R. Michael Mondavi, President and CEO of Robert Mondavi (Nasdaq: MOND - news), announced today the company's acquisition of Arrowood Vineyards & Winery in Sonoma County, California. The winery, located in Glen Ellen in the Sonoma Valley, produces critically- acclaimed, luxury category varietal wines (most selling for $27 per bottle and up) from grapes grown throughout Sonoma County. Founder and Winemaster Richard Arrowood will continue to direct winemaking and grape growing practices at the winery while his wife and partner, Alis Demers Arrowood, will continue her role in sales and marketing. All current Arrowood employees will retain positions as part of the purchase agreement.

"Arrowood is a perfect fit for our company because we share a common philosophy with Richard and Alis about producing wines of excellence that reflect their origins," said R. Michael Mondavi. "It's been a priority to add a preeminent Sonoma County winery to our family of fine wines," he noted, "and we intend for Arrowood to continue to operate independently as a natural complement to our growing luxury portfolio."

"Alis and I were approached about selling the winery many times in the past. However, more than with any other winery, we believe this alliance will afford us the opportunity to achieve our highest aspirations," said Richard Arrowood. "Working with the Robert Mondavi team will allow me to devote more time and energy to that which I am most passionate about: making fine wine. I will also have more time to explore the diversity of Sonoma County's greatest vineyards and their ultimate expression in our wines."

Arrowood Vineyards & Winery was founded in 1986 by President and Winemaster Richard Arrowood and Executive Vice President Alis Demers Arrowood. Arrowood sells wine under two labels -- Arrowood and Grand Archer -- using grapes exclusively from Sonoma's diverse viticultural areas such as the Russian River, Alexander and Dry Creek Valleys as well as Sonoma-Carneros. Richard Arrowood thrives on the artistic freedom provided by the wide range of flavors and aromas offered by these distinct appellations.

The purchase will begin with the acquisition of all Arrowood stock for $18 million. Within the next 5 years, Robert Mondavi will have the option to purchase the remaining tangible assets, including vineyards and the winery building, for $12 million. Robert Mondavi will also enter into a long-term licensing agreement for the Arrowood and Grand Archer brand names with an option to purchase them in 2010 for approximately $15 million. The price can vary depending on the future success of Arrowood and Grand Archer wines.

"From an earnings standpoint, after adjusting for Arrowood's inventory step-up, we see no change in our F2001 forecast and we expect a $.04 per share increase to our F2002 forecast," added Michael Mondavi.

Robert Mondavi currently owns and controls vineyards in top winegrowing regions of California including Napa Valley, Lodi, Mendocino County, Monterey County, Paso Robles, San Luis Obispo County, Santa Maria Valley and Santa Barbara. The Arrowood purchase represents the company's first foray into Sonoma County.

The Robert Mondavi family produces and markets fine wines under the following labels: Robert Mondavi Winery, Robert Mondavi Coastal, La Famiglia di Robert Mondavi and Colmera, Woodbridge Winery, Byron Vineyard & Winery, Io and Vichon Mediterranean. The company also produces Opus One, in partnership with the Baroness Philippine de Rothschild of Chateau Mouton Rothschild of Bordeaux, France; Luce, Lucente and Danzante in partnership with the Marchesi de' Frescobaldi of Tuscany, Italy, and Sena and Caliterra in partnership with the Eduardo Chadwick family of Vina Errazuriz in Chile. The company has a minority interest in Tenuta dell' Ornellaia, a famous estate in the Bolgheri appellation of Tuscany, producer of Ornellaia and Masseto, founded by Marchese Lodovico Antinori.