Wine Industry Report

Willamette Valley Vineyards, Inc. (Nasdaq: WVVI), sales revenue increased 56% and Net Income before taxes increased 303% for the three months ended March 31, 2006, as compared to the prior year period.

Sales to out-of-state distributors continued to be the primary reason
for the increases in sales revenue and profitability during the three month
period ending March 31, 2006. Sales to out-of-state distributors increased
153% for the three months ended March 31, 2006 as compared to the prior
year period. Depletions of the Company’s products by its out-of-state
distributors to their retail customers increased 68% in the three months
ended March 31, 2006 compared to the prior year period.

This continued increase in demand for the Company’s products has
further constrained the Company’s inventory of its core products in
national distribution. Management expects to receive less revenue from the
sales of Vintage Pinot Noir, the Company’s flagship in each of the years
2006 and 2007 than it did in 2005. The case sales of Vintage Pinot Noir in
2005 exceed inventory of this product estimated to be available for sale in
each of the years 2006 and 2007. Inventories of Whole Cluster Pinot Noir,
Pinot Gris and Riesling available for sale in 2006 are approximately the
same as sales of these products in 2005. The Company has placed these
varieties on allocation with its distributors, and has made careful, upward
price adjustments as new vintages were released in order to address these
inventory constraints.

The Company has planted additional acreage and contracted on a long
term basis (10 years) for 90 acres of Pinot Gris and Riesling which was
planted in 2005 and 100 acres of Pinot Noir and 70 acres of Pinot Gris and
Riesling in 2006 bringing the total owned and contracted vineyard to 478
acres which will produce approximately 120,000 cases when fully productive.

The Company has garnered two national wine list placements with a well
known restaurant chain and is conducting wine dinners in 2006 in over 50 of the chain’s restaurants throughout the country, taking the story of fresh
seafood and Northwest cuisine paired with wines produced by Willamette
Valley Vineyards to wine consumers. The restaurant organization and the
Company are jointly promoting these dinners to local food and wine writers.

In conjunction with these wine dinners and through national promotion,
the Company is conducting its second annual, “Why I Love Oregon Pinot Noir” essay contest, where the winner will receive an all expense paid weekend trip to Oregon Wine Country. The contest to date has identified a number of passionate Pinot Noir enthusiasts.

Since the Management’s last filing, the Willamette Valley Vineyards
Pinot Noir was named among the most popular Pinot Noirs on restaurant wine lists in Wine & Spirits Magazine, Pinot Noir expert Gregory Walters in his “Pinot Report” rated the Hoodview Pinot Noir a “92″, national writer Leslie Sbrocco in Epicurious.com featured the ‘05 Whole Cluster Pinot Noir, award winning author Kevin Zraly in his “American Wine Guide” recommended the Company’s Pinot Noir, the ‘04 Pinot Gris was ranked by the San Francisco Chronicle among its top 100 wines and the newly released ‘05 Pinot Gris was named a winner of the prestigious Oyster Competition and earned a gold medal at the Riverside International Wine Competition. The ‘05 Riesling earned the Best of Oregon designation and gold medal from the Northwest Wine Summit.

Willamette Valley Vineyards, Inc. is headquartered in Turner, Oregon.
The company is one of Oregon’s leading wineries and the state’s only
publicly held winery. Willamette Valley Vineyards is the owner of Tualatin
Estate Vineyards and Griffin Creek wines. Willamette Valley Vineyards
common stock is traded on NASDAQ (Symbol: WVVI).