by inventory and accounts  receivable and second by  substantially
all of the Company's fixed assets (other than certain specified assets), and (2)
a $17.5 million term loan secured first by certain of the Company's fixed assets
(other than certain specified assets) and second by the Company's  inventory and
accounts  receivable,  each  on a pari  passu  basis  with  the  holders  of the
Company's $30 million previously unsecured senior notes issued in September 2000


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                          THE CHALONE WINE GROUP, LTD.


(the "Notes"). In connection with the finalization,  the Company amended certain
of the provisions applicable to the Notes.

     The Company has  historically  financed  its growth  through  increases  in
borrowings and cash flow from operations.  Management expects that the Company's
working capital needs will grow  significantly to support expected future growth
in sales volume.  Due to the lengthy  aging and  processing  cycles  involved in
premium wine production,  expenditures for inventory and fixed assets need to be
made one to three years or more in advance of anticipated sales.

     The  Company   expects  to  finance  these  future  capital  needs  through
operations,  securities  offerings and  additional  borrowings.  There can be no
assurance  that the  Company  will be able to  obtain  this  financing  on terms
acceptable to the Company.



ITEM 3.    DISCLOSURES ABOUT RISK


     You should read the following  disclosures in conjunction with Management's
Discussion and Analysis of Financial Condition and Results of Operations.  These
disclosures  are intended to discuss  certain  material  risks of the  Company's
business as they appear to  management at this time.  However,  this list is not
exhaustive. Other risks may, and likely will, arise from time to time.

     OUR REVENUES AND OPERATING RESULTS FLUCTUATE SIGNIFICANTLY FROM QUARTER TO
QUARTER

     We believe  period-to-period  comparisons of our operating  results are not
necessarily  meaningful,  and  cannot be  relied  upon as  indicators  of future
performance.  In addition, there can be no assurance that our revenues will grow
or be  sustained  in  future  periods  or  that  we will  maintain  our  current
profitability   in  the   future.   Significant   factors  in  these   quarterly
fluctuations,  none of which are within our  control,  are  changes in  consumer
demand for our wines,  the affect of weather and other natural forces on growing
conditions  and, in turn,  the quality  and  quantity of grapes  produced by us,
interest rates,  inventory  levels and the timing of releases for certain wines,
among other factors.  Consequently,  we have experienced, and expect to continue
to experience, seasonal fluctuations in revenues and operating results.

     A large  portion of our  expenses  are fixed and  difficult  to reduce in a
short period of time. In quarters  when  revenues do not meet our  expectations,
our  level of fixed  expenses  tends to  exacerbate  the  adverse  effect on net
income.  In quarters when our operating  results are below the  expectations  of
public  market  analysts  or  investors,  the price of our  common  stock may be
adversely affected.

     REDUCED CONSUMER SPENDING COULD LESSEN DEMAND FOR OUR WINES AND HARM OUR
BUSINESS

     Consumer  spending trends and changes in consumer tastes have a substantial
impact on the wine industry and our business.  To the extent that wine purchases
are negatively  impacted by economic and other factors, or wine consumers reduce
consumption  of wine in favor of other  beverages,  demand  for our wines  could
decrease.

     OUR BUSINESS IS SEASONAL, WHICH COULD CAUSE OUR MARKET PRICE TO FLUCTUATE

     Our  business is subject to seasonal as well as quarterly  fluctuations  in
revenues and operating  results.  Our sales volume tends to increase  during the
summer months and the holiday season and decrease after the holiday season. As a
result,  our sales and earnings are typically highest during the fourth calendar
quarter and lowest in the first calendar  quarter.  Seasonal factors also affect
our level of borrowing.  For example, our borrowing levels typically are highest
during winter when we have to pay growers for grapes harvested and make payments
related to the grape harvest.  These and other factors may cause fluctuations in
the market price of our common stock.

     WE WILL NEED MORE WORKING CAPITAL TO GROW

     The premium wine industry is a capital-intensive  business,  which requires
substantial capital expenditures to develop and acquire vineyards and to improve
or expand wine production.  Further, the farming of vineyards and acquisition of
grapes and bulk wine require  substantial amounts of working capital. We project
the  need  for  significant  capital  spending  and  increased  working  capital
requirements  over the next several  years,  which must be financed by cash from
operations and, by additional borrowings or additional equity.


                                       11

<PAGE>


                          THE CHALONE WINE GROUP, LTD.


     OUR ACQUISITIONS AND POTENTIAL FUTURE ACQUISITIONS INVOLVE A NUMBER OF
RISKS

      Our  acquisition  of Hewitt  Ranch,  Suscol  Ranch,  Staton  Hills  Winery
(renamed  Sagelands  Vineyard),  the Jade Mountain brand,  enlarging Canoe Ridge
Vineyard and buying out our  partners,  and the possible  construction  of a new
winery on the Suscol Ranch property we recently  acquired (and potential  future
acquisitions)  involve risks associated with assimilating  these operations into
our Company;  integrating,  retaining and motivating key personnel;  integrating
and managing geographically-dispersed  operations integrating the technology and
infrastructures  of disparate  entities;  risks  inherent in the  production and
marketing  wine and  replanting of existing  vineyards from white wine grapes to
red wine grapes.

      We relied on debt financing to purchase Hewitt Ranch, Suscol Ranch, Staton
Hills Winery, the Jade Mountain brand, enlarging Canoe Ridge Vineyard and buying
out our partners and other  vineyard  land and related  assets during the fiscal
year ended December 31, 2001.  Consequently our debt-to-equity  ratio is high in
relation to our historical  standards,  even after the successful  completion of
our rights  offering in November 2001. The interest costs  associated  with this
debt will increase our operating expenses and the risk of negative cash flow.


     OUR PROFITS DEPEND LARGELY ON SALES IN CERTAIN STATES AND ON SALES OF
CERTAIN VARIETALS

     In the three  months ended March 31,  2002,  approximately  89% of our wine
sales were  concentrated in 20 states.  Changes in national consumer spending or
consumer  spending in these states and other regions of the country could affect
both the  quantity  and price  level of wines  that  customers  are  willing  to
purchase which could harm our business.

     Approximately  90% of our  consolidated  net  revenues in the three  months
ended March 31, 2002 were  concentrated in our four top selling  varietal wines.
Specifically,  sales of Chardonnay,  Cabernet Sauvignon,  Pinot Noir, and Merlot
accounted for 39%, 19%, 14% and 18% of our net revenues,  respectively.  Changes
in consumer  preferences  with respect to these varietal  wines could  adversely
affect our business.

     COMPETITION MAY HARM OUR BUSINESS

     The  premium  table  wine  industry  is  intensely  competitive  and highly
fragmented.  Our wines  compete in all of the premium wine market  segments with
many other  premium  domestic  and foreign  wines,  with  imported  wines coming
primarily  from the  Burgundy  and  Bordeaux  regions of France and, to a lesser
extent,  Italy,  Chile,  Argentina,  South Africa and Australia.  Our wines also
compete with  popular-priced  generic wines and with other  alcoholic  and, to a
lesser degree, non-alcoholic beverages, for shelf space in retail stores and for
marketing focus by our independent  distributors,  many of which carry extensive
brand portfolios.

     The wine industry has experienced  significant  consolidation.  Many of our
competitors have greater  financial,  technical,  marketing and public relations
resources  than we do.  Our sales may be harmed to the extent we are not able to
compete successfully against such wine or alternative beverage producers.


     OUR BUSINESS IS SUBJECT TO A VARIETY OF AGRICULTURAL RISKS

     Winemaking  and grape  growing  are  subject to a variety  of  agricultural
risks.  Various diseases,  pests, fungi,  viruses,  drought,  frosts and certain
other weather conditions can affect the quality and quantity of grapes available
to  us,  decreasing  the  supply  of  our  products  and  negatively   impacting
profitability.

     Many  California   vineyards  have  been  infested  in  recent  years  with
phylloxera. Our vineyard properties are primarily planted to rootstocks believed
to be  resistant to  phylloxera.  However,  there can be no  assurance  that our
existing vineyards, or the rootstocks we are now using in our planting programs,
will not become susceptible to current or new strains of phylloxera.

     Pierce's  Disease is a vine  bacterial  disease that has been in California
for more than 100 years. It kills  grapevines and there is no known cure.  Small
insects  called   sharpshooters  spread  this  disease.  A  new  strain  of  the
sharpshooter,  the glassy winged,  was discovered in Southern  California and is
believed to be migrating  north.  We are actively  supporting the efforts of the
agricultural  industry  to  control  this pest and are making  every  reasonable
effort to prevent  an  infestation  in our own  vineyards.  We cannot,  however,
guarantee that we will succeed in preventing contamination in our vineyards.

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<PAGE>


                          THE CHALONE WINE GROUP, LTD.


     Future government  restrictions regarding the use of certain materials used
in grape growing may increase vineyard costs and/or reduce production.

     Grape growing  requires  adequate water supplies.  We generally  supply our
vineyards'  water needs through wells and reservoirs  located on our properties.
We believe that we either have,  or are currently  planning to insure,  adequate
water supplies to meet the needs of all of our vineyards. However, a substantial
reduction in water supplies  could result in material  losses of grape crops and
vines.

     The weather  phenomenon  commonly  referred to as "El Nino"  produced heavy
rains and cooler weather  during the spring of 1999 and 1998,  which resulted in
colder and wetter  soils than are  typical  during  California's  grape  growing
season. Consequently, the 1999 and 1998 harvests were postponed by approximately
four to six weeks  depending  on the  geographic  location  and  varietals.  The
unusual  weather  conditions  resulting  from El Nino  impacted the quantity and
quality  of our 1998  estate  harvest.  The size of our most  significant  crops
ranged  from  normal-sized  yields to 50% of  normal  yields  (depending  on the
varietal and particular estate).

     Despite the reduction in the yield,  harvested estate crops, in combination
with contracted  grape  purchases,  are expected to permit us to meet originally
anticipated  sales  projections  from  our 1999  and  1998  vintage  Chardonnay,
Cabernet,  and Merlot  varietals.  Together,  these varietals have  historically
comprised between 80% and 85% of our aggregate annual production.


     WE MAY NOT BE ABLE TO GROW OR ACQUIRE ENOUGH QUALITY GRAPES FOR OUR WINES

     The adequacy of our grape supply is influenced by consumer  demand for wine
in relation to  industry-wide  production  levels.  While we believe that we can
secure  sufficient  supplies of grapes from a combination  of our own production
and from grape supply contracts with independent  growers,  we cannot be certain
that grape  supply  shortages  will not occur.  A shortage in the supply of wine
grapes could  result in an increase in the price of some or all grape  varieties
and a corresponding increase in our wine production costs.

     AN OVERSUPPLY OF GRAPES MAY ALSO HARM OUR BUSINESS

     Current  trends in the domestic and foreign  wine  industry  point to rapid
plantings of new vineyards and replanting of old vineyards to greater densities,
with the expected  result of  significantly  increasing the worldwide  supply of
premium wine grapes and the amount of wine which will be produced in the future.
This expected  increase in grape  production could result in an excess of supply
over demand and force us to reduce, or not increase, our prices.

     WE DEPEND ON THIRD PARTIES TO SELL OUR WINE

     We sell our products primarily through independent distributors and brokers
for resale to retail outlets,  restaurants,  hotels and private clubs across the
United  States and in some  overseas  markets.  To a lesser  degree,  we rely on
direct sales from our wineries,  our wine library and direct mail.  Sales to our
largest   distributor  and  to  our  nineteen  largest   distributors   combined
represented  approximately 6% and 41%, respectively,  of our net revenues during
the  three  months  ended  March  31,  2002.   Sales  to  our  nineteen  largest
distributors are expected to continue to represent a substantial  portion of our
net  revenues in the  future.  We use a single  broker to sell our wines  within
California. Such sales represent 28% of our net revenues during the three months
ended  March 31,  2002.  The laws and  regulations  of several  states  prohibit
changes of distributors,  except under certain limited circumstances,  making it
difficult to terminate a distributor  for poor  performance  without  reasonable
cause, as defined by applicable statutes. Any difficulty or inability to replace
distributors,  poor  performance of our major  distributors  or our inability to
collect accounts receivable from our major distributors could harm our business.

     NEW REGULATIONS OR INCREASED REGULATORY COSTS COULD HARM OUR BUSINESS

     The wine industry is subject to extensive  regulation by the Federal Bureau
of Alcohol,  Tobacco and Firearms  and various  foreign  agencies,  state liquor
authorities  and local  authorities.  These  regulations  and laws  dictate such
matters  as  licensing  requirements,  trade and  pricing  practices,  permitted
distribution  channels,   permitted  and  required  labeling,   advertising  and
relations  with  wholesalers  and  retailers.  Any  expansion  of  our  existing
facilities or development of new vineyards or wineries may be limited by present
and  future  zoning  ordinances,  environmental  restrictions  and  other  legal
requirements.  In addition,  new  regulations  or  requirements  or increases in
excise taxes, income taxes,  property and sales taxes or international  tariffs,


                                       13

<PAGE>


                          THE CHALONE WINE GROUP, LTD.


could reduce our profits. Future legal or regulatory challenges to the industry,
either individually or in the aggregate, could harm our business.

     ADVERSE PUBLIC OPINION ABOUT ALCOHOL MAY HARM OUR BUSINESS

     A number of research  studies  suggest  that  various  health  benefits may
result from the moderate  consumption of alcohol, but other studies suggest that
alcohol  consumption  does not have any health benefits and may in fact increase
the risk of stroke,  cancer and other  illnesses.  If an  unfavorable  report on
alcohol  consumption gains general support,  it could harm the wine industry and
our business.

     WE USE PESTICIDES AND OTHER HAZARDOUS SUBSTANCES IN THE OPERATION OF OUR
BUSINESS

     We use  pesticides and other  hazardous  substances in the operation of our
business. If hazardous substances are discovered on, or emanate from, any of our
properties,  and their release presents a threat of harm to public health or the
environment, we may be held strictly liable for the cost of remediation. Payment
of such costs could have a material  adverse  effect on our business,  financial
condition and results of operations.  We maintain  insurance against these kinds
of risks, and others,  under various insurance policies.  However, our insurance
may not be adequate or may not  continue to be  available at a price or on terms
that are satisfactory to us.

     CONTAMINATION OF OUR WINES WOULD HARM OUR BUSINESS

     We are  subject to certain  hazards and product  liability  risks,  such as
potential  contamination,  through  tampering or otherwise,  of  ingredients  or
products.  Contamination  of any of our  wines  could  result  in the need for a
product  recall  which could  significantly  damage our  reputation  for product
quality,  which we believe is one of our principal  competitive  advantages.  We
maintain  insurance  against  these kinds of risks,  and others,  under  various
general  liability  and  product  liability  insurance  policies.  However,  our
insurance  may not be adequate or may not continue to be available at a price or
on terms that are satisfactory to us.

     THE LOSS OF KEY EMPLOYEES WOULD DAMAGE OUR REPUTATION AND BUSINESS

     Our success depends to some degree upon the continued  services of a number
of key  employees.  Although some key employees are under  employment  contracts
with us for specific  terms,  the loss of the services of one or more of our key
employees  could harm our business and our  reputation,  particularly  if one or
more of our key  employees  resigns to join a competitor  or to form a competing
company. In such an event, despite provisions in our employment contracts, which
are designed to prevent the unauthorized disclosure or use of our trade secrets,
practices or procedures by such personnel under these  circumstances,  we cannot
be certain  that we would be able to enforce  these  provisions  or prevent such
disclosures.


     SHIFTS IN FOREIGN EXCHANGE RATES OR THE IMPOSITION OF ADVERSE TRADE
REGULATIONS COULD HARM OUR BUSINESS

     We conduct some of our import and export  activity  for wine and  packaging
supplies in foreign currencies.  We purchase foreign currency on the spot market
on an as-needed  basis and engage in limited  financial  hedging  activities  to
offset the risk of exchange rate  fluctuations.  There is a risk that a shift in
certain foreign exchange rates or the imposition of unforeseen and adverse trade
regulations  could adversely impact the costs of these items and have an adverse
impact on our operating results.

     In addition,  the  imposition of unforeseen  and adverse trade  regulations
could have an adverse  effect on our  imported  wine  operations.  Export  sales
accounted  for  approximately  2% of total  consolidated  revenue  for the three
months ended March 31, 2002. We expect the volume of international  transactions
to  increase,   which  may  increase  our  exposure  to  future   exchange  rate
fluctuations.




                                       14

<PAGE>


                          THE CHALONE WINE GROUP, LTD.


     INFRINGEMENT OF OUR TRADEMARKS MAY DAMAGE OUR BRAND NAMES OR OUR BUSINESS

     Our wines are branded consumer products,  and we distinguish our wines from
our  competitors'  by enforcement of our  trademarks.  There can be no assurance
that  competitors  will refrain from  infringing our marks or using  trademarks,
tradenames or trade dress which dilute our intellectual property rights, and any
such actions may require us to become  involved in  litigation  to protect these
rights.  Litigation  of this  nature can be very  expensive  and tends to divert
management's time and attention.


     THE MARKET PRICE OF OUR COMMON STOCK  FLUCTUATES

     All of the  foregoing  risks,  among  others not known or mentioned in this
report,  may have a  significant  effect on the market price of our shares.  The
stock markets have  experienced  extreme price and volume trading  volatility in
recent months and years.  This  volatility  has had a substantial  effect on the
market prices of securities of many companies for reasons  frequently  unrelated
or disproportionate  to the specific company's  operating  performance and could
similarly affect our market price.



PART II. - OTHER INFORMATION

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

     (a) Exhibits.

         None.

     (b) Reports on Form 8-K.

         During the first  quarter  ended March 31, 2002,  the Company filed the
following Current Reports on Form 8-K:

                  March 14, 2002 Press Release  (Item 5). The Company  announced
                  that the 2002 Shareholder  Business Meeting would be held June
                  6, 2002.


                                       15


<PAGE>


                          THE CHALONE WINE GROUP, LTD.



                                   SIGNATURES


Pursuant  to the  requirements  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.


DATED:  MAY 14, 2002                  THE CHALONE WINE GROUP, LTD.
____________________                  ____________________________
                                             (Registrant)


                                     /s/ THOMAS B. SELFRIDGE
                                     _____________________________________
                                     Thomas B. Selfridge
                                     President and Chief Executive Officer



DATED:  MAY 14, 2002                  /s/ SHAWN M. CONROY BLOM
____________________                 __________________________________________
                                     Shawn M. Conroy Blom
                                     Vice President and Chief Financial Officer




                                       16