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                        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, 1995

                                       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        No   X
                                       ------    ------
The number of shares  outstanding  of  Registrant's  Common Stock on October 31,
1995 was 7,596,018.

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<PAGE>


                          The CHALONE Wine Group, Ltd.


                         PART I. - FINANCIAL INFORMATION

Item 1.  Financial Statements

     Incorporated herein is the following unaudited financial information:

          Consolidated Balance Sheets as of September 30, 1995, and December 31,
          1994.

          Consolidated   Statements  of  Operations  for  the   three-month  and
          nine-month periods ended September 30, 1995 and 1994.

          Consolidated  Statements  of Changes  in  Financial  Position  for the
          three-month and nine-month periods ended September 30, 1995 and 1994.

          Notes to Consolidated Financial Statements.


<PAGE>
 
                         The CHALONE Wine Group, Ltd.

                           CONSOLIDATED BALANCE SHEETS
                                 (in thousands)

                                     ASSETS
                                                     September 30,  December 31,
                                                          1995         1994
                                                     -------------  ------------
Current Assets ....................................... (unaudited)
   Cash ..............................................   $      3    $     70
   Accounts receivable, less allowance for doubtful
     accounts of  $30 and $17 ........................      5,129       4,509
   Inventories .......................................     26,553      29,422
   Prepaid expenses and other assets .................        358         209
   Deferred income tax benefit .......................        312         312
                                                         --------    --------
         Total current assets ........................     32,355      34,522
   Investment in Domaines Barons de Rothschild(Lafite)     12,524      12,524
   Property, plant and equipment - net ...............     21,195      20,444
   Intangible assets arising from acquisitions, less
     amortization of $906 and $829 ...................      3,174       3,251
   Other assets ......................................      1,485       1,484
                                                         --------    --------
         Total assets ................................   $ 70,733    $ 72,225
                                                         ========    ========
 

                      LIABILITIES AND SHAREHOLDERS' EQUITY

Current Liabilities
   Notes payable .....................................   $ 13,192    $ 13,874
   Current maturities on long-term obligations .......        586         799
   Accounts payable and accrued expenses .............      2,451       2,713
                                                         --------    --------
         Total current liabilities ...................     16,229      17,386
Long-term obligations, less current maturities .......      5,426       5,541
Convertible subordinated debentures ..................     20,884      20,884
Deferred income taxes ................................      1,022       1,172
Minority interests ...................................      3,151       3,043
Shareholders' equity
   Common stock ......................................     24,515      24,472
   Retained earnings (deficit) .......................       (494)       (273)
                                                         --------    --------
         Total shareholders' equity ..................     24,021      24,199
                                                         --------    --------
         Total liabilities and shareholders' equity ..   $ 70,733    $ 72,225
                                                         ========    ========



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

                                        3

<PAGE>
 
                         The CHALONE Wine Group, Ltd.

                      CONSOLIDATED STATEMENTS OF OPERATIONS
                (unaudited)(in thousands, except per-share data)



                                       Three Months Ended    Nine Months Ended
                                           September 30,         September 30,
                                       ------------------   -------------------
                                          1995     1994        1995       1994
                                        -------  -------    --------   --------
Wine sales............................  $ 5,380  $ 4,998    $ 17,214   $ 14,577
Cost of wines sold....................    3,445    3,113      11,537      9,359
                                        -------  --------    -------   --------
     Gross profit.....................    1,935    1,885       5,677      5,218
Operating expenses....................    1,238    1,235       3,725      3,443
                                        -------  -------    --------   --------
     Operating income.................      697      650       1,952      1,775
Other income (expense)
     Interest expense.................     (743)    (691)     (2,245)    (2,052)
     Other, net   ....................       15      133         106        195
Minority interests....................      (11)     (43)       (183)      (134)
                                        -------  -------    --------   --------
   Income (loss) before income taxes..      (42)      49        (370)      (216)
Income tax benefit (expense)..........       13      (34)        149         72
                                        -------  -------    --------   --------
     Net income (loss)................  $   (29) $    15    $   (221)  $   (144)
                                        =======  =======    ========   ========

Net income (loss) per common share....  $  (.01) $   .00    $   (.04)   $  (.03)
Average number of shares used in 
   income (loss) per share 
   computation........................    4,983    4,961       4,968      4,784



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

                                       4
<PAGE>
 
                         The CHALONE Wine Group, Ltd.

            CONSOLIDATED STATEMENTS OF CHANGES IN FINANCIAL POSITION
                            (unaudited)(in thousands)


                                         Three Months Ended   Nine Months Ended
                                            September 30,       September 30,
                                          ----------------    ------------------
                                             1995     1994       1995      1994
                                          -------  -------    -------   -------
Cash flows from operating activities:
   Net earnings.......................... $   (29) $    15    $  (221)  $  (144)
   Non-cash transactions:
     Depreciation........................     293      316        922       952
     Amortization........................      37       37        113       110
     Increase in minority interest.......      10       40        183       130
     Loss (gain) on sale of equipment....      (8)      (3)       (29)       37
     Changes in:
       Deferred income taxes.............     (14)      15       (149)     (103)
       Accounts receivable...............     581     (310)      (619)     (289)
       Inventories.......................     477     (204)     2,869     1,127
       Prepaid expenses and other assets     (120)      24       (187)      (49)
       Accounts payable and accrued 
          expense........................      93      312       (262)     (937)
                                          -------  -------    -------   -------
       Net cash provided (required by)
         operating activities............   1,320      242      2,620       834
                                          -------  -------    -------   -------

Cash flows from investing activities:
   Capital expenditures..................  (1,242)    (992)    (1,769)   (1,256)
     Proceeds from disposal of
       equipment.........................      47      101        125       121
                                          -------  -------    -------   -------
       Net cash used in investing 
         activities .....................  (1,195)    (891)    (1,644)   (1,135)
                                          -------  -------    -------   -------

Cash flows from financing activities:
   Net repayments under line of credit
     agreement...........................    (143)     774       (682)     (813)
   Repayment of long-term debt...........     (86)    (166)      (328)     (539)
   Distribution to minority interest.....      --       --        (76)     (156)
   Proceeds from issuance of common stock       6      (19)        43     1,484
                                          -------  -------    -------   -------
     Net cash provided from financing
       activities........................    (223)     589     (1,043)      (24)
                                          -------  -------    -------   -------

Net increase (decrease) in cash..........     (98)     (60)       (67)     (325)
   Cash at beginning of period...........     101      156         70       421
                                          -------  -------    -------   -------
     Cash at end of period............... $     3  $    96    $     3   $    96
                                          =======  =======    =======   =======

                   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   consolidated   balance  sheet  as  of  September  30,  1995,  the
consolidated  statement of operations for the three-month and nine-month periods
ended September 30, 1995 and 1994, and the consolidated  statement of changes in
financial  position for the three-month  and nine-month  periods then ended have
been prepared by the Company,  without audit. In the opinion of management,  all
adjustments  (which  include  only normal  recurring  adjustments)  necessary to
present fairly position, results of operations and changes in financial position
at September 30, 1995, and for all periods presented have been made.

         Certain  information  and  footnote  disclosures  normally  included in
financial  statements  prepared in accordance with generally accepted accounting
principles  have  been  condensed  or  omitted.   It  is  suggested  that  these
consolidated  financial  statements  be read in  conjunction  with the financial
statements  and notes  included in the  Company's  December  31,  1994,  audited
financial statements.

NOTE 2 - Seasonal Factors
         The results for the interim periods are not  necessarily  indicative of
the results to be expected for the year, due to seasonal factors.




                                      6
<PAGE>

 
                          The CHALONE Wine Group, Ltd.


Item 2.    Management's Discussion and Analysis
           of Financial Condition and Results of Operations

<TABLE>

RESULTS OF OPERATIONS
         The following  table sets forth the percentage  relationship to revenue
of certain items in the Company's  statements of operations for the  three-month
and  nine-month  periods ended  September 30, 1995 and 1994,  and the percentage
change in such items between the comparable periods in those years.

<CAPTION>

                                     Three Months Ended           Nine Months Ended 
                                         September 30,               September 30,
                                  --------------------------   ----------------------------
                                   Percentage        Percent      Percentage        Percent
                                  of Wine Sales      Change      of Wine Sales      Change
                                  ----------------  --------   -----------------   --------
                                                     1994 vs.                      1994 vs.
                                    1995     1994      1995      1995      1994      1995
                                   -----     -----    -----     -----     -----     -----
<S>                                <C>       <C>      <C>       <C>       <C>       <C>  
Wine sales ...................     100.0%    100.0%     7.7%    100.0%    100.0%     18.1%
Cost of wines sold ...........      64.0      62.3     10.8      67.0      64.2      23.3
                                   -----     -----              -----     ----- 
   Gross profit ..............      36.0      37.7      2.4      33.0      35.8       8.7
Operating expenses ...........      23.0      24.7      0.5      21.7      23.6       8.3
                                   -----     -----              -----     ----- 
   Operating income ..........      13.0      13.0      6.0      11.3      12.2       9.5
Other income (expense)
   Interest expense ..........     (13.8)    (13.8)     7.1     (13.0)    (14.1)     (9.4)
   Other, net ................       0.2       2.7    (88.9)      0.6       1.3      45.6
Minority interests ...........      (0.2)     (0.9)   (73.5)     (1.1)     (0.9)     36.9
                                   -----     -----              -----     ----- 
   Income (loss) before income
    taxes ....................      (0.8)      1.0      n/a      (2.2)     (1.5)     76.6
Income tax (benefit) expense         0.2      (0.7)     n/a       0.9       0.5     116.1
                                   -----     -----              -----     ----- 
     Net income (loss) .......      (0.6)%     0.3%     n/a      (1.3%)    (1.0%)    57.3
                                   =====     =====              =====     =====  
</TABLE>

Wine Sales
         Sales were  $5,380,000 for the third quarter ended  September 30, 1995,
and  $17,214,000  for the nine months then ended.  Sales for the three-month and
nine-month  periods increased by 8% and 18%,  respectively,  over the comparable
periods in 1994,  due primarily to higher sales levels in the  out-of-California
markets and in custom  branded wines at Edna Valley  Vineyard and Carmenet.  The
increase in sales for the  three-month  period appears lower than the nine-month
period,  due to the effects of sales promotion in September,  1994, that was not
repeated in 1995, due to the sufficiently  strong demand for the Company's wines
in 1995.

Gross Profit
         Gross profit for the three-month and nine-month periods ended September
30, 1995, increased  approximately 2% and 9%, respectively,  over the comparable
periods in 1994.  These  increases were due primarily to the higher sales levels
mentioned above. Gross profit as a percentage of sales declined to approximately
36% and 33% for the three-month and nine-month  periods in 1995 from 38% and 36%
in the comparable periods in 1994. The decreases were primarily  attributable to
the increased sale of custom branded wines at lower gross profits. Additionally,
the mix of sales on the Company's branded wines has shifted to lower priced, and
lower margin  wines,  especially  at Carmenet and Chalone  Vineyard.  Management
believes this trend will reverse itself during the fourth quarter of 1995.

                                      7
<PAGE>
 
                          The CHALONE Wine Group, Ltd.

Item 2.    Management's Discussion and Analysis
           of Financial Condition and Results of Operations (Continued)

Operating Expenses
         Operating   expenses  include  selling,   general  and   administrative
expenses.   Operating  expenses  for  the  three-month  and  nine-month  periods
increased  by 1% and 8%,  respectively,  from the  comparable  periods  in 1994.
Operating  expenses as a percentage of sales for the  three-month and nine-month
periods  were  23%  and  22%,  respectively,  compared  to  25%  and  24% in the
comparable periods in 1994. These decreases are the result of operating expenses
increasing  at a lesser  rate than  sales  increases  experienced  during  those
periods.

Interest Expense
         Interest expense increased 7% and 9% for the three-month and nine-month
periods in 1995, over the comparable periods in 1994. The significant portion of
the Company's  borrowings  are tied to the "prime" rate charged by the Company's
bank, and that rate has increased by approximately  15% over 1994,  resulting in
increased  interest  expense.  That increase has been partially  offset by lower
working capital borrowings primarily due to lower inventory levels.

Other Income
          Other  income  decreased  by 89%  and  46%  for  the  three-month  and
nine-month periods in 1995, over the comparable periods in 1994. These decreases
are due primarily to the recognition of a one-time capital gain on the sale of a
49% interest in the "Canoe Ridge  Vineyard"  brand name and goodwill  associated
with that name to a group of investors in September, 1994.

<TABLE>
Minority Interest
     The  Company  currently  has three  ventures  in which  there is a minority
interest. The "minority interest" in earnings (losses) of these ventures for the
periods ended September 30, 1995, consisted of the following:

<CAPTION>

                                                                    Minority Interest in Earnings
                                                                              (Loss)
                                                                    -----------------------------
                                                                      3 Months         9 Months           
                                                                        Ended            Ended                
                                                         Minority     September        September
Venture                      Minority Owner                  %         30, 1995         30, 1995
-------                      --------------              --------     ---------        --------- 
<S>                          <C>                            <C>       <C>              <C>      
Edna Valley Vineyard (EVV)   Paragon Vineyard Co., Inc.     50%       $ 48,230         $ 182,815
CanoeCo Partners             CRVI                           50%        (11,854)          (26,720)
Canoe Ridge Winery (CRW)     Various                        49%        (24,891)           27,363
                                                                      --------------------------
                                                                      $ 11,485         $ 183,458
                                                                      ==========================
</TABLE>

         The "minority  interest"  amount for EVV  represents an increase of 37%
from the comparable  nine-month  period in 1994 due primarily to higher sales of
custom  branded wines  produced at EVV. The "minority  interest"  amount for CRW
represents  the results  for its first full year of  operation.  Allocations  to
"minority  interest" increase as income from EVV and CRW increases.  The Company
believes  that EVV and CRW will  continue  to  contribute  significantly  to its
income, and hence that "minority  interest" will continue,  proportionately.  An
additional small factor in the "minority interest"  calculation  consists of the
operations of the CanoeCo "Canoe Ridge"  vineyard  joint venture,  which to date
has produced  small losses  resulting  primarily  from  interest  expense on the
growing crop due to be harvested later in the year.

                                       8

<PAGE>
 
                          The CHALONE Wine Group, Ltd.

SEASONALITY
         The  Company's  wine sales from quarter to quarter are highly  variable
because the exact dates when wines are released for sale vary from year to year.
Sales are typically highest during the fourth quarter,  because of heavy holiday
sales and  because  most  wines  are  released  around  the end of the third and
beginning of the fourth quarters.

FINANCIAL CONDITION
         The  Company's  working  capital  decreased  by  $1,010,000  during the
nine-month  period  ending  September 30, 1995,  to  $16,126,000,  due to normal
capital  expenditures,  planned  repayments  of long-term  debt and the net loss
incurred.

         On October 25, 1995, the Company  received  $5,000,000 from the sale of
stock  (see  SIGNIFICANT  EVENT,  below.)  Those  proceeds  were  used to reduce
short-term borrowings under the Company's lines of credit. At November 10, 1995,
the Company had lines of credit  totaling  $15,700,000  of which  $8,440,000 had
been drawn.

         The Company is not aware of any potential  impairments to its liquidity
and  believes  that its capital  resources  are adequate to meet the current and
historic levels of capital expenditures and liquidity needs of the Company.

SIGNIFICANT EVENT
         Following a favorable vote from the Company's  shareholders  on October
25,  1995,  the  Company  concluded  a sale  of  stock  to  two  of its  largest
shareholders,   Domaines  Barons  de  Rothschild  (Lafite)  ("DBR")  and  Summus
Financial,  Inc., of $5 million at $6.00 per share,  provided equally by DBR and
Summus.  DBR and Summus will also  receive an  equivalent  number of warrants to
purchase  additional  shares at $8.00 per share. In addition,  DBR converted its
$12.4  million  holding of  debentures,  at $7.00 per share,  into 1.77  million
shares of Chalone common stock.

         Additionally,    effective   October   1,   1995,   Chalone   exchanged
substantially  all of its  existing  ownership  in DBR for a  23.5%  partnership
interest in Chateau Duhart-Milon,  a classified fourth growth Bordeaux estate in
Pauillac. DBR continues as the managing partner of Chateau Duhart-Milon.

                                       9


<PAGE>
 
                          The CHALONE Wine Group, Ltd.

                          PART II. - OTHER INFORMATION

Item 4.  Submission of Matters to a Vote of Security Holders
         A Special Meeting of Shareholders was duly called and held at the
Company's Napa,  California,  executive offices on October 25, 1995, to consider
approval  of a series of  transactions  between  the Company and its two largest
shareholders, Domaines Barons de Rothschild (Lafite) and Summus Financial, Inc.,
all pursuant to a certain  Omnibus  Agreement among the three said parties dated
August 22, 1995.  With the shares held by those two  shareholders  withheld from
voting,  the matter passed with the  affirmative  vote of 2,038,116  shares,  as
against 86,977 shares cast in opposition.

         A copy of the Omnibus  Agreement,  with its schedules and exhibits,  is
appended to this Report as Exhibit Two hereto.

Item 6.  Exhibits and Reports on Form 8-K

     (a) Exhibits.
         [1.] Financial Statements of Societe Civile de Duhart-Milon-Rothschild.
         [2.] Omnibus  Agreement with Domaines Barons de Rothschild (Lafite) and
              Summus Financial, Inc., dated August 22, 1995.
         [27] Financial Data Schedule

     (b) Reports.
         An  initial  report on Form 8-K, dated May 9, 1995, was filed to report
         the parties'  agreement  in  principle to the  transactions  ultimately
         embodied in the Omnibus Agreement  discussed  under Part II, Item 4, of
         this  Report.  Subsequent Forms 8-K/A,  Amendments 1-3, were thereafter
         filed on  August 1, August 2, and September 20, 1995, respectively,  to
         report and update financial statements thereto.


                                   SIGNATURES

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



                                                   The CHALONE Wine Group, Ltd.


Dated:  November 14, 1995                          BY /s/ William L. Hamilton
                                                     ---------------------------
                                                     William L. Hamilton
                                                     Executive Vice President
                                                     and Chief Financial Officer

                                       10