SECURITIES & 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 September 30, 2000

                                       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 November 8,
2000 was 10,240,345.


<PAGE>

<TABLE>
<CAPTION>


                          The Chalone Wine Group, Ltd.

                         PART I. - FINANCIAL INFORMATION

     ITEM 1. FINANCIAL STATEMENTS                                                                                 PAGE

<S>                                                                                                                <C>
              Consolidated Balance Sheets as of September 30, 2000, and March 31, 2000.                             3

              Consolidated Statements of Income for the three-month and six-month periods ended
              September 30, 2000 and 1999.                                                                          4

              Consolidated Statements of Cash Flows for the three month and six-month periods ended
              September 30, 2000 and 1999.                                                                          5

              Notes to Consolidated Financial Statements.                                                           6

     ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS                  7

     ITEM 3. DISCLOSURES ABOUT MARKET RISK                                                                          11

                          PART II. - OTHER INFORMATION

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

</TABLE>


<PAGE>

<TABLE>
<CAPTION>

                          The Chalone Wine Group, Ltd.

                           CONSOLIDATED BALANCE SHEETS
                        (IN THOUSANDS, EXCEPT SHARE DATA)


                               ASSETS

                                                                        September 30,         March 31,
                                                                            2000                2000
                                                                     ------------------- -------------------
 Current assets:
<S>                                                                           <C>                <C>
      Cash and equivalents                                                         $ 40                 $ -
      Accounts receivable, less allowance for doubtful
          accounts of $162 and $129, respectively                                10,256               9,836
      Notes receivable - affiliate                                                  568                 119
      Income tax receivable                                                         847               1,178
      Inventory                                                                  49,065              51,826
      Prepaid expenses                                                              201                 579
      Deferred income taxes                                                         894                 894
                                                                     ------------------- -------------------
          Total current assets                                                   61,871              64,432
 Investment in Chateau Duhart-Milon                                               8,312               9,146
 Property, plant and equipment - net                                             63,367              64,134
 Goodwill and trademarks - net of accumulated
     amortization of $1,956 and $1,743, respectively                              9,906               7,220
 Other assets                                                                       600                 733
                                                                     ------------------- -------------------
               Total assets                                                   $ 144,056           $ 145,665
                                                                     =================== ===================

                LIABILITIES AND SHAREHOLDERS' EQUITY

 Current liabilities:
      Accounts payable and accrued liabilities                                  $ 5,723             $ 5,650
      Revolving bank loan                                                         5,910              27,017
      Current maturities of long-term borrowings                                  1,548               1,784
                                                                     ------------------- -------------------
          Total current liabilities                                              13,181              34,451
 Long-term borrowings, less current maturities                                   51,016              31,041
 Deferred income taxes                                                            1,743               1,743
               Total liabilities                                                 65,940              67,235
                                                                     ------------------- -------------------
 Minority interest                                                                4,460               4,758
 Shareholders' equity:
      Common stock - authorized 15,000,000 shares no par value;
     issued and outstanding: 10,240,345 and 10,224,521 shares,                   61,376              61,377
     respectively
     Retained earnings                                                           16,639              15,851
     Cumulative foreign currency translation adjustment                          (4,359)             (3,556)
                                                                     ------------------- -------------------
               Total shareholders' equity                                        73,656              73,672
                                                                     ------------------- -------------------
               Total liabilities and shareholders' equity                     $ 144,056           $ 145,665
                                                                     =================== ===================


</TABLE>




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


                                       3


<PAGE>

<TABLE>
<CAPTION>


                          The Chalone Wine Group, LTD.

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




                                                         Three Months Ended                             Six Months Ended
                                                           September 30,                                  September 30,
                                                     -------------------------------            -------------------------------
                                                         2000              1999                     2000              1999
                                                     ------------      -------------            ------------       ------------
<S>                                                     <C>                <C>                     <C>                <C>
 Gross revenues                                         $ 14,211           $ 13,177                $ 28,729           $ 24,005
               Excise taxes                                 (374)              (330)                   (762)              (589)
                                                     ------------      -------------            ------------       ------------
 Net revenues                                             13,837             12,847                  27,967             23,416
 Cost of wines sold                                       (9,522)            (7,028)                (18,240)           (12,566)
                                                     ------------      -------------            ------------       ------------
               Gross profit                                4,315              5,819                   9,727             10,850
 Revenues from other operations, net                          27                 13                      38                 53
 Selling, general and administrative expenses             (4,094)            (3,381)                 (7,762)            (6,424)
                                                     ------------      -------------            ------------       ------------
               Operating income                              248              2,451                   2,003              4,479
 Interest expense                                         (1,059)              (599)                 (1,947)            (1,092)
 Equity in Chateau Duhart-Milon                              215                193                     533                530
 Other Income                                                848                                        848
 Minority interests                                          154               (325)                   (102)              (629)
                                                     ------------      -------------            ------------       ------------
               Income before income taxes                    406              1,720                   1,335              3,288
 Income taxes                                               (166)              (706)                   (547)            (1,348)
                                                     ------------      -------------            ------------       ------------
               Net income                               $    240           $  1,014                $    788           $  1,940
                                                     ============      =============            ============       ============

 Net income per common share
               Earnings per share - basic                 $ 0.02             $ 0.11                  $ 0.08             $ 0.21
               Earnings per share - diluted               $ 0.02             $ 0.11                  $ 0.08             $ 0.21
 Weighted average number of shares outstanding:
               Basic                                       9,365             10,229                   9,293             10,233
               Diluted                                     9,501             10,229                   9,421             10,233

</TABLE>



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



                                       4


<PAGE>

<TABLE>
<CAPTION>

                          The Chalone Wine Group, LTD.

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                            (UNAUDITED, IN THOUSANDS)


                                                                       Three months ended          Six months ended
                                                                          September 30,              September 30,
                                                                   --------------------------    ----------------------
                                                                      2000          1999             2000        1999
                                                                   -----------  -------------    ----------------------
 Cash flows from operating activities:
<S>                                                                   <C>             <C>          <C>          <C>
    Net income                                                        $   240         $1,014       $   788      $1,940
    Adjustments to reconcile net income to net cash provided
       by operating activities:
      Depreciation and amortization                                       976            665         1,959       1,339
      Equity in net income of Chateau Duhart-Milon                       (215)          (193)         (533)       (530)
      Increase (Decrease) in minority interest                           (154)           325           102         629
      Loss(Gain) on sale of property and equipment                       (837)            (5)         (837)         (1)
      Changes in:
       Accounts and other receivable                                   (1,306)        (1,923)         (540)     (1,929)
       Inventory                                                          926           (462)        3,361      (1,387)
       Prepaid expenses and other assets                                 (311)            61           511        (110)
       Accounts payable and accrued liabilities                           695            (25)           73       2,787
                                                                   -----------  -------------    ---------- -----------
      Net cash provided by operating activities                            14           (543)        4,884       2,738
                                                                   -----------  -------------    ---------- -----------
 Cash flows from investing activities:
    Capital expenditures                                               (4,631)        (3,565)       (7,541)     (5,634)
    Property and business acquisitions                                      -              -        (3,518)     (6,127)
    Proceeds from disposal of property and equipment (net)              7,419             60         7,419          65
    Distributions from Duhart-Milon                                         -              -           564         738
                                                                   -----------  -------------    ---------- -----------
      Net cash used in investing activities                             2,788         (3,505)       (3,076)    (10,958)
                                                                   -----------  -------------    ---------- -----------
 Cash flows from financing activities:
    Borrowings on revolving bank loan - net                           (23,364)         1,942       (21,107)      9,222
    Distributions to minority interests                                     -              -          (400)       (300)
    Proceeds from private placement financing                          30,000              -        30,000           -
    Repayment of long-term debt                                        (9,890)           (23)      (10,261)     (2,360)
    Proceeds from issuance of common stock                                  -            (24)            -          (2)
                                                                   -----------  -------------    ---------- -----------
      Net cash provided by financing activities                        (3,254)         1,895        (1,768)      6,560
                                                                   -----------  -------------    ---------- -----------
 Net increase (decrease) in cash and equivalents                         (452)        (2,153)           40      (1,660)
 Cash and equivalents at beginning of period                              492          2,163             -       1,670
                                                                   -----------  -------------    ---------- -----------
 Cash and equivalents at end of period                                $    40         $   10       $    40      $   10
                                                                   ===========  =============    ========== ===========

 Other cash flow information:
    Interest paid                                                     $   695         $  481       $ 1,867      $1,223
    Income taxes paid                                                      58             57           139       1,627


</TABLE>



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


                                       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  principals
generally  accepted  in the  United  States of  America  for  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 year ended March 31, 2000.


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.


RECLASSIFICATIONS

     Certain  prior-period  amounts have been  reclassified  in order to conform
with the current period presentation.

NOTE 3 - COMPREHENSIVE INCOME

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

<TABLE>
<CAPTION>

                                                 Three months ended      Six months ended
                                                    September 30,          September 30,
                                                ---------------------- ----------------------
                                                     2000       1999         2000       1999
                                                ----------- ---------- ----------- ----------
<S>                                                  <C>       <C>          <C>       <C>
 Net income                                          $ 240     $1,014       $ 788     $1,940
 Foreign currency translation gain (loss)             (786)       300        (803)      (162)
                                                ----------- ---------- ----------- ----------
 Comprehensive income                               $ (546)    $1,314       $ (15)    $1,778
                                                =========== ========== =========== ==========

</TABLE>


NOTE 4 - EARNINGS PER SHARE


Basic EPS represents the income available to common shareholders  divided by the
weighted average number of common shares outstanding for the period. Diluted EPS
represents the income available to common  shareholders  divided by the weighted
average 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.  For all periods
presented,  the effect of options and warrants was  insignificant  causing basic
and diluted  earnings per share to be the same. This effect is calculated  using
the treasury stock method.

                                       6


<PAGE>

                          The Chalone Wine Group, LTD.


NOTE 5 - ACQUISITION OF  JADE MOUNTAIN BRAND NAME RIGHTS AND INVENTORY

     On April 4, 2000,  the Company  purchased  exclusive  brand name rights and
inventory of Jade Mountain Winery, a vineyard located in Napa county, California
producing Rhone varietal wines. The acquisition price of $3.5 million, which was
financed with the Company's available  revolving credit facility,  was allocated
to an intangible asset in the amount of $2.9 million representing the brand name
rights with the  remaining  $600,000  allocated to inventory  based on estimated
fair values. The brand name rights will be amortized over 20 years. In addition,
the  Company  has  entered  into a  long-term  contract  with the  owner of Jade
Mountain to purchase Syrah, Viognier, Grenache and Merlot grapes produced from a
related vineyard.

NOTE 6 - BORROWING ARRANGEMENTS

     On September 15, 2000 the Company refinanced certain borrowings through the
issuance of $30 million of Senior  Unsecured Notes (the "Notes").  Proceeds from
the Notes were used to repay $20 million of the  Company's  Revolving  Bank Loan
and $10 million of a  pre-existing  $30 million Bank Term Loan.  Interest on the
Notes is payable  quarterly at rates  ranging from 8.75% to 8.90% and  principal
repayments  are  scheduled  beginning  September  15, 2004  through  maturity on
September  15,  2010.  The  Notes  have   restrictive   covenants  that  include
requirements to maintain certain financial ratios and restrictions on additional
indebtedness,  asset sales, investments, and payment of dividends. In connection
with this refinancing,  available  borrowings under the Company's Revolving Bank
Loan were  reduced  from $40  million to $25  million,  of which the Company had
borrowed $5.9 million as of September 30, 2000.

NOTE 7 - OTHER INCOME

         On July 14, 2000,  the Company sold the 10,000 square foot Hewitt House
and four surrounding  landscaped acres located in Napa Valley's Rutherford Bench
area for  $7,740,000  resulting in a gain of $837,000  included in Other Income.
The property was originally  acquired in the Company's  fiscal year 2000 as part
of its acquisition of the Hewitt Ranch.

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 March 31, 2000.

                                       7

<PAGE>

                          The Chalone Wine Group, LTD.

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

DESCRIPTION OF THE BUSINESS


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

RESULTS OF OPERATIONS - SECOND QUARTER OF FISCAL 2001 COMPARED TO SECOND QUARTER
OF FISCAL 2000

<TABLE>
<CAPTION>


                                            Three months ended        Percent                Six months ended          Percent
                                              September 30,            Change                  September 30,            Change
                                        ----------------------------------------         --------------------------   -----------
                                            2000          1999        00 vs 99              2000          1999         00 vs 99
                                        -------------  ------------  -----------         ------------  ------------   -----------
<S>                                          <C>           <C>         <C>                   <C>           <C>           <C>
 Net revenues                                100.0 %       100.0 %        7.7 %              100.0 %       100.0 %        19.4 %
 Cost of sales                               (68.8)%       (54.7)%       35.5 %              (65.2)%       (55.2)%        45.2 %
                                        -------------  ------------                      --------------------------
    Gross profit                              31.2 %        45.3 %      (25.8)%               34.8 %        44.8 %       (10.4)%
 Other revenues from operations                0.2 %         0.1 %          -                  0.1 %        (0.1)%           -
 Selling, general and admin. expenses        (29.6)%       (26.3)%       21.1 %              (27.8)%       (25.8)%        20.8 %
                                        -------------  ------------                      --------------------------
    Operating income                           1.8 %        19.1 %      (89.9)%                7.1 %        18.9 %       (55.3)%
 Interest Expense                             (7.7)%        (4.7)%       76.8 %               (7.0)%        (4.2)%        78.3 %
 Equity in Chateau Duhart-Milon                1.6 %         1.5 %       11.4 %                1.9 %         2.7 %         0.6 %
 Other Income                                  6.1 %         0.0 %          -                  3.0 %         0.0%            -
 Minority interest                             1.1 %        (2.5)%     (147.4)%               (0.4)%        (2.9)%       (83.8)%
                                        -------------  ------------                      --------------------------
    Income before income taxes                 2.9 %        13.4 %      (76.4)%                4.6 %        14.5 %       (59.4)%
 Income taxes                                 (1.2)%        (5.5)%      (76.5)%               (2.0)%        (5.9)%       (59.4)%
                                        -------------  ------------                      --------------------------
     Net Income (loss)                         1.7 %         7.9 %      (76.3)%                2.6 %         8.6 %       (59.4)%
                                        =============  ============                      ==========================

</TABLE>

NET REVENUES

Net revenues for the three-month and six-month  periods ended September 30, 2000
increased approximately 8% and 19%, respectively, over the comparable periods in
the prior year.  These  increases  were due almost  equally to  increases in the
average  revenue-per-case due to selected price increases and changes in product
mix, and increased sales volume.

GROSS PROFIT

Gross profit for the three and six months ended September 30, 2000, decreased by
approximately 26% and 10% respectively, over the comparable periods in the prior
year. For the quarters  ended  September 30, gross margin  percentage  decreased
from 45.3% in 1999 to 31.2% in 2000, while the gross margin percentage decreased
from 44.8% to 34.8%,  respectively,  for the six months ended September 30, 1999
and 2000.  These gross margin  decreases  were  primarily  the direct  result of
higher grape and bulk wine costs associated with 1998 and 1999 vintage wines.

                                       8

<PAGE>

                          The Chalone Wine Group, LTD.


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

The per acre grape yields for the 1998 and 1999  harvests from our own vineyards
were below normal levels, resulting in higher per unit wine costs. Growing costs
are  relatively  constant  whether  yields are high or low which causes per unit
costs in low yield  years to be higher  than  normal.  In  addition in low yield
years, we buy more grapes from outside producers,  which also increases our unit
costs.  Usually,  low  yields are  experienced  region-wide  causing  other wine
producers  to buy grapes on the open  market,  which  drives  grape costs up. If
adequate  grapes cannot be purchased then additional bulk wine must be purchased
from other  wineries.  Purchases of bulk wine are  significantly  more expensive
than wine produced in the Company's facilities.

Wines are  inventoried  from six  months to two years.  As such the higher  cost
wines from the 1998 and 1999  vintages  were  carried in  inventory  and did not
affect  profit  until they were sold.  Some of the 1998  vintage was sold in the
last fiscal year, but most of last year's sales  consisted  mainly of lower cost
prior  vintages.  In fiscal  year 2001  almost all wines sold have come from the
high cost 1998 and 1999 vintages,  which has reduced the Company's margins.  The
harvest for the 2000 vintage has been picked and is back to normal levels, which
will cause future per unit wine costs to return to normal levels and provide the
opportunity for margins to improve.

In  the  quarter ended  September 30, 2000,  the pre-tax  profit of $0.4 million
would  have been a pre-tax  loss of $0.4  million  except  for the one time $0.8
million profit on the sale of the Hewitt house.

REVENUES FROM OTHER OPERATIONS

Revenues from other  operations  usually consist of processing and other revenue
from  third-party  wineries and net profit from sales of bulk wine.  The Company
cannot predict the effect on future operating results, as this source of revenue
is highly  unpredictable  and largely  contingent on other wineries'  demand for
extra production  capacity,  which can and does vary  significantly from year to
year.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

Selling, general and administrative expenses for the three months and six months
ended  September  30,  2000,  increased   approximately  $713,000  or  21%,  and
$1,338,000 or 21%, respectively,  over the comparable periods in the prior year.
These  changes are  primarily a result of (i)  increased  selling  efforts  (ii)
launching  of the new  Sagelands  brand  name and (iii)  other  new  promotional
efforts.

OPERATING INCOME

Operating  income for the three months and six months ended  September 30, 2000,
decreased  $2.2 million or 90% and $2.5 million or 55%, due to the  decreases in
gross profits and the related increases in selling,  general and  administrative
expenses as discussed above.

INTEREST EXPENSE

Interest  expense  increased  $460,000 and $855,000 for the three months and six
months ended  September 30, 2000,  primarily due to higher  average  outstanding
borrowings  which are a result of (i) the  Sagelands  Winery  acquisition  which
occurred  during the quarter ended June 30, 1999;  (ii) the  acquisition  of the
Hewitt Ranch and Suscol Ranch properties that occurred during the fourth quarter
of  fiscal  year  2000;  (iii) the Jade  Mountain  brand-name  acquisition  that
occurred in April,  2000 and (iv) continuing  capital  expenditures,  related to
winery-expansion over the past two years.

                                       9

<PAGE>

                          The Chalone Wine Group, LTD.


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

EQUITY IN NET INCOME OF DUHART-MILON

The Company's  23.5% equity  interest in the net income of Chateau  Duhart-Milon
("Duhart-Milon")  for the three months and six months ended  September 30, 2000,
are $215,000 and $533,000  respectively.  These results are primarily  driven by
sales of the 1997 vintage of  Duhart-Milon,  which are consistent  with sales of
the 1996 vintage reflected in the prior-year results.

The Company  monitors  its  investment  in  Duhart-Milon  primarily  through its
on-going   communication   with  Domaines  Barons  de  Rothschild   (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.

OTHER INCOME

On July 14, 2000,  the Company sold the 10,000 square foot Hewitt House and four
surrounding  landscaped acres located in Napa Valley's Rutherford Bench area for
$7,740,000  and  realized  a $837,000  gain,  which has been  included  in other
income.  The property was originally  acquired in the Company's fiscal year 2000
as part of its acquisition of the Hewitt Ranch.

MINORITY INTEREST

The  financial  statements  of Edna  Valley  Vineyard  ("EVV")  and Canoe  Ridge
Vineyard,  LLC ("CRV") are consolidated with the Company's financial statements.
The interest in the equity and net income of EVV and CRV attributable to parties
other than the Company is accounted for as a "minority  interest".  The minority
interest  in the net  income of EVV and CRV for the three  months and six months
ended September 30, 2000 and 1999 consisted of the following (IN THOUSANDS):

<TABLE>
<CAPTION>

                                                                            Three months ended           Six months ended
                                                                               September 30,               September 30,
                                                             Minority   --------------------------- ---------------------------
Venture                         Minority Owner                Percent      2000           1999          2000           1999
------------                    ------------------           ---------- ------------  ------------- ------------  -------------
<S>                                                             <C>          <C>             <C>           <C>           <C>
Edna Valley Vineyard            Paragon Vineyard Co., Inc.      50.00%       $ (183)         $ 257         $ 32          $ 462
Canoe Ridge Vineyard, LLC       Various                         49.50%           29             68           70            167
                                                                        ------------  ------------- ------------  -------------
                                                                             $ (154)         $ 325        $ 102          $ 629
                                                                        ============  ============= ============  =============

</TABLE>


The  decrease in minority  interest of $480,000 or 147% and  $528,000 or 84% for
each of the periods ended  September 30, 2000, when compared to the same periods
last year, are attributable to increased grape and other production costs.

NET  INCOME

Net income for the three months and six months  ended  September  30, 2000,  was
$240,000 and $788,000 respectively, reflecting decreases of 76% and 59% over the
comparable  periods in the prior year.  These  decreases  are  primarily  due to
decreased gross profits and higher selling,  general and administrative expenses
and financing costs partially offset by the sale of the Hewitt House.

LIQUIDITY AND CAPITAL RESOURCES

Working capital increased  approximately $20 million during the six months ended
September 30, 2000 primarily as a result of the Company's refinancing of certain
borrowings  through the issuance of $30 million of Senior  Unsecured  Notes (the
"Notes") which are scheduled for repayment  through  September 2010. The Company
used the  proceeds  from the Notes to repay $20 million of  Revolving  Bank Loan
borrowings  and $10 million of a  pre-existing  $30 million  Bank Term Loan.  In
connection with this refinancing,  available borrowings under the Revolving Bank
Loan were  reduced  from $40  million to $25  million,  of which the Company had
borrowed $5.9 million as of September 30, 2000.

Selling the Hewitt house contributed over $7 million to working capital.

                                       10

<PAGE>

                          The Chalone Wine Group, LTD.


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

The Company has historically  financed its growth through  increased  borrowings
and cash flow from  operations.  During the six months ended September 30, 2000,
the Company's primary uses of its capital has been to purchase the Jade Mountain
Brand name and continued capital projects at all facilities.

The  Company is not aware of any  potential  impairments  to its  liquidity  and
believes its capital  resources are adequate to meet current and historic levels
of capital  expenditures  and its  liquidity  needs for at least the next twelve
months.


ITEM 3.  DISCLOSURES ABOUT MARKET RISK


     You should read the following  disclosures in conjunction with Management's
Discussion and Analysis of Financial Condition and Results of Operations,  which
have been drafted in compliance  with  regulations of the SEC concerning the use
of "Plain  English." 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 and other  business and economic  conditions.  Additionally,  our
sales volume tends to be affected by price  increases,  distributors'  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.

     OUR BUSINESS IS SEASONAL

     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 for  harvest  costs  and may  have to make
contractual  payments  to grape  growers.  These  and  other  factors  may cause
fluctuations in the market price of our common stock.

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

     In the six months ended September 30, 2000,  approximately  71% 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.

     Approximately  89% of our consolidated net revenues in the six months ended
September 30, 2000 were  concentrated  in our top four selling  varietal  wines.
Specifically,  sales of Chardonnay,  Pinot Noir,  Cabernet  Sauvignon and Merlot
accounted for 51%, 9%, 14% and 15% of our net revenues, respectively.

                                       11

<PAGE>

                          The Chalone Wine Group, LTD.


     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.

     BAD WEATHER, PESTS AND PLANT DISEASES COULD HARM OUR BUSINESS

     Winemaking  and grape  growing  are  subject to a variety  of  agricultural
risks.  Various diseases and pests and extreme weather conditions can materially
and  adversely  affect the quality and quantity of grapes  available to us. This
could reduce the quality or amount of wine we produce.  A  deterioration  in the
quality of our wines could harm our brand name, and a decrease in our production
could reduce our sales and profits. 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.

     Many California vineyards, including vineyards in Northern California, have
been infested  with  Phylloxera,  a root louse that renders a vine  economically
unproductive  within a few  years  after  infestation.  The  current  strain  of
Phylloxera  primarily  affects vines of a certain type. Our vineyard  properties
are  primarily  planted to  rootstocks  believed to be resistant to  Phylloxera.
However,  we cannot be certain that our existing  vineyards or the rootstocks we
are now using in our planting  and  replanting  programs  will not in the future
become  susceptible  to current or new strains of  Phylloxera,  plant insects or
diseases, any of which could harm our business.

     It is also possible that the vineyards  could be infested by new strains of
Phylloxera, insects, fungi, viruses or similar perils. For example, a new strain
of the sharpshooter  (glassy winged),  a flying insect that is believed to carry
Pierces'  Disease and can kill vines with which it comes into contact,  recently
was discovered in Southern California and is believed to be migrating north.

     Weather  fluctuations  in both rain levels and  seasonal  temperatures  can
inpact the quality  and  quantity  of grapes  available  and can result in lower
production volumes and higher costs.


     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.


     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 wineries to reduce, or not increase, prices.


                                       12


<PAGE>

                          The Chalone Wine Group, LTD.


     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 4% and 38%, respectively,  of our net revenues during
the  six  months  ended  September  30,  2000.  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 in order to sell our wines
within  California.  Such sales represent 34% of our net revenues during the six
month  period ended  September  30, 2000.  The laws and  regulations  of several
states  prohibit   changes  of   distributors,   except  under  certain  limited
circumstances, making it difficult to terminate a distributor without reasonable
cause, as defined by applicable statutes.  The resulting 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,
could reduce our profits. Future legal or regulatory challenges to the industry,
either individually or in the aggregate, could harm our business.



     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 or additional borrowings or other financing.



     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.

                                       13

<PAGE>

                          The Chalone Wine Group, LTD.


     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 principle  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, the Company
cannot be certain that it 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 5% of total consolidated  revenue for the six months
ended  September  30,  2000 and the  volume  of  international  transactions  is
increasing and may increase these risks in the future.




     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.



     OUR ACQUISITIONS AND POTENTIAL FUTURE ACQUISITIONS INVOLVE A NUMBER
     OF RISKS

     Our acquisition of Staton Hills Winery (renamed  Sagelands  Winery) and the
possible  construction  of a new winery on the Suscol Ranch property we recently
acquired  (and  potential  future  acquisitions)  involve  risks  which  include
assimilating  these  operations  into our Company;  integrating,  retaining  and
motivating  key  personnel;  integrating  and managing  geographically-dispersed
operations  because  Staton  Hills is in  Washington  State and our  Company  is
headquartered in California;  integrating the technology and  infrastructures of
disparate  entities;  risks inherent in the production of wine in, and marketing
of wine from,  Washington  State; and the replanting of existing  vineyards from
white wine grapes to red wine grapes.


     We have relied on debt  financing to purchase  Hewitt Ranch,  Suscol Ranch,
Staton Hills Winery, the Jade Mountain brand and other vineyard land and related
assets.  Consequently  our  debt-to-equity  ratio  is  high in  relation  to our
historical standards. The interest costs associated with this debt will increase
our operating expenses and the risk of negative cash flow.

                                       14

<PAGE>

                          The Chalone Wine Group, LTD.


     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.  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.  These broad
market fluctuations may reduce the market price of our shares.




PART II. - OTHER INFORMATION

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

     (a) Exhibits.

         EXHIBIT NUMBER

                  27       Financial Data Schedule

     (b) Reports.

                  None

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: NOVEMBER 14, 2000       THE CHALONE WINE GROUP, LTD.
------------------------       ----------------------------
                                       (Registrant)


                                  /S/ THOMAS B. SELFRIDGE
                               ----------------------------------------
                               Thomas B. Selfridge
                               President and Chief Executive Officer




DATED: NOVEMBER 14, 2000          /S/ THOMAS B. SELFRIDGE
------------------------       ----------------------------------------
                               Thomas B. Selfridge
                               Acting Principal Financial and Accounting Officer