SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

___________________________________________________________

FORM 10-QSB
___________________________________________________________

Quarterly Report Pursuant to Section 13 or 15 (d) of the
Securities Exchange Act of 1934

For the Quarter Ended June 30, 2001

Commission File Number 0-21522

WILLAMETTE VALLEY VINEYARDS, INC.

 (Exact name of registrant as specified in charter)

              Oregon                       93-0981021
  (State or other jurisdiction of      (I.R.S. Employer
  incorporation or organization)     Identification Number)


___________________________________________________________


8800 Enchanted Way,  S.E., Turner, Oregon 97392
 (503)-588-9463

 (Address, including Zip code, and telephone number,
including area code, of registrant's principal executive offices)

___________________________________________________________

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.

                                            [X] YES       [  ] NO

Number of shares of common stock outstanding as of June 30, 2001
4,356,981 shares, no par value

Transitional Small Business Disclosure
                                           [  ] YES        [X] NO




                  WILLAMETTE VALLEY VINEYARDS, INC.
                       INDEX TO FORM 10-QSB


Part I - Financial Information

Item 1--Financial Statements

Balance Sheet

Statement of Operations

Statement of Cash Flows

Notes to Consolidated Financial Statements

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

Part II - Other Information

Item 1--Exhibits and Reports of Form 8-K

Item 5--Other Information

Signatures








PART 1              FINANCIAL INFORMATION
ITEM 1

                     Financial Statements


                  WILLAMETTE VALLEY VINEYARDS
                        Balance Sheet
                         (unaudited)
                                          June 30,          December 31,
                                            2001                2000
ASSETS.                                                    ____________
Current Assets:
  Cash and cash equivalents               $184,190          $  252,876
  Accounts receivable trade, net           654,265             564,020
  Inventories                            6,573,070           6,921,014
  Prepaid expenses and other
   current assets                          112,520              45,954
  Deferred income taxes                    118,951             118,951
                                         _________            _________
Total current assets                     7,642,996           7,902,815

Vineyard development cost, net           1,609,742           1,608,365
Property and equipment, net              5,706,769           5,989,169
Investments                                  9,974               4,974
Notes receivable                            71,984              56,869
Debt issuance costs, net                    58,485              50,061
Other assets                               211,878             185,619
                                         _________           _________
Total assets                       $    15,311,828        $ 15,797,872

LIABILITIES AND SHAREHOLDERS EQUITY

Current liabilities
  Line of credit                     $   1,350,000        $  2,616,549
  Notes Payable                          1,500,000                  -
  Current portion of long term debt        220,921             220,921
  Accounts payable                         546,806             847,883
  Accrued commissions and payroll          105,087             143,662
  Grapes payable                           566,971             914,366
                                          ________            ________
Total current liabilities                4,289,785           4,743,381

Long-term debt                           3,296,594           3,406,681
Deferred rent liability                     46,013              31,634
Deferred gain                              462,203             474,695
Deferred income taxes                   ___146,819          ___146,819
Total liabilities                        8,241,414           8,803,210

Shareholders' equity
  Common stock, no par value - 10,000,000
  shares authorized, 4,356,981 and 4,254,481
  shares issued and outstanding at June 30,
  2001 and December 31, 2000             6,980,597           6,817,613
Retained earnings                           89,817             177,049
                                        __________          __________
Total shareholders' equity               7,070,414           6,994,662

Total liabilities and shareholders'
equity                               $  15,311,828       $  15,797,872

The accompanying notes are an integral part of this financial statement.


                  WILLAMETTE VALLEY VINEYARDS, INC.
                      Statement of Operations
                            (unaudited)



                           Three months ended,       Six months ended
                                June 30,                   June 30,
                           2001         2000        2001         2000

Net Revenues
  Case Revenue       $ 1,519,404  $ 1,583,302  $ 2,996,682  $ 2,840,723
  Bulk Revenue                 -            -      210,355            -
Total Revenue          1,519,404    1,583,302    3,207,037    2,840,723


Cost of Sales
  Case                   710,638      771,593    1,427,884    1,405,962
  Bulk                         -            -      180,316            -
Total Cost of Sales      710,638      771,593    1,608,200    1,405,962

Gross Margin             808,766      811,709    1,598,837    1,434,761

Selling, general and
 administrative expenses 732,151      649,049    1,451,110    1,241,372

Net operating income      76,615      162,660      147,727      193,389

Other income (expense)
  Interest income          1,130          961        2,160        1,922
  Interest expense      (127,418)    (130,359)    (253,384)    (249,535)
  Other income             9,863        6,655       16,265       13,671

Net income (loss) before
 Income taxes            (39,810)      39,917      (87,232)     (40,553)

Income tax benefit             -            -            -            -

Net income (loss)        (39,810)      39,917      (87,232)     (40,553)

Retained earnings beginning of
 period                  129,627       81,517      177,049      161,971

Retained earnings end of
 period                   89,817      121,434       89,817      121,434

Basic gain (loss) per
 common share               (.01)         .01         (.02)        (.01)

Diluted gain (loss) per
 common share               (.01)         .01         (.02)        (.01)

Weighted average number of
 basic common shares
 outstanding           4,356,981    4,253,431    4,281,981    4,253,431

The accompanying notes are an integral part of this financial statement.


                  WILLAMETTE VALLEY VINEYARDS, INC.
                      Statement of Cash Flows
                            (unaudited)


                                              Six Months Ended June 30,

                                               2001                 2000

Cash flows from operating activities:
  Net loss                                  $  (87,232)      $  (40,553)
Reconciliation of net loss to net cash used
for operating activities:
  Depreciation and amortization                352,651          376,599
  Stock issued for compensation                  3,984                -

Changes in assets and liabilities:
  Accounts receivable trade                    (90,245)        (157,571)
  Inventories                                  347,944          (65,372)
  Prepaid expenses and other current assets    (66,566)          24,986
  Other assets                                 (26,259)               -
  Accounts payable                            (301,077)        (316,190)
  Accrued commissions and payroll              (38,575)         (28,632)
  Income tax payable                                 -          (42,244)
  Grapes payable                              (347,395)        (425,147)
  Deferred rent liability                       14,379                -
  Deferred gain                                (12,492)         (21,077)

Net cash used for operating activities        (250,883)        (692,228)


Cash flow from investing activities
  Construction expenditures and purchases
  of equipment                                 (46,963)         (50,217)
  Vineyard development expenditures            (33,089)         (84,903)
  Notes receivable                             (15,115)           2,973
  Investments                                   (5,000)               -


Net cash used by investing activities         (100,167)        (135,120)


Cash flows from financing activities:
  Line of credit borrowings (repayment)     (1,266,549)         715,000
  Notes Payable                              1,500,000
  Debt issuance cost                                 -            8,809
  Proceeds from issuance of common stock       159,000                -
  Decrease in long term debt                  (110,087)        (113,237)

Net cash provided by financing activities      282,364          610,572

Net decrease in cash and
  cash equivalents                             (68,686)        (216,776)

Cash and cash equivalents:
  Beginning of period                          252,876          219,041

  End of period                                184,190            2,265

The accompanying notes are an integral part of this financial statement.


NOTES TO CONSOLIDATED FINANCIAL STATEMENT

1) BASIS OF PRESENTATION

The interim financial statements have been prepared by the Company, without
audit and subject to year-end adjustment, in accordance with generally
accepted accounting principles, except that certain information and
footnote disclosure made in the latest annual report have been condensed
or omitted for the interim statements.  Certain costs are estimated for
the full year and are allocated to interim periods based on estimates of
operating time expired, benefit received, or activity associated with the
interim period.  The financial statements reflect all adjustments, which
are, in the opinion of management, necessary for fair presentation.






2) INVENTORIES BY MAJOR CLASSIFICATION ARE SUMMARIZED AS FOLLOW:


                                                June 30,    December 31,
                                                  2001           2000
Winemaking and packaging materials            $  654,937      $  273,189
Work-in-progress (costs relating
  to unprocessed and/or bulk
  wine products)                               1,906,874       2,415,006
Finished goods (bottled wines                  4,011,259       4,232,819
  and related products)                        _________      __________
                                           $   6,573,070      $6,921,014
                                               =========      ==========




3) PROPERTY AND EQUIPMENT CONSIST OF THE FOLLOWING:

                                                June 30,    December 31,
                                                  2001          2000

Land and improvements                  	      $  965,909    $   965,309
Winery building and hospitality center         4,552,321      4,549,081
Equipment                                      4,328,708      4,285,585
                                               _________      __________
                                           $   9,846,938     $9,799,975

Less accumulated depreciation                 (4,140,169)    (3,810,806)
                                               _________      __________
                                 	   $   5,706,769     $5,989,169
                                  	       =========      ==========


4) SUBSEQUENT EVENTS:

None.





ITEM 2

Management's Discussion and Analysis of Financial Condition
 and Results of Operations

Forward Looking Statement:

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

Management's Discussion and Analysis of
Financial Condition and Results of Operations

While the Company produced a net loss in the Second Quarter, we made
positive gains in gross profit due to improved sales of higher margin
products.  Management expects sales volumes to improve during the
remainder of the year, particularly in states other than Oregon,
continuing the increase in gross profit.

The first half of 2001 marked the Company's transition from numerous
independent distributors supported by a network of brokers to a single
network of affiliated distributors in over half of the national market.
The Company created a new top management position of National Sales
Manager to oversee the new distribution network and filled the
position in January increasing sales salary, travel, and marketing
expenses.  The Company has seen some benefits of the new relationship
in the increased out of state sales achieved in the quarter, though
not in the volumes expected.

Management considers the adoption of the consolidated distribution
network to be a very positive shift in our business practices.  This
shift will provide the Company a central focus on product sales, and
shared perspective on problems and solutions.  This change, though
positive, does involve risks.  Weaknesses in revenue generation will
develop should the distributors fail to perform; this impact will be
magnified due to the large portion of the market covered by the new
network.

During this second quarter, our products continued to garner numerous
accolades.  The Company's '98 Willamette Valley Vineyards Hoodview
Vineyard Pinot Noir and Estate Chardonnay received Gold Medals at the
Tasters Guild International Wine Judging.  The Company's '98 Willamette
Valley Vineyards Estate Vineyard Pinot Noir received a Silver Medal at
the Northwest Wine Summit.


RESULTS OF OPERATIONS

Revenue

Winery Operations
The Company's revenues from winery operations are summarized as follows:

                               Three Months ended     Six Months ended
                                      June 30,              June 30,
                                2001       2000         2001       2000

Tasting Room Sales
and Rental Income         $  314,239  $  255,016  $  537,290  $  401,427
On-site and off-site
 festivals                    48,886      76,443      99,306     209,489
In state sales               595,234     722,473   1,209,921   1,165,529
Out of state sales           597,132     587,385   1,230,487   1,165,419
Bulk wine/ Misc. sales        13,446           -     223,801       6,280
Total Revenue            $ 1,568,937 $ 1,641,317 $ 3,300,805 $ 2,948,144

Less Excise Taxes             49,533      58,015      93,768     107,421

Net Revenue              $ 1,519,404 $ 1,583,302 $ 3,207,037 $ 2,840,723


Tasting Room sales and rental income for the three months ending June 30,
increased 23% to $314,239 in 2001 from $255,016 for the same period in 2000.
For the first six months of 2001, sales increased 34% over the same period
in 2000.  Retail sales increased during the second quarter of 2001 due in
part to improved over-the-phone sales of the Preferred Customer
Representatives who are solely responsible to contact and promote sale of
wine to valued customers who have made significant purchases in the past.

On-site and off-site festival sales for the second quarter of 2001 decreased
36% to $48,886 from $76,443 over the second quarter of 2000.  During the
first half of 2001, sales in this category decreased 53% over the same
period in 2000.  This decrease in festival revenues is primarily due to a
change in focus from event driven sales to retail outlet sales.  The Company
has focused on retail sales that provide higher margins and lower associated
costs.

Sales in the state of Oregon, through the Company's independent sales force,
increased 1% to $518,903 in the second quarter of 2001 from $513,074 in the
second quarter of 2000.  The Company's direct instate sales to our largest
customer decreased 63% to $76,331 from $209,399 in 2000.  This decrease was
primarily the result of a price increase for Riesling because of the low
2000 harvest, due to a late frost, and resulting lack of volume.  For the
first half of 2001, in-state sales increased 4% over the same period in
2000.  This increase is due primarily to the buy-in on Riesling during
the first quarter prior to the price increase.

Out-of-state sales in the second quarter of 2001 increased 2% to $597,132
from $587,385 in the second quarter of 2000. In the second quarter of 2001,
the Company continued to experience growing pains from the transition to a
new sales structure and distribution network.  During the first quarter of
2001, the Company began a transition to a new network of affiliated
nationwide distributors.  This change included the hiring of a new Executive
Vice-President of Sales to oversee the distributor relationship, increasing
out of state sales expenses by 51%.


Excise taxes

The Company's excise taxes decreased in the second quarter of 2001 to
$49,533 from $58,015 the same period in 2000.  For the first half 2001,
excise taxes decreased to $93,768 from $107,421 for the same period in
2000.  This was due in part to the increased sales of high margin products
and decreased case depletions of lower margin products in the first half
of 2001, decreasing overall sales volumes and taxes paid by volume.

Gross Profit

Winery Operations

As a percentage of revenue, gross profit for the winery operations
increased to 53% in the second quarter of 2001 as compared to 51% in the
second quarter of 2000.  This increase is a result of the lower sales of
lower margin products, such as Riesling, and higher sales of higher margin
products like Pinot Noirs.  The Company expects the gross margins in 2001
to be higher than in 2000 due to the Company's focus on, and improved
distribution of, higher margin products. The Company plans to continue to
eliminate some of its problem inventory by accepting lower margins and
turning the inventory into cash.  This will help bring inventory to what
management considers a desirable operation level, but could depress gross
margins.

Selling, General and Administrative Expenses

Selling, general and administrative expenses increased 13% to $732,151 in
the second quarter of 2001 from $649,049 in the second quarter of 2000.
For the first half of 2001, selling, general and administrative expenses
increased 17% to $1,451,110 from $1,241,372 in the first half of 2000.
As a percentage of revenue from winery operations, selling, general and
administrative expenses increased to 48% in the second quarter of 2001
from 41% in the second quarter of 2000. The Company increased its
spending in the first half of 2001 in several categories. In the first
half of 2001, the Company invested in its new distribution agreement
through increased sales payroll expenditures, and sales and marketing
travel expenses.


Interest Income, Other Income and Expense

Interest income increased to $1,130 for the second quarter of 2001 from
$961 for the second quarter of 2000.  Interest expense decreased to
$127,418 in the second quarter of 2001 from $130,359 in 2000. Interest
costs were lower because the Company paid lower interest rates on its
line of credit, and because the company paid down half of its line of
credit during the quarter.  Other income increased to $9,863 for the
second quarter 2001 from $6,655 for the second quarter of 2000.


Income Taxes

The Company experienced a net loss for the first six months in 2001.
No income tax benefit has been recorded.


Liquidity and Capital Resources

At June 30, 2001, the Company had a working capital balance of $3.4
million and a current ratio of 1.8:1.  At December 31, 2000, the Company
had a working capital balance of $3.2 million and a current ratio of 1.7:1.

The Company had a cash balance of $184,190 at June 30, 2001.

At June 30, 2001, the line of credit balance was $1,350,000. On May 2, 2001,
the Company obtained an extension of its line of credit from Farm Credit
Services. This extended the maturity date of the line of credit from May 1,
2001 to August 1, 2001. As of this date, Farm Credit Services has extended
the Company's line of credit until October 1, 2001. The Company is
finalizing alternate financing and expects to have a new line of credit in
place by October 1, 2001, the maturity date of the current line of credit.

As of June 30, 2001, the Company had a total long-term debt balance of
$3,517,515 owed to Farm Credit Services. This debt was used to finance
the Hospitality Center, invest in winery equipment to increase the
Company's winemaking capacity, complete the storage facility, and
purchase Tualatin Vineyards. At December 31, 2000, the Company was in
violation of 3 of 5 of its debt coverage covenants.  Farm Credit
Services has signed a waiver letter to the Company for these covenants.

At June 30, 2001, the Company owed $566,971 on grape contracts.  A large
portion is owed to a single grape grower, which will be paid as the wine
made from those grapes is sold.



PART II.               OTHER INFORMATION


Item 1
               Exhibits and Reports on Form 8-K.

(a) No Exhibits

Item 5 - Other Information

In connection with its ongoing transition to a national network of
affiliated distributors, the Company has entered into an agreement with
fourteen affiliated distributors under which the Company's products will
be distributed in certain states.  As part of that agreement, the Company
has agreed to pay the distributors incentive compensation if certain
sales goals are met over the next five years.  The incentive compensation
will be paid only in the event of a transaction in excess of $12 million
in value in which either the Company sells all or substantially all of
its assets or a merger, sale of stock, or other similar transaction
occurs, the result of which is that the Company's current shareholders do
not own at least a majority of the outstanding shares of capital stock of
the surviving entity.  Assuming the $12 million threshold is met and the
distributors meet certain sales goals, the distributors will be entitled
to incentive compensation equal to 20% of the total proceeds from the
sale or transaction and up to 17.5% of the difference between the
transaction value and approximately $8.5 million.



SIGNATURES


Pursuant to the requirements of the Security Exchange Act of 1934,
as amended, the Registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.


                 WILLAMETTE VALLEY VINEYARDS, INC.




Date:                         By /s/ James W. Bernau
                                  James W. Bernau
                                  President


Date:                          By /s/ Sean M. Cary
                                  Sean M. Cary
                                  Controller