Business & Finance

BRL Hardy Involved in Formation of New US Wine Company

June 12th, 2001

Constellation Brands, Inc., the largest single-source supplier of imported beer, wine and distilled spirits in the US, and BRL Hardy Ltd. (ASX: BRL), the second largest wine company in Australia, announced today that they have signed a definitive agreement to form a new joint venture wine company. The new company, Pacific Wine Partners, will produce, market and sell a global portfolio of premium wines in the US, including a portfolio of Australian imports, the fastest growing wine category in the industry.

The joint venture will be equally owned by the two partners and is expected to be slightly accretive to Constellation's earnings per share in the current fiscal year. Pacific Wine Partners will have the US distribution rights to seven brands - Banrock Station, Hardys, Leasingham, Barossa Valley Estate and Chateau Reynella from Australia; Nobilo from New Zealand and La Baume from France. The new company will also own Farallon, an award-winning wine from the Central Coast, and Riverland Vineyards winery in Monterey County, California. In addition, the joint venture will control 1,400 acres of vineyards in Monterey. Pacific Wine Partners is estimated to begin operations in August 2001, and the closing of the transaction is subject to satisfaction of customary closing conditions. In addition to its 50% share of equity, Constellation will receive $37 million in cash, which will be used to reduce debt.

Richard Sands, Chairman, CEO and President of Constellation, said, "Our alliance with BRL Hardy melds their Australian winemaking skills and Constellation's distribution strength to create a leading portfolio of premium wines." Mr. Sands added, "This new wine company will produce, market, and sell a global portfolio of premium wines in the US - a category where Australian wines have a strong market position and have the highest growth rate of any imported wines. Our wine portfolio, already one of the broadest in the world, will gain immediate depth in one of the fastest growing categories."

Stephen Millar, Managing Director of BRL Hardy, said, "In Constellation we have found an ideal partner who will enable us to establish a strong presence with US wines in the US market. We will achieve this presence quickly and efficiently because Constellation brings to this joint venture an existing California winery and vineyards combined with powerful US distribution. The joint venture will focus on driving sales of its high growth Australian, New Zealand, French and California wine portfolio, introducing new premium wines as well as pursuing acquisitions. We believe that our combined resources will enable us to quickly become an industry leader."

Jose F. Fernandez, who joined BRL Hardy, North America last year as Chief Executive Officer, will head Pacific Wine Partners. Previously Mr. Fernandez had been President and Chief Executive Officer of Southcorp, North America. In this position, Mr. Fernandez led the development of the number one Australian wine import to the US. Other members of the executive team will consist of employees from both BRL Hardy and Constellation.