Vincor Integration Plan of Constellation Brands

12/07/06 Constellation Brands, Inc. announced its plan for the integration of acquired Vincor International operations around the world. Constellation completed the acquisition of Mississauga, Ontario, Canada-based Vincor International Inc. on June 5. On June 1, Vincor shareholders overwhelmingly voted to accept Constellation's C$36.50 per share cash offer to buy the company.

Approximately 90 percent of Vincor's 2,358 worldwide employees will be retained, with positions trimmed coming primarily from sales, marketing, administrative and production redundancies in the United States, United Kingdom and Australia, where Constellation's operations are significantly larger in scale than Vincor's. In Canada, where nearly 79 percent of Vincor's total employment exists, 30 people will be impacted. In addition, 16 positions will be filled, with the net decrease of 14 positions in Canada, representing less than one percent of Vincor's nationwide employment. Vincor's Canadian operations have become "Vincor Canada," and it is Constellation's fifth core market, the others being the United States, United Kingdom, Australia and New Zealand.

"While we are moving quickly to consolidate activities wherever it makes sense, we're maintaining an appropriate level of staffing and retaining the expertise and experience to maintain and grow the production, marketing and sales of Vincor brands around the world," stated Rob Sands, Constellation Brands president and chief operating officer. "With both companies having very similar structures and cultures, the transition should be a smooth one. Whenever Constellation adds companies, brands and people, business continuity is always at the top of our priority list, and we want to make certain employees understand our values and culture, and feel good about becoming part of our growing organization. We wish we could retain everyone, but that is not possible because a small percentage of positions are duplicative. We provide appropriate transition support for anyone impacted by these changes."

Sales and marketing groups will be consolidated throughout the summer months, with systems integration slated for fall 2006. Some operations, such as warehousing, will also be consolidated, as will some supply chain activities. Each Vincor asset will be evaluated to determine how best to maximize its value to the regional operating company it is aligned with geographically. The integration is expected to be substantially complete by the end of fiscal year 2007. Those people displaced as a result of this integration plan will receive a severance package.

One-time Charges

In connection with the company's integration of Vincor announced today, Constellation expects to incur restructuring and related charges and acquisition-related integration costs totaling approximately $39 million pre- tax that will be recorded in the company's results of operations. These cash charges are composed primarily of employee redundancy costs and activities relating to the consolidation of certain back-office functions and systems.

Approximately $35 million of these charges is expected to be recorded in the company's fiscal 2007 results, of which approximately $16 million is expected to be recorded in the second quarter of fiscal 2007. The remaining $4 million of the charges is expected to be recorded in fiscal 2008.

The company will also incur one-time cash costs of approximately $50 million that will be recorded as liabilities in the company's allocation of purchase price in connection with the Vincor acquisition. The purchase accounting adjustments are composed primarily of severance charges associated with personnel reductions and contract termination costs.

The aggregate of restructuring and related charges, acquisition-related integration costs and purchase accounting adjustments, is approximately $89 million. A Form 8-K associated with the company's Vincor Integration Plan will be filed with the Securities and Exchange Commission within four business days.

The company believes the actions announced today will reduce ongoing operating expenses annually by approximately $40 - $45 million beginning in fiscal 2008, with approximately half of the savings being realized in fiscal 2007. These savings and the associated costs are included in the company's fiscal 2007 outlook.

"The Vincor integration plan we announced today should enable us to realize significant synergies and deliver returns consistent with those developed in our Vincor acquisition model," stated Sands. "With our vast experience at managing a global wine business that has grown both organically and through acquisitions, we believe there remain unharvested opportunities to further refine our geographic footprint. We are evaluating our production capabilities to identify initiatives which will create incremental value and returns for the long term, while maintaining the quality, style and rich heritage of our wine portfolio."