Constellation Brands to Invest in U.K. Distribution and Bottling Operations

04/08/06 Constellation Brands, Inc., a leading international beverage alcohol producer and marketer has announced plans to invest in new Constellation Europe distribution and bottling facilities in the United Kingdom and to streamline certain Australian wine operations. These initiatives are part of the company's ongoing efforts to harvest opportunities which maximize asset utilization, further reduce costs and improve long-term return on invested capital throughout its international operations.

The new U.K. facilities are expected to reduce costs of production and distribution while increasing profitability for the company's U.K. operations. In addition to consolidating warehousing and distribution, Constellation Europe's wine bottling capacity and efficiency will be significantly increased.

Adding a new distribution center and bottling operations is expected to reduce Constellation Europe's costs of transport and manufacturing. In concert with the existing national distribution center, the new distribution center will house Constellation Europe's branded and wholesale product inventory, and will eliminate the need for the multiple satellite warehouses currently being used, while accommodating future expansion of the business. Constellation expects construction of the additional distribution center to be completed in its fiscal year 2009. The company is also in the process of finalizing the program's details, which will include new investments in fixed assets and certain fixed asset disposals.

In Australia, Constellation's Hardy Wine Company will streamline certain operations to maximize long-term value of its retained assets and to continue strengthening its leadership position in Australian New World wines. This includes the buy-out of certain grape supply and processing contracts and the sale of certain non-strategic assets.

"The recent identification of these opportunities, combined with the addition of Vincor to our international wine portfolio in June, validated the potential long-term value associated with making these changes," stated Rob Sands, Constellation Brands president and chief operating officer. "Our decentralized and entrepreneurial structure allows us to swiftly identify and act upon opportunities such as this to fine tune our organization as needed. Both the U.K. and Australian markets are intensely competitive and it is essential that we continue to identify and harvest opportunities to reduce our operating costs and improve our returns to maintain our competitive advantage. In the future, we will continue to look at high return projects such as these to further streamline our business, improve our returns and create greater value from our acquisitions."

The company expects these projects to reduce net operating expenses by approximately $5 million in fiscal 2008, and by more than $15 million annually beginning in fiscal 2009.

In connection with the Fiscal 2007 Wine Plan, the company expects to incur one-time cash charges of approximately $40 million and one-time non-cash charges of approximately $20 million, for a total of approximately $60 million in one-time charges.