Wine Industry Report

Revenues for the second quarter of 2006 totaled $1.5 million, compared
to $0.8 million for the second quarter of 2005. This increase was
attributable to increased sales of bulk wine, and revenues generated by the
Company’s new winery, which began operations in September of 2005. The net loss for the three months ended June 30, 2006 was $1.4 million ($1.37 per share), compared to a net loss of $301,000 ($0.29 per share) in 2005.

Revenues for the six months ended June 30, 2006 totaled $8.5 million,
compared to $1.8 million for the same period of 2005. This increase was
driven primarily by sales of bulk wine. The net loss for the six months
ended June 30, 2006 was $932,000 ($0.91 per share), compared to a net loss of $944,000 ($0.92 per share) in 2005.

Commenting on the results, Mr. Mike Thomsen, Chief Financial Officer of
Scheid Vineyards, said, “The timing of revenues in our business fluctuates
from quarter-to-quarter and is difficult to predict, therefore, results
from the first half of the year are not indicative of what should be
expected for the full calendar year. The annual grape harvest occurs in
September and October and revenues derived from grape sales, as well as
crush fees from winery operations, are recognized at that time.”

Mr. Thomsen continued, “For the first six months of 2006, sales of bulk
wine totaled $7.4 million, as compared to $1.3 million for the 2005 period.
This increase was due primarily to the increase in the amount of bulk wine
that was sold by the Company after the 2005 grape harvest. In addition, the
Company’s winery generated approximately $0.5 million in storage and
processing revenues during the first six months of 2006. Primarily as the
result of the increase in bulk wine sales, gross profit increased to $3.2
million for the first six months of 2006, compared to $0.6 million in 2005.
The gross profit margin on revenues increased to 38% for the first six
months of 2006, compared to 34% in 2005, primarily as a result of the
revenues produced by the Company’s winery.

The increase in gross profit for the first six months of 2006 was
offset by a $0.7 million increase in legal, accounting, and administrative
expenses, primarily from fees related to the Company’s reverse stock split
in May 2006, and the additional overhead necessary to operate the Company’s new winery. In addition, interest expense increased to $1.2 million during the first six months of 2006, as compared to $0.4 million in 2005, due to increased borrowings to fund the construction of the Company’s winery. It should be noted that the profit results for the 2005 period reflect a gain of $0.9 million from the sale of vineyard land and certain equipment. There were no similar sales in the first half of 2006.”

2006 Harvest Update
Commenting on the outlook for the upcoming 2006 harvest, Mr. Scott
Scheid, President and Chief Executive Officer, stated, “The 2006 growing
season has been characterized by a very wet spring followed by a warm early summer. In late July, all of California experienced a prolonged and
record-breaking heat wave. This heat wave does not appear to have had a
significant adverse affect on the crop, although it is not possible to
predict actual crop size and future weather conditions or other factors may
affect the ultimate size of the crop. At this time, however, management
anticipates that yields from the Company’s vineyards in 2006 will be at
average levels for most varieties. The grape harvest usually begins in
early September in the Company’s southernmost vineyards, and it is expected that the harvest will be in full swing in late September. This timing is normal for wine grape vineyards in the Central Coast.”

Stock Repurchase Program
Scheid also announced today that its Board of Directors has approved a
stock repurchase program in which the Company may use up to $1 million in open market transactions to purchase outstanding shares of its Class A
Common Stock at such times, and in such amounts or blocks, as management deems appropriate.

About Scheid Vineyards Inc.
Scheid Vineyards Inc. (http://www.scheidvineyards.com) is an independent producer of premium wine grapes and bulk wine. The Company operates approximately 5,700 acres of vineyards, primarily in Monterey County, California. The Company sells most of its grape production under short and long-term grape and bulk wine contracts to wineries producing high quality table wine. The Company also operates a winery with an approximately 13,000 ton processing capability in which the Company produces bulk wine, as well as a small amount of ultra premium wine under its own label. The Class A Common Stock of Scheid Vineyards is traded on the Pink Sheets Electric Quotation Service under the stock symbol SVIN. The “Pink Sheets” is a centralized quotation service that collects and publishes market maker quotes in real time, primarily through its website, http://www.pinksheets.com.

                     SCHEID VINEYARDS INC. AND SUBSIDIARY
                         CONSOLIDATED BALANCE SHEETS
                  (Amounts in thousands, except share data)
                                 (Unaudited)
                                                     June 30,   December 31,
                                                       2006           2005
                      ASSETS
    CURRENT ASSETS:
     Cash and cash equivalents                          $200         $1,197
     Accounts receivable                               1,005         10,273
     Inventories                                      10,654          6,992
     Supplies, prepaid expenses and
      other current assets                             1,118            949
     Deferred income taxes                               250              -
        Total current assets                          13,227         19,411
    PROPERTY, PLANT AND EQUIPMENT, net                72,267         69,964
    OTHER ASSETS, net                                    548            550
                                                     $86,042        $89,925

    LIABILITIES AND STOCKHOLDERS' EQUITY
    CURRENT LIABILITIES:
     Accounts payable and accrued liabilities         $1,583         $2,956
     Deferred revenues                                     -            233
     Income taxes payable                                  -          1,612
     Deferred income taxes                                 -            398
        Total current liabilities                      1,583          5,199
    LONG-TERM DEBT, net of current portion            36,429         35,804
    DEFERRED INCOME TAXES                              6,905          6,905
        Total liabilities                             44,917         47,908
    STOCKHOLDERS' EQUITY:
     Preferred stock, $.001 par value; 2,000,000
      shares authorized; no shares issued
      and outstanding                                      -              -
     Common stock,
      Class A, $.001 par value; 4,000,000 shares
       authorized; 805,117, and 409,250 shares
       outstanding at June 30, 2006 and
       December 31, 2005, respectively
      Class B, $.001 par value; 2,000,000 shares
       authorized; 219,443 and 612,443 and shares
       issued and outstanding at June 30, 2006
       and December 31, 2005, respectively                 1              1
    Additional paid-in capital                        21,973         21,898
    Retained earnings                                 26,736         27,668
    Less: treasury stock; 309,829 and 308,829
     Class A shares at cost at June 30, 2006
     and December 31, 2005, respectively             (7,585)        (7,550)
        Total stockholders' equity                    41,125         42,017
                                                     $86,042        $89,925

                     SCHEID VINEYARDS INC. AND SUBSIDIARY
                    CONSOLIDATED STATEMENTS OF OPERATIONS
                (amounts in thousands, except per share data)
                                 (Unaudited)

                                      Three Months Ended   Six Months Ended
                                           June 30,            June 30,

                                          2006     2005      2006      2005
    REVENUES:
     Bulk wine sales                     $906     $444     $7,391    $1,255
     Winery processing and
      other revenues                      206        -        460         -
     Vineyard management, services
      and other fees                      241      218        409       391
     Tasting room revenues                109       95        214       171
        Total revenues                  1,462      757      8,474     1,817
    COST OF SALES                       1,418      466      5,256     1,197
    GROSS PROFIT                           44      291      3,218       620
     General and administrative
      expenses                          1,615    1,220      3,176     2,518
     Selling expenses                     181      138        311       244
     Write-down of
      vineyard improvements                 -        -        120         -
     Interest expense                     624      247      1,203       394
     Investment and interest
      (income) loss                       (2)        -        (5)      (31)
     Gain on sales of land
      and equipment                       (7)    (813)        (7)     (931)
    LOSS BEFORE INCOME TAX BENEFIT    (2,367)    (501)    (1,580)   (1,574)
    INCOME TAX BENEFIT                    970      200        648       630
    NET LOSS                         $(1,397)   $(301)     $(932)    $(944)

    BASIC AND DILUTED NET LOSS
     PER SHARE                        $(1.37)  $(0.29)    $(0.91)   $(0.92)

    WEIGHTED AVERAGE SHARES
     OUTSTANDING                        1,022    1,021      1,023     1,021

[Source: Scheid Vineyards Inc.]