Canandaigua Brands Reports Fourth Quarter Results

Fairport, New York, April 15, 1999 -- Canandaigua Brands, Inc. (Nasdaq: CBRNA and CBRNB) today reported net income before extraordinary items of $12 million for the three months ended February 28, 1999 ("Fourth Quarter 1999") and $62 million for the twelve months ended February 28, 1999 (" Fiscal 1999"), increases of 85 percent and 31 percent, respectively. Net income before extraordinary items for both Fourth Quarter 1999 and Fiscal 1999 includes an after-tax nonrecurring charge of approximately $2 million arising from the closing of a production facility. Earnings per share on a diluted basis before extraordinary items but inclusive of the nonrecurring charge were $0.65 for Fourth Quarter 1999 and $3.30 for Fiscal 1999, increases of 97 percent and 34 percent as compared to Fourth Quarter 1998 and Fiscal 1998.

All results reflect a change in the Company's method of accounting for inventory valuation from the last-in, first-out (LIFO) method to the first-in, first-out (FIFO) method. The Company made this change in accounting method primarily to better match revenues and expenses of the products sold and to provide financial comparability to other publicly-traded companies in the industry.

Richard Sands, President and Chief Executive Officer of Canandaigua Brands, said, "This has been an outstanding year for our Company in many areas. Corona Extra continued its powerful momentum. We had one of the most successful new product launches in wine history with Arbor Mist, and we increased the Company's size and scope dramatically with the acquisition of Matthew Clark plc in December 1998." Mr. Sands added, "Fiscal 2000 also promises to be an exciting year for us, having recently announced our first acquisition in the ultra-premium wine category - the prestigious Simi Winery in Sonoma, California - and having completed the acquisition of the Black Velvet and other Canadian whisky brands this month. We are looking forward to taking advantage of the momentum we've gained in our branded business to add value for our shareholders in the upcoming years."

Consolidated Results

Net sales reached $459 million in Fourth Quarter 1999, a 63 percent increase over Fourth Quarter 1998. Net sales for Fiscal 1999 totaled $1.5 billion, a 23 percent increase over Fiscal 1998.

Gross profit improved by $58 million, or 73 percent, in Fourth Quarter 1999. Gross profit for Fiscal 1999 reached $448 million, a 30 percent increase as compared to Fiscal 1998. Increased sales and improved gross profit margins accounted for the additional gross profits in both Fourth Quarter 1999 and Fiscal 1999.

Selling, general and administrative expenses reached $97 million in Fourth Quarter 1999, a $37 million increase, most of which was related to the Matthew Clark business acquired during the quarter. The remainder of the increase is attributable to incremental marketing costs. Selling, general and administrative expenses of $300 million in Fiscal 1999 were $68 million higher than in Fiscal 1998 for the same reasons.

Operating income in both Fourth Quarter 1999 and Fiscal 1999 was affected by the $3 million nonrecurring charge related to the closing of a production facility. Net interest expense increased to $18 million in Fourth Quarter 1999 from $8 million in Fourth Quarter 1998. For Fiscal 1999, net interest expense reached $41 million from $32 million in Fiscal 1998. The increases in both periods resulted from the Matthew Clark acquisition during Fourth Quarter 1999.

Net income and earnings per share before extraordinary items were $12 million and $0.65 in Fourth Quarter 1999 as compared to $6 million and $0.33 in Fourth Quarter 1998. Net income and earnings per share before extraordinary items were $62 million and $3.30 in Fiscal 1999 as compared to $47 million and $2.47 in Fiscal 1998. The Company incurred an extraordinary charge of $11 million after taxes in Fourth Quarter 1999. This charge resulted from fees related to the replacement of the Company's bank credit facility. The extraordinary charge reduced diluted earnings per share by $0.62 in Fourth Quarter 1999 and $0.61 in Fiscal 1999.

Barton Incorporated

Barton net sales, led by Corona Extra, grew by 10 percent in Fourth Quarter 1999, resulting from a 15 percent increase in beer sales and a 3 percent increase in spirits sales. For the full year Barton's net sales increased by 17 percent, primarily as a result of a 27 percent increase in sales of beer brands led by Barton's Mexican portfolio.

Operating income more than tripled in Fourth Quarter 1999, primarily as a result of the increased sales and a nonrecurring expense related to a management change which reduced operating income in Fourth Quarter 1998. Operating income for Fiscal 1999 increased by 33 percent, largely as a result of the volume increases in the fiscal year and the nonrecurring charge in the prior year, partially offset by higher marketing costs associated with the increased sales.

Canandaigua Wine Company, Inc.

Net sales of the Company's Canandaigua Wine Company segment increased by 3 percent in Fourth Quarter 1999, led by two new wine products, Arbor Mist and Mystic Cliffs, as well as an 8 percent increase in the Almaden boxed wine brand. These increases were partially offset by declines in many of the Company's table wine brands. Net sales for Fiscal 1999 grew by 4 percent, also as a result of the new brands and Almaden boxed wine growth, partially offset by declines in other table wine brands.

Canandaigua Wine Company's operating income declined by 31 percent in Fourth Quarter 1999. Higher gross profit resulting from increased sales and cost improvements was more than offset by investment in marketing costs to launch the Company's new brands and grow market share for core brands. Operating income for Fiscal 1999 grew by 2 percent, with incremental gross profit from additional sales volume and cost savings initiatives partially offset by higher marketing costs.

Canandaigua Wine Company expects to incur a pretax nonrecurring charge in Fiscal 2000 of approximately $2 million to reflect severance and related costs associated with management changes.

Matthew Clark plc

The acquisition of Matthew Clark plc was completed in Fourth Quarter 1999. As such, its results are the same for for both Fourth Quarter 1999 and Fiscal 1999. Net sales for both periods were $159 million. Operating income of $9 million for both periods is net of a $3 million nonrecurring charge related to a cider production facility consolidation program that was begun prior to the acquisition. Operating income exclusive of the nonrecurring charge was $12 million. Matthew Clark expects to incur additional pretax nonrecurring costs of approximately $3 million in Fiscal 2000 for the completion of the facility consolidation.

Canandaigua Brands, Inc., headquartered in Fairport, New York, is a leading producer and marketer of beverage alcohol brands in the United States and the United Kingdom. As the second largest supplier of wine, the second largest importer of beers and the fourth largest supplier of distilled spirits, Canandaigua Brands is the largest single-source supplier of these products in the United States. In the United Kingdom, Canandaigua Brands is a leading provider of wine and cider, as well as the premier independent wholesaler of beverage alcohol products.