Standard & Poor's Ratings Services has revised its ratings outlook for alcohol producer and distributor Constellation Brands Inc. to stable from negative. The outlook revision, announced on Monday, reflects the company's continued de-leveraging and its improvement in credit measures after its April 2003 debt-financed acquisition of Australian wine producer BRL Hardy Ltd.

At the same time, Standard & Poor's has affirmed its 'BB' corporate credit and senior unsecured debt ratings on Constellation Brands, as well as its 'B+' subordinated debt and 'B' preferred stock ratings on the company.

About US$2 billion of total debt was outstanding at 29 Feb 2004.

"The ratings on Constellation Brands Inc. reflect its strong cash generation from a diverse portfolio of beverage alcohol products, offset in part by the competitive nature of the company's markets and a leveraged financial profile reflecting an acquisitive growth strategy," said Standard & Poor's credit analyst Nicole Delz Lynch.

Constellation Brands has the largest wine business in the world. It is the second-largest US supplier of wines, the third-largest US importer of beer, and the third-largest US supplier of distilled spirits. The company is also the No. 1 supplier of wine and the No. 2 producer of cider in the UK, a leading beverage alcohol wholesaler in the UK, and the largest wine producer in Australia.

S&P warned, however, that Constellation's acquisition strategy has always been a risk, a key issue in the company's business profile. In addition to BRL Hardy (purchased for $1.4 billion, including the assumption of debt), the company made almost $1.5 billion worth of mostly debt-financed acquisitions and joint ventures between November 1998 and February 2002.

Nevertheless, S&P said, these transactions have broadened Constellation's business lines and product portfolio, significantly increased its international revenue base, and, in some instances, created distribution synergies. The combination with Hardy has further broadened the business portfolio and provided a key presence in the growing Australian wine market, S&P concluded.