Constellation's Strong Beer & Spirits Sales Result in Higher Than Expected First Quarter Earnings per Share

Company Raises Full-Year Earnings per Share Guidance

FAIRPORT, N.Y., June 30 /PRNewswire-FirstCall/ -- Constellation Brands, Inc. (NYSE: STZ, ASX: CBR), a leading international producer and marketer of beverage alcohol brands, reported record net sales of $927 million, a 20 percent increase, for its first quarter ended May 31, 2004. Pro forma net sales for the quarter, which include $31 million of sales from Hardy for March 2003, increased 15 percent driven by growth across all categories - imported beer, spirits, wine and the U.K. wholesale business. Currency contributed six percent of the increase.

"Our first quarter results represent a tremendous start to the new year and continue to demonstrate the strength of our strategy of breadth and scale leading to profitable growth," said Chairman and Chief Executive Officer Richard Sands. "Our recent beer price increase was well received in all channels resulting in a quicker volume rebound than we anticipated and our spirits business posted another quarter of sales growth that exceeded our expectations. Our wine business continued to experience healthy growth as evidenced by strong consumer purchases in all our major markets. With these strong results we are raising our full year earnings per share estimates."

Net income as reported under generally accepted accounting principles ("reported") for first quarter increased 31 percent to $51 million and reported diluted earnings per share increased 10 percent to $0.45. First quarter 2005 reported results include restructuring and related charges and net unusual costs of $8 million after tax, or $0.07 per share. First quarter 2004 reported results also include restructuring and related charges and net unusual costs of $8 million after tax, or $0.08 per share. Net income on a comparable basis, excluding the restructuring and related charges and net unusual costs, increased 27 percent to $60 million and comparable diluted earnings per share increased six percent to reach $0.52 per share. Earnings per share growth was negatively impacted by additional shares outstanding primarily as a result of the company's equity offerings in July 2003 which paid down debt incurred to partially finance the Hardy acquisition.

Net income and diluted earnings per share on a comparable basis exclude restructuring and related charges and net unusual costs. The company discusses results on a comparable basis in order to give investors better insight on underlying business trends from continuing operations. A table reconciling these measures and other related financial measures to reported results is included in this release. For a detailed discussion of these items, please see the section "Items Affecting Comparability" following the financial statements.

The company's measure of segment profitability excludes restructuring and related charges and net unusual costs, which is consistent with the measure used by management to evaluate results.

Constellation Beers and Spirits Results

Net sales for the quarter grew 14 percent to reach $316 million on both strong beer and spirits growth. Beer sales increased 14 percent driven by both pricing and volume gains on Corona Extra, Corona Light, Modelo Especial, Pacifico and Negra Modelo. The company's beer volumes rebounded quicker than expected following a planned price increase to wholesalers on its Mexican beers, which began to take effect in January 2004 and resulted in strong wholesaler demand prior to the price increase.

A seven percent increase in branded spirits sales and a sharp increase in production services sales resulted in total spirits sales improving 13 percent. The seven percent rise in branded sales was driven by Black Velvet Canadian Whisky, Montezuma Tequila, Fleischmann and Barton vodkas, the 99 Cordials range and Chi-Chi's prepared cocktails.

Operating income for Constellation Beers and Spirits grew 13 percent to reach $68 million for the first quarter due primarily to higher sales. Operating margins remained relatively even as increased gross profit margins were offset by increases in advertising, marketing and general expenses to support growth initiatives.

Constellation Wines Results

With growth in branded wines and the U.K. wholesale business, net sales for first quarter fiscal 2005 increased 23 percent to $611 million, including an eight percent benefit from currency.

Branded wine sales increased 17 percent to reach $364 million, primarily due to an additional month of sales from the Hardy acquisition and a five percent benefit from currency. Pro forma net sales of branded wine, which include $27 million of sales from Hardy for March 2003, increased eight percent for the quarter, including six percent from currency. Consumer purchases remained healthy across the company's wine categories and geographies, and wine shipments were strong in the U.K. and Australia. In the U.S., sales to retailers and consumer purchases exceeded company shipments.

Wholesale and other sales increased 34 percent driven by the U.K. wholesale business, which added new accounts and increased sales in existing accounts. Nearly half this increase was due to the benefit of currency.

Operating income for Constellation Wines in first quarter fiscal 2005 increased 11 percent to reach $68 million. Operating margins were 11.1 percent in the quarter versus 12.3 percent in the prior year. The decline in margins was due to a greater volume of sales of lower margin products, and increased advertising spend.

In summarizing the first quarter results Sands concluded, "With a broad portfolio of beverage alcohol products, strong global routes-to-market and independent businesses managing this wide breadth and scale within their geographies, we are able to take advantage of different market forces to consistently grow the business and deliver shareholder value."

Outlook

The following table sets forth management's current diluted earnings per share expectations both on a reported basis and comparable basis for the second quarter ending August 31, 2004 and fiscal year ending February 28, 2005. The table also includes actual diluted earnings per share both on a reported basis and comparable basis for the same periods a year ago. A reconciliation of reported information to comparable information is included in this media release.


           Constellation Brands Second Quarter and Fiscal Year 2005
                      Diluted Earnings Per Share Outlook

                                 Reported Basis          Comparable Basis
                               FY05      FY04 Actual    FY05       FY04 Actual
                             Estimate                 Estimate
    Second Quarter Ending
     August 31             $0.66 - $0.69   $0.34    $0.68 - $0.71    $0.64
    Full Year Ending
     February 28/29        $2.42 - $2.52   $2.06    $2.57 - $2.67    $2.49
About Constellation

Constellation Brands, Inc. is a leading international producer and marketer of beverage alcohol brands with a broad portfolio across the wine, spirits and imported beer categories. Well-known brands in Constellation's portfolio include: Corona Extra, Pacifico, St. Pauli Girl, Black Velvet, Fleischmann's, Mr. Boston, Paul Masson Grande Amber Brandy, Franciscan Oakville Estate, Estancia, Simi, Ravenswood, Blackstone, Banrock Station, Hardys, Nobilo, Alice White, Vendange, Almaden, Arbor Mist, Stowells and Blackthorn.

Quarterly Conference Call

A conference call to discuss first quarter fiscal 2005 results will be hosted by Chairman and CEO Richard Sands and Executive Vice President and Chief Financial Officer Tom Summer on Wednesday, June 30, 2004 at 5:00 p.m. (Eastern). The conference call can be accessed by dialing 412-858-4600 beginning 10 minutes prior to the start of the call. A live listen-only web cast of the conference call, together with a copy of this press release (including the attachments) and other financial information that may be discussed in the call are available on the Internet at Constellation's web site: http://www.cbrands.com under "Investors."

FORWARD-LOOKING STATEMENTS

The statements made under the heading Outlook (collectively, the "Outlook"), as well as all other statements set forth in this press release which are not historical facts, are forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from those set forth in or implied by the forward-looking statements.

During the quarter, Constellation may reiterate the estimates set forth above under the heading Outlook. Prior to the start of the company's quiet period, beginning August 18, the public can continue to rely on the Outlook as still being Constellation's current expectations on the matters covered, unless Constellation publishes a notice stating otherwise.

Beginning August 18, 2004, Constellation will observe a "quiet period" during which the Outlook no longer constitutes the company's current expectations. During the quiet period, the Outlook should be considered to be historical, speaking as of prior to the quiet period only, and not subject to update by the company.

The company's forward-looking statements are based on management's current expectations and, unless otherwise noted, do not take into account the impact of any future acquisition, merger or any other business combination, divestiture or financing that may be completed after the date of this release. Any projections of future results of operations, and in particular, (i) the company's estimated diluted earnings per share on a reported basis for second quarter 2005 and fiscal 2005, and (ii) the company's estimated diluted earnings per share on a comparable basis for second quarter 2005 and fiscal 2005, should not be construed in any manner as a guarantee that such results will in fact occur. In addition to the risks and uncertainties of ordinary business operations, the forward-looking statements of the company contained in this press release are also subject to the following risks and uncertainties: the company achieving certain sales projections and meeting certain cost targets; wholesalers and retailers may give higher priority to products of the company's competitors; raw material supply, production or shipment difficulties could adversely affect the company's ability to supply its customers; increased competitive activities in the form of pricing, advertising and promotions could adversely impact consumer demand for the company's products and/or result in higher than expected selling, general and administrative expenses; a general decline in alcohol consumption; increases in excise and other taxes on beverage alcohol products; and changes in foreign currency exchange rates. For additional information about risks and uncertainties that could adversely affect the company's forward-looking statements, please refer to the company's filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the fiscal year ended February 29, 2004.





                   CONSTELLATION BRANDS, INC. AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                 (in thousands)

                                              May 31, 2004   February 29, 2004
    ASSETS
    CURRENT ASSETS:
         Cash and cash investments                 $11,443           $37,136
         Accounts receivable, net                  711,847           635,910
         Inventories, net                        1,315,356         1,261,378
         Prepaid expenses and other                141,589           137,047
             Total current assets                2,180,235         2,071,471
    PROPERTY, PLANT AND EQUIPMENT, net           1,060,706         1,097,362
    GOODWILL                                     1,501,912         1,540,637
    INTANGIBLE ASSETS, net                         723,887           744,978
    OTHER ASSETS                                    82,334           104,225
         Total assets                         $  5,549,074      $  5,558,673

    LIABILITIES AND STOCKHOLDERS' EQUITY
    CURRENT LIABILITIES:
         Notes payable to banks                 $  243,552          $  1,792
         Current maturities of long-term
          debt                                     108,927           267,245
         Accounts payable                          361,506           270,291
         Accrued excise taxes                       55,377            48,465
         Other accrued expenses and
          liabilities                              397,979           442,009
             Total current liabilities           1,167,341         1,029,802
    LONG-TERM DEBT, less current
     maturities                                  1,736,159         1,778,853
    DEFERRED INCOME TAXES                          178,258           187,410
    OTHER LIABILITIES                              156,633           184,989
    STOCKHOLDERS' EQUITY                         2,310,683         2,377,619
         Total liabilities and
          stockholders' equity                $  5,549,074      $  5,558,673


                 CONSTELLATION BRANDS, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF INCOME
                             ON A REPORTED BASIS
                    (in thousands, except per share data)

                                             For the        For the
                                              Three          Three
                                           Months Ended  Months Ended  Percent
                                           May 31, 2004  May 31, 2003  Change
     Sales                                  $1,174,315      $990,240     19%
     Excise taxes                             (247,010)     (217,438)    14%
          Net sales                            927,305       772,802     20%
     Cost of product sold                     (676,843)     (563,717)    20%
          Gross profit                         250,462       209,085     20%
     Selling, general and administrative
      expenses                                (138,428)     (107,802)    28%
     Restructuring and related charges          (1,613)       (2,316)   -30%
          Operating income                     110,421        98,967     12%
     Gain on change in fair value of
      derivative instruments                         -         1,181   -100%
     Equity in earnings of equity method
      investees                                     62           328    -81%
     Interest expense, net                     (30,281)      (39,243)   -23%
          Income before income taxes            80,202        61,233     31%
     Provision for income taxes                (28,873)      (22,044)    31%
          Net income                            51,329        39,189     31%
     Dividends on preferred stock               (2,451)            -     N/A
          Income available to common
           stockholders                        $48,878       $39,189     25%

     Earnings per common share:
          Basic                                  $0.46         $0.42     10%
          Diluted                                $0.45         $0.41     10%

     Weighted average common shares
      outstanding:
          Basic                                106,778        92,880     15%
          Diluted                              115,062        95,661     20%

     Segment Information:
     Net sales:
          Constellation Beers and Spirits
              Imported beers                  $236,896      $207,264     14%
              Spirits                           79,291        70,205     13%
                   Net sales                  $316,187      $277,469     14%
          Constellation Wines
              Branded wine                    $363,883      $310,480     17%
              Wholesale and other              247,235       184,853     34%
                   Net sales                  $611,118      $495,333     23%
     Consolidated net sales                   $927,305      $772,802     20%

     Operating income:
          Constellation Beers and Spirits      $67,852       $59,883     13%
          Constellation Wines                   67,659        61,023     11%
          Corporate Operations and Other       (11,869)      (10,071)    18%
          Restructuring and related
           charges and unusual costs (a)       (13,221)      (11,868)    11%
     Consolidated operating income            $110,421       $98,967     12%

     (a) Restructuring and related charges and unusual costs for First
         Quarter 2005 include financing costs of $10,313, restructuring and
         related charges of $1,613, and the flow through of inventory step-up
         associated with the Hardy acquisition of $1,295.  Restructuring and
         related charges and unusual costs for First Quarter 2004 include the
         flow through of inventory step-up associated with the Hardy
         acquisition of $5,517, financing costs of $4,035 and restructuring
         and related charges of $2,316.


                 CONSTELLATION BRANDS, INC. AND SUBSIDIARIES
                    CONSOLIDATED STATEMENTS OF CASH FLOWS
                                (in thousands)

                                              For the Three     For the Three
                                               Months Ended      Months Ended
                                               May 31, 2004      May 31, 2003

     CASH FLOWS FROM OPERATING
      ACTIVITIES:
          Net income                              $51,329           $39,189

          Adjustments to reconcile net income
          to net cash used in operating
          activities:
           Depreciation of property, plant and
            equipment                              21,194            17,828
                   Deferred tax provision           6,259             4,650
                   Amortization of intangible
                    and other assets                3,061             5,966
                   Noncash portion of loss on
                    extinguishment of debt          1,799               800
                   Loss (gain) on sale of assets      693            (2,003)
                   Stock-based compensation expense    25               158
                   Amortization of discount on
                    long-term debt                     13                20
                   Equity in earnings of equity
                    method investees                  (62)             (328)
                   Gain on change in fair value of
                    derivative instruments              -            (1,181)
                   Change in operating assets and
                    liabilities, net of effects from
                    purchases of businesses:
                     Accounts receivable, net     (85,132)          (39,765)
                     Inventories, net            (113,885)          (15,169)
                     Prepaid expenses and other
                      current assets               12,566            15,571
                     Accounts payable             112,745           (28,400)
                     Accrued excise taxes           7,449             5,461
                     Other accrued expenses and
                      liabilities                 (56,971)           (9,494)
                     Other assets and liabilities,
                      net                          (7,541)              334
                       Total adjustments          (97,787)          (45,552)
                       Net cash used in
                        operating activities      (46,458)           (6,363)

     CASH FLOWS FROM INVESTING ACTIVITIES:
          Purchases of property, plant and
           equipment                              (22,113)          (18,091)
          Payment of accrued earn-out amount       (1,338)             (978)
          Proceeds from sale of assets                445             4,896
          Purchases of businesses, net of
           cash acquired                                -        (1,067,694)
                       Net cash used in investing
                        activities                (23,006)       (1,081,867)

     CASH FLOWS FROM FINANCING ACTIVITIES:
          Net proceeds from notes payable         265,891            15,735
          Exercise of employee stock options        5,814             7,571
          Proceeds from employee stock
           purchases                                    1                 -
          Principal payments of long-term debt   (217,204)         (492,701)
          Payment of preferred stock dividends     (2,451)                -
          Proceeds from issuance of long-term
           debt                                         -         1,600,000
          Payment of issuance costs of
           long-term debt                               -           (32,547)
                       Net cash provided by
                        financing activities       52,051         1,098,058

     Effect of exchange rate changes on cash
      and cash investments                         (8,280)           22,370

     NET (DECREASE) INCREASE IN CASH AND
      CASH INVESTMENTS                            (25,693)           32,198
     CASH AND CASH INVESTMENTS, beginning
      of period                                    37,136            13,810
     CASH AND CASH INVESTMENTS, end of period     $11,443           $46,008

RECONCILIATION OF REPORTED AND COMPARABLE HISTORICAL INFORMATION (in thousands, except per share data)

Comparable measures are provided because management uses this information in evaluating the results of the continuing operations of the Company and internal goal setting. In addition, the Company believes this information provides investors better insight on underlying business trends and results in order to evaluate year over year financial performance. As such, an increase in cost of goods sold resulting from the flow through of inventory step-up associated with the Hardy acquisition, financing costs and the imputed interest charge associated with the Hardy acquisition, restructuring and related charges (including exiting the U.S. commodity concentrate product line) and gains on changes in fair value of derivative instruments are excluded from comparable results. You may also visit the Company's website at http://www.cbrands.com under Investors/Financial information/Financial Reports for a historical reconciliation between reported and comparable information.


                              For the Three           For the Three
                              Months Ended            Months Ended
                              May 31, 2004   Margin   May 31, 2003   Margin

    Reported net sales            $927,305    100.0%      $772,802    100.0%

    Reported gross profit         $250,462     27.0%      $209,085     27.1%
        Inventory step-up            1,295      0.1%         5,517      0.7%
    Comparable gross profit       $251,757     27.1%      $214,602     27.8%

    Reported operating income     $110,421     11.9%       $98,967     12.8%
        Financing costs             10,313      1.1%         4,035      0.5%
        Restructuring and
         related charges             1,613      0.2%         2,316      0.3%
        Inventory step-up            1,295      0.1%         5,517      0.7%
    Comparable operating
     income                       $123,642     13.3%      $110,835     14.3%

    Reported net income            $51,329      5.5%       $39,189      5.1%
        Financing costs              6,601      0.7%         2,583      0.3%
        Restructuring and
         related charges             1,032      0.1%         1,482      0.2%
        Inventory step-up              829      0.1%         3,531      0.5%
        Imputed interest charge          -      0.0%         1,061      0.1%
        Gain on derivative
         instruments                     -      0.0%          (756)    -0.1%
    Comparable net income          $59,791      6.4%       $47,090      6.1%

    Reported diluted earnings
     per share                       $0.45                   $0.41
        Financing costs               0.06                    0.03
        Restructuring and
         related charges              0.01                    0.02
        Inventory step-up             0.01                    0.04
        Imputed interest
         charge                          -                    0.01
        Gain on derivative
         instruments                     -                   (0.01)
    Comparable diluted
     earnings per share (1)          $0.52                   $0.49

     (1) May not sum due to rounding as each item is computed independently.

    RECONCILIATION OF REPORTED AND PRO FORMA NET SALES
    (in thousands)

Pro forma net sales are provided because management believes this information provides investors better insight on underlying business trends and results in order to evaluate year over year financial performance. As such, pro forma net sales for the three months ended May 31, 2003, present net sales after giving effect to the Hardy acquisition as if the Company had owned Hardy since March 1, 2003. You may also visit the Company's website at http://www.cbrands.com under Investors/Financial Information/Financial Reports for a reconciliation of reported net sales to pro forma net sales.


                              For the Three           For the Three
                              Months Ended            Months Ended
                              May 31, 2004            May 31, 2003   Growth

    CONSOLIDATED NET SALES
    Reported net sales           $927,305                $772,802      20%
        Prior year Hardy sales
         (2)                            -                  31,000
    Pro forma net sales          $927,305                $803,802      15%

    BRANDED WINE NET SALES
    Reported net sales           $363,883                $310,480      17%
        Prior year Hardy sales
         (2)                            -                  27,000
    Pro forma net sales          $363,883                $337,480       8%

     (2)  For the period March 1, 2003 through March 27, 2003.


RECONCILIATION OF REPORTED AND COMPARABLE DILUTED EARNINGS PER SHARE GUIDANCE

Range for the Quarter Range for the Year Ending August 31, 2004 Ending February 28, 2005 Forecasted reported diluted earnings per share $0.66 $0.69 $2.42 $2.52 Inventory step-up 0.01 0.01 0.03 0.03 Financing costs - Call of senior notes - - 0.06 0.06 Restructuring and related charges 0.01 0.01 0.06 0.06 Forecasted comparable diluted earnings per share $0.68 $0.71 $2.57 $2.67 Actual For the Actual For the Three Months Year Ended Ended August February 31, 2003 29, 2004 Reported diluted earnings per share $0.34 $2.06 Excise tax, duty and other costs - (0.06) Inventory step-up 0.06 0.13 Concentrate inventory write-down 0.10 0.10 Financing costs 0.03 0.07 Restructuring and related charges 0.10 0.19 Imputed interest charge - 0.01 Gain on derivative instruments - (0.01) Comparable diluted earnings per share (1) $0.64 $2.49 (1) May not sum due to rounding as each item is computed independently.
ATTACHMENTS TO CONSTELLATION BRANDS FIRST QUARTER FISCAL 2005 MEDIA RELEASE ITEMS AFFECTING COMPARABILITY FOR FISCAL 2005

Financing costs -- Call (Redemption) of senior notes -- On February 10, 2004, the company called its $200,000,000 8.5% senior subordinated notes due 2009 which were redeemed March 2004. In connection with this redemption, the company incurred an unusual charge in the first quarter of fiscal 2005 related to the call premium and the remaining unamortized financing fees associated with the original issuance of the bonds. The company expects to incur a charge of $0.06 per share for fiscal 2005.

Restructuring and related charges -- In connection with the further realignment of business operations within the company's wine division and, as previously announced in fiscal 2004, exiting the commodity concentrate product line, the company expects restructuring and related charges of approximately $0.06 per share for fiscal 2005 ($0.03 for exiting the commodity concentrate product line and $0.03 for further realignment of business operations).

Inventory step-up -- The Hardy acquisition resulted in an allocation of purchase price in excess of book value to certain inventory on hand at the date of purchase. This allocation of purchase price in excess of book value is referred to as inventory step-up. The inventory step-up represents an assumed manufacturing profit attributable to Hardy preacquisition. For inventory produced and sold after the acquisition date, the related manufacturer's profit accrues to the company. As a result of final appraisals, the company expects the flow through of inventory step-up to have a negative impact of approximately $0.03 per share for fiscal 2005.

ITEMS AFFECTING COMPARABILITY FOR FISCAL 2004

Excise tax, duty and other costs -- In the fourth quarter of fiscal 2004, the company recognized a net benefit of $10.4 million related to relief from certain excise taxes, duty and other costs incurred in prior years. The net $10.4 million is comprised of a $9.2 million increase in net sales, a $2.3 million reduction in cost of product sold and a $1.1 million increase in SG&A. This had a positive impact of approximately $0.06 per share for fiscal 2004.

Inventory step-up -- The flow through of inventory step-up had an impact of approximately $0.13 per share for fiscal 2004.

Concentrate inventory write-down -- The company made a decision to exit the U.S. commodity concentrate product line -- located in Madera, California. The commodity concentrate product line was facing declining sales and profits and was not part of the company's core business, beverage alcohol. The company continues to produce and sell value-added, proprietary products such as MegaColors. The charge for the write-down of concentrate inventory was $0.10 per share for fiscal 2004. In addition, and related to exiting this product line, the company expects to record restructuring and related charges of approximately $0.17 per share, of which $0.14 was recorded in fiscal 2004 and $0.03 will be recorded in fiscal 2005.

Financing costs -- Hardy acquisition - In connection with the Hardy acquisition, the company recorded amortization expense for deferred financing costs associated with noncontinuing financing, primarily related to the bridge loan agreement. This charge was $0.07 per share for fiscal 2004.

Restructuring and related charges -- Restructuring and related charges resulted from the realignment of business operations in the company's wine division, as previously announced in the fourth quarter of fiscal 2003, and exiting the commodity concentrate product line. The company incurred total charges of approximately $0.19 per share for fiscal 2004 ($0.05 for realignment of businesses and $0.14 for exiting the commodity concentrate product line).

Imputed interest charge -- In connection with the Hardy acquisition and in accordance with purchase accounting, the company was required to take a one-time imputed interest charge for the time period between when the company obtained control of Hardy and the date it paid Hardy shareholders. The company incurred a charge of $0.01 per share for fiscal 2004.

Gain on change in fair value of derivative instruments -- In connection with the Hardy acquisition, the company entered into derivative instruments to cap the cost of the acquisition in U.S. dollars. The company recorded a gain in the first quarter, which represented the net change in value of the derivative instruments from the beginning of the first quarter until the date Hardy shareholders were paid. The company recorded a gain of $0.01 per share for fiscal 2004.

CONTACT:
Media Relations - Philippa Dworkin
585-218-3733

Mike Martin
585-218-3669

Investor Relations - Mark Maring
585-218-3668

Lisa Schnorr
585-218-3677
All for Constellation Brands, Inc.