Constellation to Sell Strathmore Water to U.K. Firm A.G. Barr p.l.c. for 15 Million Pounds Sterling

FAIRPORT, N.Y., May 22 /PRNewswire-FirstCall/ -- Constellation Brands, Inc. has entered into an agreement to sell its Strathmore bottled water business to A.G. Barr p.l.c., the Scottish-based U.K. soft drinks business, for 15 million pounds Sterling. The transaction is expected to close in late May or early June. Strathmore became part of Constellation's portfolio in 1998 when it acquired U.K. drinks company Matthew Clark plc -- now known as Constellation Europe -- the U.K.'s leading wine company, independent wholesaler to the on-premise channel and a leading cider producer.

"Strathmore is a non-core product for us in a category in which we do not generally compete, and we believe our resources can be better utilized in support of our U.K. beverage alcohol portfolio," stated Richard Sands, Constellation Brands chairman and chief executive officer. "The benefits of owning Strathmore, which largely relate to sales through our U.K. wholesale business, have been protected by an ongoing supply contract with A.G. Barr."

The divestiture is expected to result in a pre-tax loss of approximately 7 million pounds and an after-tax loss of approximately 9 million pounds, or a $0.07 reduction to the company's first quarter and fiscal 2007 diluted earnings per share ("EPS") as reported under generally accepted accounting principles ("reported"). As a result of this transaction, the company also expects its reported fiscal 2007 tax rate to be slightly higher than the 36.5 percent rate previously announced. The divestiture is expected to have an immaterial impact on Constellation's ongoing EPS, both on a reported and comparable basis in future periods.

Due to the anticipated impact on reported earnings, the company is adjusting its reported diluted EPS guidance, as set forth in its April 6, 2006, earnings news release, for the first quarter and full fiscal year 2007, to $0.18-$0.21 and $1.50-$1.58, respectively. The company's comparable diluted EPS guidance for the first quarter and full fiscal year 2007, as set forth in the company's April 6, 2006, earnings news release, is unchanged. Strathmore's total annual net sales and operating income for Constellation's last fiscal year were 12.6 (U.S. GAAP basis) million pounds and 1.3 million pounds, respectively.

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: Almaden, Arbor Mist, Vendange, Woodbridge by Robert Mondavi, Hardys, Nobilo, Alice White, Ruffino, Robert Mondavi Private Selection, Blackstone, Ravenswood, Estancia, Franciscan Oakville Estate, Simi, Robert Mondavi Winery brands, Stowells, Blackthorn, Black Velvet, Mr. Boston, Fleischmann's, Paul Masson Grande Amber Brandy, Chi-Chi's, 99 Schnapps, Ridgemont Reserve 1792, Effen Vodka, Corona Extra, Corona Light, Pacifico, Modelo Especial, Negra Modelo, St. Pauli Girl, Tsingtao. For additional information about Constellation Brands, as well as its product portfolio, visit the company's Web site at http://www.cbrands.com .

FORWARD-LOOKING STATEMENTS

The 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 current quarter, Constellation may reiterate the estimates set forth and referenced in this news release (collectively, the "Projections"). Prior to the start of a quiet period, which will begin at the close of business on May 31, 2006, the public can continue to rely on the Projections as still being Constellation's current expectations on the matters covered, unless Constellation publishes a notice stating otherwise.

At the close of business on May 31, 2006, Constellation will observe a "quiet period" during which the Projections should not be considered to constitute the company's expectations. During the quiet period, the Projections 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 fiscal 2007 and first quarter 2007, and (ii) the company's estimated diluted earnings per share on a comparable basis for fiscal 2007 and first quarter 2007, 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 interest rates and foreign currency exchange rates. In addition, the company may not achieve all of the expected cost savings related to its announced global wine restructuring due to lower than anticipated reductions in headcount or other expenses, or a delay or greater than anticipated costs in the implementation of the restructuring. The company has entered into a foreign currency forward contract to purchase foreign currency in order to hedge against the risk of foreign currency fluctuations in connection with its pending acquisition of Vincor International Inc. and the payment of Vincor debt. The company will be required to mark the derivative contract to market, which could result in a gain or loss. With regard to the proposed sale of its Strathmore bottled water business, there can be no assurance that any transaction between Constellation and A. G. Barr will occur, or will occur on the timetable contemplated hereby. 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 Feb. 28, 2006, which contain a discussion of additional factors that may affect Constellation's business. The factors discussed in these reports could cause actual future performance to differ from current expectations.

SOURCE Constellation Brands, Inc. -0- 05/22/2006 /CONTACT: Media Relations, Mike Martin, +1-585-218-3669, Kevin Harwood, +1-585-218-3666, Investor Relations, Lisa Schnorr, +1-585-218-3677, Bob Czudak, +1-585-218-3668, all of Constellation Brands, Inc./ /Photo: http://www.newscom.com/cgi-bin/prnh/20040119/STZLOGO / /Web site: http://www.cbrands.com / (STZ STZB)