Constellation Purchases Remaining Portion of Iconic Ruffino Wine Business

October 6, 2011
Constellation Brands, Inc. (NYSE: STZ), the world's leading premium wine company, announced today that it has purchased the remaining 50.1 percent of Ruffino S.r.l. from MPF International S.r.l., an entity controlled by the Folonari family of Tuscany, Italy for approximately $69 million. Constellation also assumes approximately $73 million of debt, net of cash acquired, as part of the transaction. Constellation welcomes approximately 130 employees and now fully owns the iconic Ruffino brand and historical production facility located in close proximity to Florence. The wines continue to be produced on approximately 600 hectares of prestigious vineyards at the same Tuscan Estates of Ruffino as has been done for decades.

"The prestigious Ruffino brand, which dates back to 1877, is an internationally recognized Old World wine brand that sets the standard for Italian wines," said Rob Sands, president and chief executive officer, Constellation Brands, Inc. "We intend to build on the history of the Folonari family and the image and reputation they brought to the brand for today's wine consumers who enjoy Tuscan style wines."

"Constellation has a history of evolving iconic wines, such as the Robert Mondavi brand, and nurturing them to their full potential," said Adolfo Folonari, the outgoing managing director of Ruffino S.r.l, who will remain with Ruffino as a board member. "I am confident that Constellation will leverage its global best practices to take the Ruffino brand to an entirely new level, while carefully preserving the heritage of the wines."

Among Ruffino's most recognized brands are the coveted Ruffino Riserva Ducale which is celebrating its 80th anniversary vintage this year and Riserva Ducale Gold, Il Ducale, Chianti Superiore, Lumina and Modus. According to SymphonyIRI industry data for the last 52 weeks, Ruffino is experiencing approximately eight percent growth in dollar sales in the U.S. Ruffino's year-to-date global sales are growing at nine percent. The brand has launched a number of new items in the last year, including the highly successful introduction of Ruffino Prosecco sparkling wine.

Constellation also named Sandro Sartor to be the general manager of Ruffino, effective November 1, 2011. Sartor will be responsible for running the day-to-day operations of the Ruffino business and will report to Greg Fowler, Constellation's senior vice president, operations. Most recently, Sartor served as managing director and general manager for Diageo Italia S.p.A.

Constellation's equity interest in Ruffino began in 2004 with a 40 percent stake in the company and increased to 49.9 percent in 2010. Since then, the Ruffino brand has become one of Constellation's 19 "focus brands" which represent the majority of profit for the company's U.S. wine and spirits business.

Ruffino annually produces 1.3 million cases of wine which are sold in key markets around the world. Approximately 50 percent of its sales are currently made by Constellation in the U.S. The remaining portion is expected to become incremental to Constellation's total wine volumes.

For financial reporting purposes, Constellation will begin consolidating Ruffino's financial results in its North American segment, where previously they were recorded as equity earnings. Constellation expects this transaction to be neutral to the company's ongoing diluted EPS for fiscal 2012.