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Constellation Brands signs letter of intent to puchase SA’s Flagstone Winery

[London, 8 October 2007] Constellation Brands Inc. the world’s largest wine company, has signed a letter of intent to acquire Flagstone Winery. Once completed this will be one of the most significant investments into the South African wine industry by a global wine company. The announcement was made today in London at the Wines of South Africa Mega Tasting press briefing taking place in Earls Court.

Constellation Brands produces, markets and sells a broad portfolio of wines and other alcoholic beverages across the globe. The company entered the South African market in 2006 with the purchase of Canadian wine company, Vincor International which owned the country’s largest wine export brand, Kumala – now the biggest selling South African wine in the United Kingdom.

“Since the acquisition of Vincor, there has been a need to extend Constellation’s portfolio beyond Kumala into premium and luxury brands to establish South Africa as a growing premium category in the global wine market over the longer term”, said James Reid, Operations Director of Constellation Wines South Africa.

“Kumala competes successfully at the volume-driven, lifestyle sector of the market. We have been looking to build our South African range to meet the global demand for premium and luxury wines which has resulted in the proposed acquisition of Flagstone – an ideal base for a premium portfolio for Constellation in South Africa,” he explained.

Flagstone, situated near Somerset West, produces more than 30 award-winning red and white wines – and was recently named one of the top 10 wineries in South Africa. Its owner and winemaker Bruce Jack is well known and highly regarded in the local and international industry.

Reid said that the proposed acquisition of Flagstone is part of Constellations’ long term strategy strategic aim to increase its market share of South African wines in all its core markets, including the US and EU. “This requires a major destination marketing drive for South Africa which will be driven by Bruce Jack,” he said.

Jack will not only remain the chief viticulturalist, winemaker and marketer of the Flagstone brand, but will assume viticultural and winemaking responsibility for the Kumala brand as well. He will also be promoting the South African wine message globally for Constellation.

Both core brands will continue to be marketed and sold in South Africa.

Jack said Constellation’s proposed acquisition underpins the long-term confidence in the South African wine industry and the potential of South African wines to achieve a more significant presence in the global wine market.

“This proposed acquisition not only recognises the quality and winemaking philosophy of the wines produced by Flagstone but also provides the accessibility to the global market required to grow the Flagstone brand internationally,” added Jack.

“Constellation is committed to promoting South Africa as a consistent, top quality wine producing country. We’re also committed to building a platform within the South African wine industry that will continue to produce award winning wines. In addition, we are committed to sustainable and ethical wine production, which is becoming an increasingly important motivator for consumers of South African wine,” concluded Reid.