UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-K
(Mark One)

[X]  ANNUAL REPORT  PURSUANT TO SECTION 13 OR 15(d) OF THE  SECURITIES  EXCHANGE
     ACT OF 1934
For the fiscal year ended February 28, 1999
                          -----------------

                                       OR

[ ]  TRANSITION  REPORT  PURSUANT  TO  SECTION  13 OR  15(d)  OF THE  SECURITIES
     EXCHANGE ACT OF 1934
For the transition period from               to
                               -------------    -------------


                           COMMISSION FILE NO. 0-7570

     DELAWARE              CANANDAIGUA BRANDS, INC.              16-0716709
                              AND ITS SUBSIDIARIES:
     NEW YORK              BATAVIA WINE CELLARS, INC.            16-1222994
     NEW YORK              CANANDAIGUA WINE COMPANY, INC.        16-1462887
     NEW YORK              CANANDAIGUA EUROPE LIMITED            16-1195581
     ENGLAND AND WALES     CANANDAIGUA LIMITED                      ----
     NEW YORK              POLYPHENOLICS, INC.                   16-1546354
     NEW YORK              ROBERTS TRADING CORP.                 16-0865491
     DELAWARE              BARTON INCORPORATED                   36-3500366
     DELAWARE              BARTON BRANDS, LTD.                   36-3185921
     MARYLAND              BARTON BEERS, LTD.                    36-2855879
     CONNECTICUT           BARTON BRANDS OF CALIFORNIA, INC.     06-1048198
     GEORGIA               BARTON BRANDS OF GEORGIA, INC.        58-1215938
     NEW YORK              BARTON DISTILLERS IMPORT CORP.        13-1794441
     DELAWARE              BARTON FINANCIAL CORPORATION          51-0311795
     WISCONSIN             STEVENS POINT BEVERAGE CO.            39-0638900
     ILLINOIS              MONARCH IMPORT COMPANY                36-3539106
     GEORGIA               THE VIKING DISTILLERY, INC.           58-2183528
    (State or other        (Exact name of registrant as          (I.R.S.
     jurisdiction of        specified in its charter)             Employer
     incorporation or                                             Identifiection
     organization)                                                No.)


              300 WILLOWBROOK OFFICE PARK, FAIRPORT, NEW YORK 14450
              -----------------------------------------------------
               (Address of principal executive offices) (Zip Code)

        Registrants' telephone number, including area code (716) 218-2169
                                                           --------------


           SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
                                      None


           SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:

  Class A Common Stock (Par Value $.01 Per Share) of Canandaigua Brands, Inc.
  ---------------------------------------------------------------------------
                                (Title of Class)

  Class B Common Stock (Par Value $.01 Per Share) of Canandaigua Brands, Inc.
  ---------------------------------------------------------------------------
                                (Title of Class)

<PAGE>

Indicate  by check mark  whether  the  Registrants  (1) have  filed all  reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
Registrants  were required to file such  reports),  and (2) have been subject to
such filing requirements for the past 90 days.   Yes  X    No
                                                     ---      ---

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation  S-K is not contained  herein,  and will not be contained,  to the
best of Registrants'  knowledge,  in definitive proxy or information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]

The  aggregate  market  value of the  common  stock  held by  non-affiliates  of
Canandaigua Brands, Inc., as of May 14, 1999, was $841,819,702.

The number of shares  outstanding  with respect to each of the classes of common
stock of Canandaigua  Brands,  Inc., as of May 14, 1999, is set forth below (all
of the Registrants,  other than Canandaigua Brands, Inc., are direct or indirect
wholly-owned subsidiaries of Canandaigua Brands, Inc.):

                   CLASS                          NUMBER OF SHARES OUTSTANDING
                   -----                          ----------------------------

Class A Common Stock, Par Value $.01 Per Share              17,640,877
Class B Common Stock, Par Value $.01 Per Share               3,189,599


                       DOCUMENTS INCORPORATED BY REFERENCE

The proxy  statement  of  Canandaigua  Brands,  Inc. to be issued for the annual
meeting of  stockholders  to be held July 20, 1999, is incorporated by reference
in Part III.

================================================================================
<PAGE>
                                      - 1 -

                                     PART I

ITEM 1.   BUSINESS
-------   --------

     Unless  the  context  otherwise  requires,  the term  "Company"  refers  to
Canandaigua Brands, Inc. and its subsidiaries, and all references to "net sales"
refer to gross  revenue less excise taxes and returns and  allowances to conform
with the Company's  method of  classification.  All references to "Fiscal 1999",
"Fiscal 1998" and "Fiscal  1997" shall refer to the Company's  fiscal year ended
the last day of February of the indicated year.

     Industry  data  disclosed  in this  Annual  Report  on Form  10-K  has been
obtained from Adam's Media  Handbook  Advance,  NACM, AC Nielsen,  The U.S. Wine
Market:  Impact Databank  Review and Forecast and the Zenith Guide.  The Company
has not  independently  verified  this  data.  References  to  positions  within
industries are based on unit volume.

     The Company is a leading  producer and marketer of branded beverage alcohol
products in the United  States and the United  Kingdom.  According  to available
industry  data,  the Company ranks as the second  largest  supplier of wine, the
second  largest  importer of beer and the fourth  largest  supplier of distilled
spirits in the United States.  The Matthew Clark  Acquisition (as defined below)
established the Company as a leading British producer of cider, wine and bottled
water and as a leading beverage alcohol wholesaler in the United Kingdom.

     The Company is a Delaware corporation organized in 1972 as the successor to
a  business  founded  in 1945 by  Marvin  Sands,  Chairman  of the  Board of the
Company.  The Company has  aggressively  pursued  growth in recent years through
acquisitions,  brand  development,  new product  offerings and new  distribution
agreements.  The Matthew Clark Acquisition and the Black Velvet  Acquisition (as
defined below) continued a series of strategic  acquisitions made by the Company
since 1991 by which it has diversified  its offerings and as a result, increased
its  market  share,  net sales and cash  flow.  The  Company  has also  achieved
internal growth by developing new products and repositioning  existing brands to
focus on the fastest growing sectors of the beverage alcohol industry.

     The  Company  markets  and sells over 170  national  and  regional  branded
products to more than 1,000  wholesale  distributors  in the United States.  The
Company also  distributes its own branded  products and those of other companies
to more than 16,000  customers in the United  Kingdom.  The Company  operates 20
production  facilities in the United  States,  Canada and the United Kingdom and
purchases products for resale from other producers.

RECENT ACQUISITIONS

     MATTHEW CLARK ACQUISITION

     On December  1, 1998,  the Company  acquired  control of Matthew  Clark plc
("Matthew  Clark") and has since  acquired  all of Matthew  Clark's  outstanding
shares (the "Matthew Clark  Acquisition").  Matthew Clark grew  substantially in
the 1990s through a series of strategic  acquisitions,  including  Grants of St.
James's in 1993,  the Gaymer Group in 1994 and Taunton Cider Co. in 1995.  These
acquisitions  served to solidify Matthew Clark's position within its key markets
and  contributed to an increase in net sales to  approximately  $671 million for
Matthew Clark's fiscal year ended April 30, 1998.  Matthew Clark has developed a
number of leading market positions, including positions as a leading independent
beverage  supplier to the on-premise  trade,  the number one producer of branded
boxed wine,

<PAGE>
                                      - 2 -

the number one  branded  producer  of  fortified  British  wine,  the number one
branded bottler of sparkling water and the number two producer of cider.

     The Matthew Clark  Acquisition  strengthens  the Company's  position in the
beverage alcohol industry by providing the Company with a presence in the United
Kingdom and a platform for growth in the European  market.  The  acquisition  of
Matthew   Clark  also   offers   potential   benefits   including   distribution
opportunities to market  California-produced  wine and U.S.-produced  spirits in
the United Kingdom, as well as the potential to market Matthew Clark products in
the U.S.

     ACQUISITION OF BLACK VELVET CANADIAN WHISKY BRAND AND RELATED ASSETS

     On April 9, 1999, in an asset  acquisition,  the Company  acquired  several
well-known  Canadian  whisky  brands,  including  Black  Velvet,  the third best
selling  Canadian  whisky and the 16th best selling  spirits brand in the United
States,  production facilities located in Alberta and Quebec, Canada, case goods
and bulk whisky  inventories  and other related assets from affiliates of Diageo
plc  (collectively,  the "Black Velvet  Acquisition").  Other  principal  brands
acquired in the transaction were Golden Wedding,  OFC,  MacNaughton,  McMaster's
and Triple Crown. In connection with the  transaction,  the Company also entered
into  multi-year  agreements  with Diageo to provide  packaging  and  distilling
services for various brands retained by Diageo.

     The  addition  of  the  Canadian   whisky  brands  from  this   transaction
strengthens  the  Company's  position in the North  American  distilled  spirits
category,   and  enhances  the  Company's   portfolio  of  brands  and  category
participation.  The acquired  operations are being integrated with the Company's
existing spirits business.

RECENT DEVELOPMENTS-PENDING ACQUISITIONS OF SIMI WINERY AND FRANCISCAN ESTATES

     SIMI WINERY

     On April 1, 1999, the Company entered into a definitive agreement with Moet
Hennessy,  Inc. to purchase all of the outstanding capital stock of Simi Winery,
Inc.  ("Simi").  (The  acquisition  of the  capital  stock of Simi is  hereafter
referred to as the "Simi  Acquisition.") The Simi Acquisition  includes the Simi
winery (located in Healdsburg,  California), equipment, vineyards, inventory and
worldwide  ownership of the Simi brand name. Founded in 1876, Simi is one of the
oldest and best known wineries in California,  combining a strong  super-premium
and  ultra-premium  brand with a flexible  and  well-equipped  facility and high
quality vineyards in the key Sonoma appellation.

     FRANCISCAN ESTATES

     On April 21,  1999,  the Company  entered  into (i) a  definitive  purchase
agreement with Franciscan  Vineyards,  Inc.  ("Franciscan") and its shareholders
to,  among other  matters,  purchase  all of the  outstanding  capital  stock of
Franciscan and (ii) definitive  purchase agreements with certain parties related
to  Franciscan  to  acquire  certain   vineyards  and  related  vineyard  assets
(collectively,  the  "Franciscan  Acquisition").   Pursuant  to  the  Franciscan
Acquisition,  the Company  will:  (i) acquire the  Franciscan  Oakville  Estate,
Estancia and Mt. Veeder  brands;  (ii) acquire  wineries  located in Rutherford,
Monterey and Mt. Veeder, California; (iii) acquire vineyards in the Napa Valley,
Alexander Valley,  Monterey and Paso Robles appellations and additionally,  will
enter into long-term  grape contracts with certain parties related to Franciscan
to  purchase   additional   grapes  grown  in  the  Napa  and  Alexander  Valley
appellations;  (iv) acquire  distribution  rights to the Quintessa and Veramonte
brands;  and (v)

<PAGE>
                                      - 3 -

acquire equity interests in entities that own the Veramonte brand, the Veramonte
winery (which is located in the  Casablanca  Valley,  Chile) and vineyards  also
located in the  Casablanca  Valley.  Franciscan's  net sales for its fiscal year
ended  December  31,  1998,  were   approximately   $50  million  on  volume  of
approximately 600,000 cases.

     Franciscan  is one of the foremost  super-premium  and  ultra-premium  wine
companies  in  California.   While  the  super-premium  and  ultra-premium  wine
categories  represented only 9% of the total wine market by volume in 1997, they
accounted for more than 25% of sales dollars.  More  importantly,  super-premium
and  ultra-premium  wine sales grew at an annual  rate of 10%  between  1995 and
1997,  and  by  more  than  18%  in  1998.  Given  its  fiscal  1998  volume  of
approximately  600,000 cases sold, Franciscan has recorded a three-year compound
annual growth rate of more than 17%.

     When  completed,  the Simi and Franciscan  Acquisitions  will establish the
Company as a leading  producer and marketer of super-premium  and  ultra-premium
wine.  The Simi and  Franciscan  operations  complement  each  other  and  offer
synergies  in the  areas of sales and  distribution,  grape  usage and  capacity
utilization.  Together, Simi and Franciscan represent the sixth largest presence
in the super-premium and ultra-premium  wine categories.  The Company intends to
operate  Simi and  Franciscan,  and their  properties,  together  as a  separate
business   segment.   The  Company's   strategy  is  to  further  penetrate  the
super-premium and ultra-premium wine categories,  which have higher gross profit
margins than popularly-priced wine.

     The  agreements  for the Simi and  Franciscan  Acquisitions  are subject to
certain customary conditions prior to closing, which the Company expects will be
satisfied.  The Company cannot guarantee,  however, that those transactions will
be completed upon the agreed upon terms, or at all.

PRIOR ACQUISITIONS

     The Company  made a series of  significant  acquisitions  between  1991 and
1995,  commencing  with the  acquisition of the Cook's,  Cribari,  Dunnewood and
other wine brands and related wine  production  facilities in 1991. In 1993, the
Company  diversified into the imported beer and distilled spirits  categories by
acquiring Barton Incorporated,  through which the Company acquired  distribution
rights with respect to Corona Extra and other Modelo brands,  St. Pauli Girl and
other  imported  beer  brands,  and the Barton,  Ten High,  Montezuma  and other
distilled  spirits brands.  Also in 1993, the Company  acquired the Paul Masson,
Taylor  California   Cellars  and  other  wine  brands  and  related  production
facilities. In 1994, the Company acquired the Almaden,  Inglenook and other wine
brands, a grape juice concentrate business and related facilities.  In 1995, the
Company  acquired the Mr. Boston,  Canadian LTD,  Skol,  Old Thompson,  Kentucky
Tavern,  Glenmore  and di Amore  distilled  spirits  brands;  the  rights to the
Fleischmann's  and Chi-Chi's  distilled  spirits brands under long-term  license
agreements;  the U.S. rights to the Inver House,  Schenley and El Toro distilled
spirits brands; and related production facilities and assets.

     Through  these  acquisitions,  the Company has become more  competitive  by
diversifying  its portfolio;  developing  strong market positions in the growing
beverage  alcohol  product  categories of varietal table wine and imported beer;
strengthening its relationships with wholesalers; expanding its distribution and
enhancing its  production  capabilities;  and acquiring  additional  management,
operational, marketing, and research and development expertise.

<PAGE>
                                      - 4 -

BUSINESS SEGMENTS

     The Company  operates  primarily  in the beverage  alcohol  industry in the
United States and the United Kingdom.  The Company reports its operating results
in four  segments:  Canandaigua  Wine  (branded  wine  and  brandy,  and  other,
primarily grape juice concentrate); Barton (primarily beer and spirits); Matthew
Clark  (branded  wine,  cider and bottled  water,  and  wholesale  wine,  cider,
spirits,  beer and soft drinks);  and Corporate  Operations and Other (primarily
corporate related items).

     Information regarding net sales,  operating income and total assets of each
of the Company's business segments and information regarding geographic areas is
set forth in Note 15 to the Company's  consolidated financial statements located
in Item 8 of this Annual Report on Form 10-K.

     CANANDAIGUA WINE

     Canandaigua Wine produces,  bottles, imports and markets wine and brandy in
the United  States.  It is the  second  largest  supplier  of wine in the United
States and exports wine to  approximately  65 countries  from the United States.
Canandaigua Wine sells table wine, dessert wine,  sparkling wine and brandy. Its
leading   brands  include   Inglenook,   Almaden,   Paul  Masson,   Arbor  Mist,
Manischewitz,  Taylor,  Marcus  James,  Estate  Cellars,  Vina  Santa  Carolina,
Dunnewood,  Mystic Cliffs,  Cook's, J. Roget,  Richards Wild Irish Rose and Paul
Masson Grande Amber Brandy. Most of its wine is marketed in the popularly-priced
category of the wine market.

     As a related part of its U.S. wine business,  Canandaigua Wine is a leading
grape juice concentrate  producer in the United States.  Grape juice concentrate
competes with other domestically produced and imported fruit-based concentrates.
Canandaigua Wine's other  wine-related  products and services include bulk wine,
cooking wine, grape juice and Inglenook-St. Regis, a leading de-alcoholized line
of wine in the United States.

     BARTON

     Barton  produces,  bottles,  imports and markets a diversified line of beer
and distilled spirits. It is the second largest marketer of imported beer in the
United  States and  distributes  five of the top 25 imported  beer brands in the
United States:  Corona Extra,  Modelo Especial,  Corona Light,  Pacifico and St.
Pauli Girl.  Corona Extra is the number one imported beer  nationwide.  Barton's
other  imported  beer brands  include  Negra Modelo from Mexico,  Tsingtao  from
China,  Peroni from Italy and Double  Diamond and Tetley's  English Ale from the
United  Kingdom.  Barton also  operates the Stevens  Point  Brewery,  a regional
brewer located in Wisconsin, which produces Point Special, among other brands.

     Barton is the fourth  largest  supplier of distilled  spirits in the United
States and exports distilled spirits to approximately fifteen countries from the
United   States.   Barton's   principal   distilled   spirits   brands   include
Fleischmann's, Mr. Boston, Canadian LTD, Chi-Chi's prepared cocktails, Ten High,
Montezuma,  Barton,  Monte Alban,  Inver House and the recently  acquired  Black
Velvet  brand.  Substantially  all of Barton's  spirits unit volume  consists of
products  marketed in the price  value  category.  Barton  also sells  distilled
spirits in bulk and provides contract production and bottling services for third
parties.

<PAGE>
                                      - 5 -

     MATTHEW CLARK

     The Company  acquired  Matthew Clark in the fourth  quarter of Fiscal 1999.
Matthew Clark is a leading  producer and distributor of cider,  wine and bottled
water and a leading drinks  wholesaler  throughout the United  Kingdom.  Matthew
Clark also exports its branded  products to  approximately 50 countries from the
United Kingdom.

     Matthew Clark is the second  largest  producer and marketer of cider in the
United  Kingdom.  Matthew  Clark  distributes  its  cider  brands  in  both  the
on-premise  and  off-premise  markets  and  these  brands  compete  in both  the
mainstream and premium brand  categories.  Matthew  Clark's  leading  mainstream
cider brands  include  Blackthorn  and Gaymer's Olde English.  Blackthorn is the
number two  mainstream  cider brand and Gaymer's Olde English is the UK's second
largest cider brand in the take-home  market.  Matthew  Clark's  leading premium
cider brands are Diamond White and K.

     Matthew Clark is the largest  supplier of wine to the  on-premise  trade in
the United  Kingdom.  Its Stowells of Chelsea brand maintains a leading share in
the branded boxed wine segment.  Matthew Clark also  maintains a leading  market
share position in fortified British wine through its QC and Stone's brand names.
It also produces and markets Strathmore bottled water in the United Kingdom, the
leading bottled sparkling water brand in the country.

     Matthew Clark is a leading independent  beverage supplier to the on-premise
trade in the United  Kingdom  and has one of the largest  customer  bases in the
United  Kingdom,  with more than 16,000  on-premise  accounts.  Matthew  Clark's
wholesaling business involves the distribution of branded wine, spirits,  cider,
beer and soft  drinks.  While these  products  are  primarily  produced by third
parties, they also include Matthew Clark's cider and wine branded products.

     CORPORATE OPERATIONS AND OTHER

     Corporate Operations and Other includes traditional corporate related items
and the results of an immaterial operation.

MARKETING AND DISTRIBUTION

     UNITED STATES

     The  Company's  products are  distributed  and sold  throughout  the United
States  through  over  1,000  wholesalers,  as well as through  state  alcoholic
beverage control  agencies.  Both Canandaigua Wine and Barton employ  full-time,
in-house  marketing,  sales and customer  service  organizations  to develop and
service their sales to wholesalers and state agencies. The Company believes that
the  organization  of its sales force into  separate  segments  positions  it to
maintain a high degree of focus on each of its principal product categories.

     The Company's  marketing  strategy places primary emphasis upon promotional
programs  directed  at  its  broad  national  distribution  network,  and at the
retailers served by that network.  The Company has extensive  marketing programs
for its brands  including  promotional  programs  on both a  national  basis and
regional  basis in  accordance  with the  strength of the brands,  point-of-sale
materials, consumer media advertising, event sponsorship, market research, trade
advertising and public relations.

<PAGE>
                                      - 6 -

     During Fiscal 1999, the Company  increased its advertising  expenditures to
put more  emphasis on consumer  advertising  for certain wine brands,  including
newly  introduced  brands,  and for its  imported  beer brands,  primarily  with
respect  to the  Mexican  brands.  In  addition,  promotional  spending  for the
Company's wine brands increased to address competitive factors.

     UNITED KINGDOM

     The Company's  UK-produced branded products are distributed  throughout the
United  Kingdom by Matthew  Clark.  The  products  are  packaged at one of three
production  facilities.  Shipments  of cider and wine are then  made to  Matthew
Clark's national distribution center for branded products.  All branded products
are then  distributed to either the on-premise or off-premise  markets with some
of the sales to on-premise  customers  made through  Matthew  Clark's  wholesale
business.  Matthew Clark's wholesale  products are distributed  through thirteen
depots located throughout the United Kingdom.  On-premise  distribution channels
include  hotels,  restaurants,  pubs,  wine  bars  and  clubs.  The  off-premise
distribution  channels include grocers,  convenience retail, cash and carry, and
wholesalers.

     Matthew   Clark   employs  a  full-time,   in-house   marketing  and  sales
organization  that targets  off-premise  customers for Matthew  Clark's  branded
products.  Matthew  Clark also employs a full-time,  in-house  branded  products
marketing and sales  organization  that  services  specifically  the  on-premise
market in the United Kingdom.  Additionally,  Matthew Clark employs a full-time,
in-house  marketing  and sales  organization  to service  the  customers  of its
wholesale business.

TRADEMARKS AND DISTRIBUTION AGREEMENTS

     The Company's products are sold under a number of trademarks, most of which
are owned by the Company.

     The Company also  produces and sells wine and  distilled  spirits  products
under exclusive license or distribution agreements. Important agreements include
(1) a long-term  license agreement with Hiram Walker & Sons, Inc. (which expires
in 2116) for the Ten High,  Crystal Palace,  Northern Light and Imperial Spirits
brands;  and (2) a long-term license agreement with the B. Manischewitz  Company
(which expires in 2042) for the Manischewitz  brand of kosher wine. On September
30, 1998,  under the  provisions  of an existing  long-term  license  agreement,
Nabisco Brands Company agreed to transfer to Barton all of its right,  title and
interest to the corporate name  "Fleischmann  Distilling  Company" and worldwide
trademark rights to the "Fleischmann" mark for alcoholic beverages.  Pending the
completion  of the  assignment  of such  interests,  the license  will remain in
effect.  The Company also has other less  significant  license and  distribution
agreements  related  to the sale of wine and  distilled  spirits  with  terms of
various durations.

     All of the Company's  imported beer products are marketed and sold pursuant
to exclusive distribution agreements with the suppliers of these products. These
agreements  have terms that vary and prohibit the Company from  importing  other
beer from the same country. The Company's agreement to distribute Corona and its
other  Mexican beer brands  exclusively  throughout  25 primarily  U.S.  western
states  expires  in  December  2006 and,  subject  to  compliance  with  certain
performance criteria, continued retention of certain Company personnel and other
terms under the agreement, will be automatically renewed for additional terms of
five years.  Changes in control of the Company or of its subsidiearies  involved
in  importing  the Mexican  beer  brands,  changes in the  position of the Chief
Executive  Officer of Barton Beers,  Ltd.  (including by death or disability) or
the termination of the President of Barton Incorporated,  may be a basis for the
supplier, unless it consents to such changes, to terminate the

<PAGE>
                                      - 7 -

agreement.  The  supplier's  consent  to such  changes  may not be  unreasonably
withheld.  The Company's agreement for the importation of St. Pauli Girl expires
in June 2003. The Company's  agreement for the  importation of Tetley's  English
Ale  expires  in  December  2007.  The  Company's  agreement  for the  exclusive
importation of Tsingtao  throughout the entire United States expires in December
1999 and,  subject to  compliance  with certain  performance  criteria and other
terms under the agreement,  will be  automatically  renewed until December 2002.
Prior to their  expiration,  these  agreements  may be terminated if the Company
fails to meet certain performance criteria. The Company believes it is currently
in compliance with its material imported beer distribution agreements. From time
to time, the Company has failed,  and may in the future fail, to satisfy certain
performance  criteria in its distribution  agreements.  Although there can be no
assurance  that its beer  distribution  agreements  will be  renewed,  given the
Company's  long-term  relationships  with its suppliers the Company expects that
such agreements  will be renewed prior to their  expiration and does not believe
that these agreements will be terminated.

     The Company owns the  trademarks for most of the brands that it acquired in
the  Matthew  Clark  Acquisition.  The  Company  has a  series  of  distribution
agreements and supply  agreements in the United  Kingdom  related to the sale of
its products with varying terms and durations.

COMPETITION

     The beverage alcohol industry is highly  competitive.  The Company competes
on the  basis  of  quality,  price,  brand  recognition  and  distribution.  The
Company's   beverage   alcohol   products   compete  with  other  alcoholic  and
nonalcoholic beverages for consumer purchases,  as well as shelf space in retail
stores and marketing focus by the Company's  wholesalers.  The Company  competes
with numerous  multinational  producers  and  distributors  of beverage  alcohol
products,  some of which have significantly  greater resources than the Company.
In the United States,  Canandaigua  Wine's principal  competitors  include E & J
Gallo Winery and The Wine Group. Barton's principal competitors include Heineken
USA, Molson Breweries USA, Labatt's USA,  Guinness Import Company,  Brown-Forman
Beverages,  Jim Beam  Brands and Heaven  Hill  Distilleries,  Inc. In the United
Kingdom,  Matthew Clark's principal competitors include Halewood Vintners,  H.P.
Bulmer, Tavern,  Waverley Vintners and Perrier. In connection with its wholesale
business,  Matthew  Clark  distributes  the branded  wine of third  parties that
compete directly against its own wine brands.

PRODUCTION

     In the United States, the Company's wine is produced from several varieties
of wine grapes grown  principally  in  California  and New York.  The grapes are
crushed  at  the  Company's   wineries  and  stored  as  wine,  grape  juice  or
concentrate.  Such  grape  products  may be made  into  wine for sale  under the
Company's  brand  names,  sold to other  companies  for resale  under  their own
labels,  or  shipped  to  customers  in the form of  juice,  juice  concentrate,
unfinished wine,  high-proof grape spirits or brandy. Most of the Company's wine
is bottled and sold within eighteen months after the grape crush.  The Company's
inventories of wine,  grape juice and  concentrate  are usually at their highest
levels in November and December immediately after the crush of each year's grape
harvest, and are substantially reduced prior to the subsequent year's crush.

     The bourbon whiskeys, domestic blended whiskeys and light whiskeys marketed
by the Company are primarily  produced and aged by the Company at its distillery
in  Bardstown,  Kentucky,  though  it may  from  time  to  time  supplement  its
inventories through purchases from other distillers.  Following the Black Velvet
Acquisition,  the majority of the Company's  Canadian  whisky  requirements

<PAGE>
                                      - 8 -

are produced and aged at its Canadian  distilleries in Lethbridge,  Alberta, and
Valleyfield,  Quebec. At its Albany, Georgia, facility, the Company produces all
of the neutral  grain  spirits and whiskeys it uses in the  production of vodka,
gin and  blended  whiskey it sells to  customers  in the state of  Georgia.  The
Company's requirements of Scotch whisky,  tequila,  mezcal and the neutral grain
spirits it uses in the  production of gin and vodka for sale outside of Georgia,
and other spirits products, are purchased from various suppliers.

     The Company  operates three  facilities in the United Kingdom that produce,
bottle and package cider,  wine and water. To produce Stowells of Chelsea,  wine
is imported  in bulk from  various  countries  such as Chile,  Germany,  France,
Spain,  South Africa and  Australia,  which are then  packaged at the  Company's
facility at Bristol and  distributed  under the Stowells of Chelsea  brand name.
The Strathmore  brand of bottled water (which is available in still,  sparkling,
and  flavored  varieties)  is sourced  and  bottled in Forfar,  Scotland.  Cider
production was consolidated at the Company's  facility at Shepton Mallet,  where
apples of many different  varieties are purchased from U.K. growers and crushed.
This juice,  along with  European-sourced  concentrate,  is then  fermented into
cider.

SOURCES AND AVAILABILITY OF RAW MATERIALS

     The  principal  components  in  the  production  of the  Company's  branded
beverage  alcohol  products  are  packaging  materials   (primarily  glass)  and
agricultural products, such as grapes and grain.

     The Company  utilizes  glass and PET bottles  and other  materials  such as
caps,  corks,  capsules,  labels  and  cardboard  cartons  in the  bottling  and
packaging of its products.  Glass bottle costs are one of the largest components
of the  Company's  cost of product  sold.  The glass  bottle  industry is highly
concentrated   with  only  a  small  number  of   producers.   The  Company  has
traditionally  obtained,  and continues to obtain, its glass requirements from a
limited  number of  producers.  The Company has not  experienced  difficulty  in
satisfying its  requirements  with respect to any of the foregoing and considers
its  sources of supply to be  adequate.  However,  the  inability  of any of the
Company's  glass bottle  suppliers to satisfy the Company's  requirements  could
adversely affect the Company's operations.

     Most of the Company's annual grape  requirements are satisfied by purchases
from each  year's  harvest  which  normally  begins in August  and runs  through
October.  The Company believes that it has adequate sources of grape supplies to
meet its sales  expectations.  However,  in the event  demand for  certain  wine
products exceeds expectations, the Company could experience shortages.

     The Company purchases grapes from over 800 independent growers, principally
in the San Joaquin  Valley and Monterey  regions of  California  and in New York
State.  The Company enters into written  purchase  agreements with a majority of
these growers on a  year-to-year  basis.  The Company  currently  owns or leases
approximately   4,200  acres  of  vineyards,   either  fully  bearing  or  under
development,  in  California  and New York.  This acreage  supplies only a small
percentage of the Company's total needs.  The Company  continues to consider the
purchase or lease of  additional  vineyards,  and  additional  land for vineyard
plantings, to supplement its grape supply.

     The  distilled   spirits   manufactured  by  the  Company  require  various
agricultural  products,  neutral  grain  spirits and bulk  spirits.  The Company
fulfills  its  requirements  through  purchases  from  various  sources  through
contractual  arrangements and through purchases on the open market.  The Company
believes that adequate supplies of the aforementioned  products are available at
the present time.

<PAGE>
                                      - 9 -

     The Company  manufactures  cider,  perry,  light and fortified British wine
from  materials that are purchased  either on a contracted  basis or on the open
market.  In particular,  supplies of cider apples are sourced  through long term
supply  arrangements with owners of apple orchards.  There are adequate supplies
of the various raw materials at this particular time.

GOVERNMENT REGULATION

     The  Company's  operations  in the United  States are subject to  extensive
Federal and state  regulation.  These  regulations  cover,  among other matters,
sales  promotion,  advertising  and public  relations,  labeling and  packaging,
changes in officers or directors, ownership or control, distribution methods and
relationships,  and requirements regarding brand registration and the posting of
prices and price  changes.  All of the Company's  operations  and facilities are
also  subject  to  Federal,  state,  foreign  and local  environmental  laws and
regulations  and the  Company is  required  to obtain  permits  and  licenses to
operate its facilities.

     In the United Kingdom, the Company has secured a Customs and Excise License
to carry on its excise trade.  Licenses are required for all premises where wine
is produced. The Company holds a license to act as an excise warehouse operator.
Registrations  have been secured for the  production of cider and bottled water.
Formal approval of product labeling is not required.

     In Canada,  the Company's  operations are also subject to extensive federal
and  provincial  regulation.  These  regulations  cover,  among  other  matters,
advertising and public relations, labeling and packaging,  environmental matters
and  customs  and duty  requirements.  The  Company is also  required  to obtain
licenses and permits in order to operate its facilities.

     The Company believes that it is in compliance in all material respects with
all  applicable   governmental  laws  and  regulations  and  that  the  cost  of
administration   and  compliance  with,  and  liability  under,  such  laws  and
regulations  does not have,  and is not  expected  to have,  a material  adverse
impact on the  Company's  financial  condition,  results of  operations  or cash
flows.

EMPLOYEES

     The Company  had  approximately  2,300  full-time  employees  in the United
States at the end of April  1999,  of which  approximately  870 were  covered by
collective  bargaining  agreements.  Additional  workers  may be employed by the
Company during the grape crushing season.

     The Company  had  approximately  1,700  full-time  employees  in the United
Kingdom at the end of April 1999,  of which  approximately  420 were  covered by
collective bargaining agreements.  Additional workers may be employed during the
peak season.

     The Company had approximately 230 full-time  employees in Canada at the end
of April 1999, of which approximately 185 were covered by collective  bargaining
agreements.

     The Company considers its employee relations generally to be good.

<PAGE>
                                     - 10 -

ITEM 2.   PROPERTIES
-------   ----------

     Through  the  Company's  four  business  segments,  the  Company  currently
operates  wineries,  distilling  plants,  bottling plants, a brewery,  cider and
water producing  facilities,  most of which include warehousing and distribution
facilities on the  premises.  The Company also  operates  separate  distribution
centers  under the Matthew Clark  segment's  wholesaling  business.  The Company
believes that all of its  facilities are in good condition and working order and
have adequate capacity to meet its needs for the foreseeable future.

     CANANDAIGUA WINE

     Canandaigua  Wine maintains its headquarters in owned and leased offices in
Canandaigua,  New York.  It  operates  three  wineries  in New York,  located in
Canandaigua,  Naples and Batavia  and six  wineries  in  California,  located in
Madera,  Gonzales,  Escalon,  Fresno,  and Ukiah. All of the facilities in which
these wineries  operate are owned,  except for the winery in Batavia,  New York,
which is leased.  Canandaigua  Wine  considers its principal  wineries to be the
Mission  Bell  winery  in  Madera,   California;   the  Canandaigua   winery  in
Canandaigua, New York; and the Monterey Cellars winery in Gonzales,  California.
The Mission Bell winery crushes grapes,  produces,  bottles and distributes wine
and produces grape juice concentrate.  The Canandaigua winery crushes grapes and
produces,  bottles and  distributes  wine.  The Monterey  Cellars winery crushes
grapes and produces, bottles and distributes wine for Canandaigua Wine's account
and, on a contractual basis, for third parties.

     Canandaigua  Wine  currently  owns or leases  approximately  4,200 acres of
vineyards,  either fully bearing or under  development,  in  California  and New
York.

     BARTON

     Barton maintains its  headquarters in leased offices in Chicago,  Illinois.
It owns and operates four distilling plants, two in the United States and two in
Canada. The two distilling plants in the United States are located in Bardstown,
Kentucky;  and Albany,  Georgia;  and the two distilling plants in Canada, which
were acquired in connection  with the Black Velvet  Acquisition,  are located in
Valleyfield,  Quebec;  and Lethbridge,  Alberta.  Barton considers its principal
distilling  plants  to  be  the  facilities  located  in  Bardstown,   Kentucky;
Valleyfield,  Quebec; and Lethbridge,  Alberta. The Bardstown facility distills,
bottles and warehouses distilled spirits products for Barton's account and, on a
contractual  basis,  for other  participants  in the industry.  The two Canadian
facilities  distill,  bottle and store Canadian whisky for Barton's own account,
and  distill  and/or  bottle and store  Canadian  whisky,  vodka,  rum,  gin and
liqueurs for third parties.

     In the United  States,  Barton also  operates a brewery and three  bottling
plants.  The brewery is located in Stevens  Point,  Wisconsin;  and the bottling
plants  are  located in  Atlanta,  Georgia;  Owensboro,  Kentucky;  and  Carson,
California.  All of these facilities are owned by Barton except for the bottling
plant in Carson, California, which is operated and leased through an arrangement
involving an ongoing  management  contract.  Barton considers the bottling plant
located  in  Owensboro,  Kentucky  to be one of its  principal  facilities.  The
Owensboro  facility  bottles  and  warehouses  distilled  spirits  products  for
Barton's account and also performs contract bottling.

<PAGE>
                                     - 11 -

     MATTHEW CLARK

     Matthew  Clark  maintains  its  headquarters  in owned  offices in Bristol,
England.  It  currently  owns and operates  two  facilities  in England that are
located in Bristol and Shepton  Mallet and one facility in Scotland,  located in
Forfar.  Matthew  Clark  considers  all  three  facilities  to be its  principal
facilities.  The Bristol  facility  produces,  bottles and  packages  wine;  the
Shepton Mallet facility  produces,  bottles and packages  cider;  and the Forfar
facility produces,  bottles and packages water products. Matthew Clark also owns
another  facility in England,  located in Taunton,  the operations of which have
now been consolidated  into its Shepton Mallet facility.  Matthew Clark plans to
sell the Taunton property.

     To  distribute  its  products  that are produced at the Bristol and Shepton
Mallet facilities, Matthew Clark operates, in England, the National Distribution
Centre,  located at Severnside.  This distribution facility is leased by Matthew
Clark.  To support its  wholesaling  business,  Matthew Clark operates  thirteen
distribution  centers located  throughout the United  Kingdom,  all of which are
leased.  These  thirteen  distribution  centers are used to distribute  products
produced by third parties,  as well as by Matthew Clark.  Matthew Clark has been
and continues to  consolidate  the  operations of its  wholesaling  distribution
centers.

     CORPORATE OPERATIONS AND OTHER

     The Company  maintains  its  corporate  headquarters  in offices  leased in
Fairport, New York.


ITEM 3.   LEGAL PROCEEDINGS
-------   -----------------

     The Company and its  subsidiaries  are subject to  litigation  from time to
time in the ordinary  course of business.  Although the amount of any  liability
with  respect  to such  litigation  cannot  be  determined,  in the  opinion  of
management  such  liability  will  not have a  material  adverse  effect  on the
Company's financial condition, results of operations or cash flows.


ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
-------   ---------------------------------------------------

     Not Applicable.

EXECUTIVE OFFICERS OF THE COMPANY

     Information with respect to the current  executive  officers of the Company
is as follows:

NAME                 AGE      OFFICE HELD
----                 ---      -----------
Marvin Sands          75      Chairman of the Board
Richard Sands         48      President and Chief Executive Officer
Robert Sands          40      Chief Executive Officer, International, Executive
                              Vice President and General Counsel; and President
                              and Chief Executive Officer of Canandaigua Wine
                              Company, Inc.
Peter Aikens          60      President and Chief Executive Officer of Matthew
                              Clark plc
Alexander L. Berk     49      President and Chief Executive Officer of Barton
                              Incorporated
George H. Murray      52      Senior Vice President and Chief Human Resources
                              Officer
Thomas S. Summer      45      Senior Vice President and Chief Financial Officer

<PAGE>
                                     - 12 -

     Marvin  Sands is the founder of the  Company,  which is the  successor to a
business  he started  in 1945.  He has been a director  of the  Company  and its
predecessor  since 1946 and was Chief  Executive  Officer  until  October  1993.
Marvin Sands is the father of Richard Sands and Robert Sands.

     Richard  Sands,  Ph.D.,  has  been  employed  by  the  Company  in  various
capacities since 1979. He was elected Executive Vice President and a director in
1982,  became President and Chief Operating  Officer in May 1986 and was elected
Chief  Executive  Officer in October  1993.  He is a son of Marvin Sands and the
brother of Robert Sands.

     Robert  Sands was  appointed  Chief  Executive  Officer,  International  in
December 1998 and was appointed  Executive Vice President and General Counsel in
October  1993.  He was  elected a director  of the  Company in January  1990 and
served as Vice  President  and General  Counsel from June 1990  through  October
1993.  From June 1986  until  his  appointment  as Vice  President  and  General
Counsel,  Mr. Sands was employed by the Company as General Counsel. In addition,
since the departure in April 1999 of the former  President of  Canandaigua  Wine
Company, Inc., a wholly-owned  subsidiary of the Company, Mr. Sands has assumed,
on an interim basis,  the position of President and Chief  Executive  Officer of
that company.  In this capacity,  Mr. Sands is in charge of the Canandaigua Wine
segment,  until a permanent successor is appointed.  He is a son of Marvin Sands
and the brother of Richard Sands.

     Peter Aikens  serves as President  and Chief  Executive  Officer of Matthew
Clark plc, a  wholly-owned  subsidiary  of the Company.  In this  capacity,  Mr.
Aikens is in charge of the Company's  Matthew Clark segment,  and has been since
the Company  acquired control of Matthew Clark in December 1998. He has been the
Chief Executive  Officer of Matthew Clark plc since May 1990 and has been in the
brewing and drinks industry for most of his career.

     Alexander L. Berk serves as President and Chief Executive Officer of Barton
Incorporated,  a wholly-owned  subsidiary of the Company. In this capacity,  Mr.
Berk is in charge of the  Company's  Barton  segment.  From 1990 until  February
1998, Mr. Berk was President and Chief Operating Officer of Barton and from 1988
to  1990,  he  was  the  President  and  Chief  Executive  Officer  of  Schenley
Industries. Mr. Berk has been in the alcoholic beverage industry for most of his
career,  serving in various  positions.

     George H. Murray joined the Company in April 1997 as Senior Vice  President
and Chief Human  Resources  Officer.  From August 1994 to April 1997, Mr. Murray
served as Vice President - Human Resources and Corporate  Communications  of ACC
Corp., an international long distance reseller. For eight and a half years prior
to that, he served in various  senior  management  positions  with First Federal
Savings and Loan of Rochester,  New York,  including the position of Senior Vice
President of Human Resources and Marketing from 1991 to 1994.

     Thomas S. Summer joined the Company in April l997 as Senior Vice  President
and Chief Financial Officer. From November 1991 to April 1997, Mr. Summer served
as Vice President,  Treasurer of Cardinal Health,  Inc., a large national health
care  services  company,  where  he  was  responsible  for  directing  financing
strategies and treasury  matters.  Prior to that, from November 1987 to November
1991, Mr. Summer held several  positions in corporate  finance and international
treasury with PepsiCo, Inc.

     Executive officers of the Company hold office until the next Annual Meeting
of the Board of Directors and until their successors are chosen and qualify.

<PAGE>
                                     - 13 -

                                     PART II

ITEM 5.   MARKET FOR THE  REGISTRANT'S  COMMON  EQUITY AND  RELATED  STOCKHOLDER
-------   ----------------------------------------------------------------------
          MATTERS
          -------

     The Company's Class A Common Stock (the "Class A Stock") and Class B Common
Stock  (the  "Class B  Stock")  trade on the  Nasdaq  Stock  Market  (registered
trademark)  under the symbols "CBRNA" and "CBRNB,"  respectively.  The following
tables set forth for the periods  indicated the high and low sales prices of the
Class A Stock and the  Class B Stock as  reported  on the  Nasdaq  Stock  Market
(registered trademark).


                                           CLASS A STOCK
                    ---------------------------------------------------------
                    1ST QUARTER     2ND QUARTER     3RD QUARTER   4TH QUARTER
                    -----------     -----------     -----------   -----------
 Fiscal 1998
   High              $ 32 1/4        $ 42 3/4        $ 53 1/2      $ 58 1/2
   Low               $ 21 7/8        $ 29 3/8        $ 39 1/2      $ 43 3/4
 Fiscal 1999
   High              $ 59 3/4        $ 52 3/8        $ 52 1/8      $ 61 1/2
   Low               $ 45 9/16       $ 40 1/4        $ 35 1/4      $ 45 5/8


                                           CLASS B STOCK
                    ---------------------------------------------------------
                    1ST QUARTER     2ND QUARTER     3RD QUARTER   4TH QUARTER
                    -----------     -----------     -----------   -----------
 Fiscal 1998
   High              $ 37            $ 43            $ 54 5/8      $ 57 3/4
   Low               $ 27            $ 35 1/2        $ 40 3/4      $ 45
 Fiscal 1999
   High              $ 59 3/4        $ 51 1/2        $ 52          $ 62 1/4
   Low               $ 45 1/2        $ 40 3/4        $ 37 1/4      $ 46 7/8


     At May 14, 1999, the number of holders of record of Class A Stock and Class
B Stock of the Company were 977 and 290, respectively.

     The  Company's  policy is to retain  all of its  earnings  to  finance  the
development and expansion of its business, and the Company has not paid any cash
dividends since its initial public offering in 1973. In addition,  the Company's
current bank credit  agreement,  the Company's  indenture for its $130 million 8
3/4% Senior  Subordinated  Notes due December  2003,  its  indenture for its $65
million 8 3/4%  Series C Senior  Subordinated  Notes due  December  2003 and its
indenture for its $200 million 8 1/2% Senior  Subordinated  Notes due March 2009
restrict the payment of cash dividends.

<PAGE>
                                     - 14 -

ITEM 6.   SELECTED FINANCIAL DATA
-------   -----------------------
<TABLE>
<CAPTION>
                                                                                         FOR THE SIX
                                                                                         MONTHS ENDED       FOR THE YEARS ENDED
                                                 FOR THE YEARS ENDED FEBRUARY 28,        FEBRUARY 29,           AUGUST 31,
                                            -----------------------------------------    ------------    ------------------------
                                                1999           1998           1997           1996           1995          1994
(in thousands, except per share data)       -----------     ----------     ----------     ----------     ----------     ---------
<S>                                         <C>             <C>            <C>            <C>            <C>            <C>
Gross sales                                 $ 1,984,801     $1,632,357     $1,534,452     $  738,415     $1,185,074     $ 861,059
Less-excise taxes                              (487,458)      (419,569)      (399,439)      (203,391)      (278,530)     (231,475)
                                            -----------     ----------     ----------     ----------     ----------     ---------
    Net sales                                 1,497,343      1,212,788      1,135,013        535,024        906,544       629,584
Cost of product sold                         (1,049,309)      (869,038)      (812,812)      (389,281)      (657,883)     (458,311)
                                            -----------     ----------     ----------     ----------     ----------     ---------
    Gross profit                                448,034        343,750        322,201        145,743        248,661       171,273
Selling, general and administrative
  expenses                                     (299,526)      (231,680)      (208,991)      (112,411)      (159,196)     (121,388)
Nonrecurring charges                             (2,616)          --             --           (2,404)        (2,238)      (24,005)
                                            -----------     ----------     ----------     ----------     ----------     ---------
    Operating income                            145,892        112,070        113,210         30,928         87,227        25,880
Interest expense, net                           (41,462)       (32,189)       (34,050)       (17,298)       (24,601)      (18,056)
                                            -----------     ----------     ----------     ----------     ----------     ---------
    Income before taxes and
      extraordinary item                        104,430         79,881         79,160         13,630         62,626         7,824
Provision for income taxes                      (42,521)       (32,751)       (32,977)        (6,221)       (24,008)       (2,640)
                                            -----------     ----------     ----------     ----------     ----------     ---------
    Income before extraordinary item             61,909         47,130         46,183          7,409         38,618         5,184
Extraordinary item, net of income taxes         (11,437)          --             --             --             --            --
                                            -----------     ----------     ----------     ----------     ----------     ---------
Net income                                  $    50,472     $   47,130     $   46,183     $    7,409     $   38,618     $   5,184
                                            ===========     ==========     ==========     ==========     ==========     =========
Earnings per common share:
  Basic:
    Income before extraordinary item        $      3.38     $     2.52     $     2.39     $     0.38     $     2.06     $    0.34
    Extraordinary item                            (0.62)          --             --             --             --            --
                                            -----------     ----------     ----------     ----------     ----------     ---------
  Earnings per common share - basic         $      2.76     $     2.52     $     2.39     $     0.38     $     2.06     $    0.34
                                            ===========     ==========     ==========     ==========     ==========     =========
  Diluted:
    Income before extraordinary item        $      3.30     $     2.47     $     2.37     $     0.37     $     2.03     $    0.33
    Extraordinary item                            (0.61)          --             --             --             --            --
                                            -----------     ----------     ----------     ----------     ----------     ---------
  Earnings per common share - diluted       $      2.69     $     2.47     $     2.37     $     0.37     $     2.03     $    0.33
                                            ===========     ==========     ==========     ==========     ==========     =========
Total assets                                $ 1,793,776     $1,090,555     $1,043,281     $1,045,590     $  770,004     $ 814,718
                                            ===========     ==========     ==========     ==========     ==========     =========
Long-term debt                              $   831,689     $  309,218     $  338,884     $  327,616     $  198,859     $ 289,122
                                            ===========     ==========     ==========     ==========     ==========     =========
</TABLE>

For the  fiscal  years  ended  February  28,  1999 and  1998,  see  Management's
Discussion and Analysis of Financial  Condition and Results of Operations  under
Item 7 of this Annual  Report on Form 10-K and Notes to  Consolidated  Financial
Statements  as of February 28, 1999,  under Item 8 of this Annual Report on Form
10-K.  During  January 1996,  the Board of Directors of the Company  changed the
Company's fiscal year end from August 31 to the last day of February.

All periods  presented  have been  restated to reflect the  Company's  change in
inventory  valuation  method  from  LIFO to FIFO  (see  Note 1 in the  Notes  to
Consolidated  Financial Statements as of February 28, 1999, under Item 8 of this
Annual Report on Form 10-K).

<PAGE>
                                     - 15 -

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
-------  -----------------------------------------------------------------------
         OF OPERATIONS
         -------------

INTRODUCTION
------------

     The following  discussion and analysis  summarizes the significant  factors
affecting  (i)  consolidated  results of  operations of the Company for the year
ended February 28, 1999 ("Fiscal 1999"), compared to the year ended February 28,
1998 ("Fiscal  1998"),  and Fiscal 1998 compared to the year ended  February 28,
1997 ("Fiscal  1997"),  and (ii) financial  liquidity and capital  resources for
Fiscal 1999. This discussion and analysis should be read in conjunction with the
Company's consolidated financial statements and notes thereto included herein.

     The Company  operates  primarily  in the beverage  alcohol  industry in the
United States and the United Kingdom.  The Company reports its operating results
in four  segments:  Canandaigua  Wine  (branded  wine  and  brandy,  and  other,
primarily grape juice concentrate); Barton (primarily beer and spirits); Matthew
Clark  (branded  wine,  cider and bottled  water,  and  wholesale  wine,  cider,
spirits,  beer and soft drinks);  and Corporate  Operations and Other (primarily
corporate related items).

     During the fourth quarter of Fiscal 1999, the Company changed its method of
determining the cost of inventories from the last-in,  first-out ("LIFO") method
to the first-in, first-out ("FIFO") method. All previously reported results have
been restated to reflect the retroactive  application of this accounting  change
as required by generally accepted accounting principles.  For further discussion
of  the  impact  of  this  accounting  change,  see  Note  1  to  the  Company's
consolidated  financial  statements  located in Item 8 of this Annual  Report on
Form 10-K.

     RECENT ACQUISITIONS

     On December 1, 1998, the Company  acquired control of Matthew Clark and has
since acquired all of Matthew Clark's outstanding  shares.  Prior to the Matthew
Clark  Acquisition,  the Company was principally a producer and supplier of wine
and an importer and producer of beer and distilled spirits in the United States.
The Matthew  Clark  Acquisition  established  the  Company as a leading  British
producer of cider,  wine and  bottled  water and as a leading  beverage  alcohol
wholesaler in the United Kingdom.  (See also the discussions  regarding  Matthew
Clark under Item 1 "Business"  of this Annual  Report on Form 10-K.) The results
of operations of Matthew Clark have been included in the consolidated results of
operations of the Company since the date of acquisition, December 1, 1998.

     On April 9, 1999, in an asset  acquisition,  the Company  acquired  several
well-known Canadian whisky brands, including Black Velvet, production facilities
located in Alberta and Quebec,  Canada,  case goods and bulk whisky  inventories
and other related assets from  affiliates of Diageo plc. In connection  with the
transaction,  the Company also entered into multi-year agreements with Diageo to
provide packaging and distilling services for various brands retained by Diageo.
The addition of the Canadian whisky brands from this transaction strengthens the
Company's  position  in the  North  American  distilled  spirits  category,  and
enhances the Company's portfolio of brands and category participation.

     The Matthew Clark and Black Velvet  Acquisitions  are  significant  and the
Company expects them to have a material  impact on the Company's  future results
of operations.

<PAGE>
                                     - 16 -

     RECENT DEVELOPMENTS - PENDING ACQUISITIONS OF SIMI AND FRANCISCAN

     On April 1, 1999, the Company entered into a definitive agreement with Moet
Hennessy,  Inc. to purchase all of the  outstanding  capital stock of Simi.  The
Simi Acquisition includes the Simi winery, equipment,  vineyards,  inventory and
worldwide ownership of the Simi brand name.

     On April 21, 1999, the Company entered into definitive  purchase agreements
with Franciscan and its shareholders,  and certain parties related to Franciscan
to,  among other  matters,  purchase  all of the  outstanding  capital  stock of
Franciscan and acquire certain  vineyards and related vineyard assets.  Pursuant
to the  Franciscan  Acquisition,  the Company will:  (i) acquire the  Franciscan
Oakville Estate,  Estancia and Mt. Veeder brands;  (ii) acquire wineries located
in Rutherford,  Monterey and Mt. Veeder, California;  (iii) acquire vineyards in
the Napa Valley,  Alexander  Valley,  Monterey and Paso Robles  appellations and
additionally,  will enter into long-term  grape  contracts with certain  parties
related  to  Franciscan  to  purchase  additional  grapes  grown in the Napa and
Alexander Valley appellations; (iv) acquire distribution rights to the Quintessa
and Veramonte brands;  and (v) acquire equity interests in entities that own the
Veramonte brand and the Veramonte  winery and certain  vineyards  located in the
Casablanca Valley, Chile.

     The  agreements  for the Simi and  Franciscan  Acquisitions  are subject to
certain customary conditions prior to closing, which the Company expects will be
satisfied.  The Company cannot guarantee,  however, that those transactions will
be completed upon the agreed upon terms, or at all.

RESULTS OF OPERATIONS
---------------------

FISCAL 1999 COMPARED TO FISCAL 1998

     NET SALES

     The  following  table sets forth the net sales (in thousands of dollars) by
operating segment of the Company for Fiscal 1999 and Fiscal 1998.

                                    Fiscal 1999 Compared to Fiscal 1998
                                 -----------------------------------------
                                                 Net Sales
                                 -----------------------------------------
                                                                %Increase/
                                    1999           1998          Decrease
                                 ----------     ----------      ----------
     Canandaigua Wine:
       Branded                   $  598,782     $  570,807         4.9 %
       Other                         70,711         71,988        (1.8)%
                                 ----------     ----------
     Net sales                   $  669,493     $  642,795         4.2 %
                                 ----------     ----------
     Barton:
       Beer                      $  478,611     $  376,607        27.1 %
       Spirits                      185,938        191,190        (2.7)%
                                 ----------     ----------
     Net sales                   $  664,549     $  567,797        17.0 %
                                 ----------     ----------
     Matthew Clark:
       Branded                   $   64,879     $     --            --
       Wholesale                     93,881           --            --
                                 ----------     ----------
     Net sales                   $  158,760     $     --            --
                                 ----------     ----------
     Corporate Operations
       and Other                 $    4,541     $    2,196       106.8 %
                                 ----------     ----------

     Consolidated Net Sales      $1,497,343     $1,212,788        23.5 %
                                 ==========     ==========

<PAGE>
                                     - 17 -

     Net sales for Fiscal 1999  increased  to  $1,497.3  million  from  $1,212.8
million for Fiscal 1998, an increase of $284.6 million, or 23.5%.

     Canandaigua Wine
     ----------------

     Net sales for Canandaigua  Wine for Fiscal 1999 increased to $669.5 million
from $642.8 million for Fiscal 1998, an increase of $26.7 million, or 4.2%. This
increase resulted primarily from (i) the introduction of two new products, Arbor
Mist and Mystic  Cliffs,  in Fiscal 1999,  (ii) Paul Masson  Grande Amber Brandy
growth,  and (iii) Almaden boxed wine growth.  These  increases  were  partially
offset by  declines  in other  wine  brands  and in the  Company's  grape  juice
concentrate business.

     Barton
     ------

     Net sales for Barton for  Fiscal  1999  increased  to $664.5  million  from
$567.8  million for Fiscal 1998, an increase of $96.8  million,  or 17.0%.  This
increase  resulted  primarily  from an  increase  in sales of beer brands led by
Barton's Mexican portfolio.  This increase was partially offset by a decrease in
revenues from Barton's spirits contract bottling business.

     Matthew Clark
     -------------

     Net sales for Matthew Clark for Fiscal 1999 since the date of  acquisition,
December 1, 1998, were $158.8 million.

     GROSS PROFIT

     The Company's gross profit increased to $448.0 million for Fiscal 1999 from
$343.8  million for Fiscal 1998, an increase of $104.3  million,  or 30.3%.  The
dollar increase in gross profit  resulted  primarily from the sales generated by
the Matthew Clark  Acquisition  completed in the fourth  quarter of Fiscal 1999,
increased beer sales and the  combination  of higher average  selling prices and
lower  average  costs for branded wine sales.  As a percent of net sales,  gross
profit  increased  to 29.9% for  Fiscal  1999 from 28.3% for  Fiscal  1998.  The
increase in the gross  profit  margin  resulted  primarily  from higher  selling
prices and lower costs for  Canandaigua  Wine's  branded  wine sales,  partially
offset by a sales mix shift towards lower margin  products,  particulary  due to
the growth in Barton's beer sales.

     SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

     Selling,  general and  administrative  expenses increased to $299.5 million
for Fiscal  1999 from  $231.7  million  for Fiscal  1998,  an  increase of $67.8
million,  or 29.3%. The dollar increase in selling,  general and  administrative
expenses  resulted   primarily  from  expenses  related  to  the  Matthew  Clark
Acquisition,  as well as marketing and  promotional  costs  associated  with the
Company's  increased branded sales volume.  The  year-over-year  comparison also
benefited  from a one time charge for  separation  costs incurred in Fiscal 1998
related  to  an  organizational  change  within  Barton.  Selling,  general  and
administrative  expenses as a percent of net sales increased to 20.0% for Fiscal
1999 as compared to 19.1% for Fiscal 1998.  The increase in percent of net sales
resulted  primarily from (i) Canandaigua Wine's investment in brand building and
efforts to increase  market  share and (ii) the Matthew  Clark  Acquisition,  as
Matthew Clark's selling, general and administrative expenses as a percent of net
sales is typically higher than for the Company's other operating segments.

<PAGE>
                                     - 18 -

     NONRECURRING CHARGES

     The Company  incurred  nonrecurring  charges of $2.6 million in Fiscal 1999
related to the closure of a production  facility in the United Kingdom.  No such
charges were incurred in Fiscal 1998.

     OPERATING INCOME

     The following table sets forth the operating profit/(loss) (in thousands of
dollars) by operating segment of the Company for Fiscal 1999 and Fiscal 1998.

                                        Fiscal 1999 Compared to Fiscal 1998
                                        -----------------------------------
                                               Operating Profit/(Loss)
                                        -----------------------------------
                                                                 %Increase/
                                          1999         1998      (Decrease)
                                        --------     --------    ----------
     Canandaigua Wine                   $ 46,283     $ 45,440        1.9 %
     Barton                              102,624       77,010       33.3 %
     Matthew Clark                         8,998         --           --
     Corporate Operations and Other      (12,013)     (10,380)     (15.7)%
                                        --------     --------
     Consolidated Operating Profit      $145,892     $112,070       30.2 %
                                        ========     ========

     As a result of the above  factors,  operating  income  increased  to $145.9
million  for Fiscal 1999 from $112.1  million  for Fiscal  1998,  an increase of
$33.8 million, or 30.2%.

     INTEREST EXPENSE, NET

     Net interest expense  increased to $41.5 million for Fiscal 1999 from $32.2
million for Fiscal  1998,  an increase of $9.3  million or 28.8%.  The  increase
resulted  primarily  from  additional   interest  expense  associated  with  the
borrowings related to the Matthew Clark Acquisition.

     EXTRAORDINARY ITEM, NET OF INCOME TAXES

     The Company incurred an  extraordinary  charge of $11.4 million after taxes
in Fiscal 1999. This charge resulted from fees related to the replacement of the
Company's bank credit facility,  including  extinguishment  of the Term Loan. No
extraordinary charges were incurred in Fiscal 1998.

     NET INCOME

     As a result of the above factors, net income increased to $50.5 million for
Fiscal 1999 from $47.1 million for Fiscal 1998, an increase of $3.3 million,  or
7.1%.

     For  financial  analysis  purposes  only,  the  Company's  earnings  before
interest,  taxes,  depreciation and amortization ("EBITDA") for Fiscal 1999 were
$184.5  million,  an increase of $39.3 million over EBITDA of $145.2 million for
Fiscal  1998.  EBITDA  should not be construed  as an  alternative  to operating
income or net cash flow from operating activities and should not be construed as
an indication of operating performance or as a measure of liquidity.

<PAGE>
                                     - 19 -

FISCAL 1998 COMPARED TO FISCAL 1997

     NET SALES

     The  following  table sets forth the net sales (in thousands of dollars) by
operating segment of the Company for Fiscal 1998 and Fiscal 1997.

                                         Fiscal 1998 Compared to Fiscal 1997
                                       ---------------------------------------
                                                     Net Sales
                                       ---------------------------------------
                                                                    %Increase/
                                          1998          1997        (Decrease)
                                       ----------    ----------     ----------
     Canandaigua Wine:
       Branded                         $  570,807    $  537,745        6.1 %
       Other                               71,988       112,546      (36.0)%
                                       ----------    ----------
     Net sales                         $  642,795    $  650,291       (1.2)%
                                       ----------    ----------
     Barton:
       Beer                            $  376,607    $  298,925       26.0 %
       Spirits                            191,190       185,289        3.2 %
                                       ----------    ----------
     Net sales                         $  567,797    $  484,214       17.3 %
                                       ----------    ----------

     Corporate Operations and Other    $    2,196    $      508      332.3 %
                                       ----------    ----------

     Consolidated Net Sales            $1,212,788    $1,135,013        6.9%
                                       ==========    ==========


     Net sales for Fiscal 1998  increased  to  $1,212.8  million  from  $1,135.0
million for Fiscal 1997, an increase of $77.8 million, or 6.9%.

     Canandaigua Wine
     ----------------

     Net sales for Canandaigua  Wine for Fiscal 1998 decreased to $642.8 million
from $650.3 million for Fiscal 1997, a decrease of $7.5 million,  or 1.2%.  This
decrease resulted  primarily from lower sales of grape juice  concentrate,  bulk
wine and other branded wine products,  partially  offset by an increase in table
wine sales and brandy sales.

     Barton
     ------

     Net sales for Barton for  Fiscal  1998  increased  to $567.8  million  from
$484.2  million for Fiscal 1997, an increase of $83.6  million,  or 17.3%.  This
increase  resulted  primarily from additional beer sales,  largely Mexican beer,
and additional spirits sales.

     GROSS PROFIT

     The Company's gross profit increased to $343.8 million for Fiscal 1998 from
$322.2  million for Fiscal  1997,  an increase of $21.5  million,  or 6.7%.  The
dollar  increase in gross profit  resulted  primarily from increased beer sales,
higher average selling prices and cost structure improvements related to

<PAGE>
                                     - 20 -

branded wine sales,  higher  average  selling prices in excess of cost increases
related to grape juice  concentrate  sales and higher average selling prices and
increased  volume  related  to  branded  spirits  sales.  These  increases  were
partially offset by lower sales volume of grape juice concentrate and bulk wine.
As a percent of net sales,  gross profit decreased  slightly to 28.3% for Fiscal
1998 from 28.4% for Fiscal 1997.

     SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

     Selling,  general and  administrative  expenses increased to $231.7 million
for Fiscal  1998 from  $209.0  million  for Fiscal  1997,  an  increase of $22.7
million,  or 10.9%. The dollar increase in selling,  general and  administrative
expenses  resulted  principally from marketing and selling costs associated with
the Company's  branded sales volume,  and a one-time charge for separation costs
related to an organizational change within the Barton segment.  Selling, general
and  administrative  expenses as a percent of net sales  increased  to 19.1% for
Fiscal 1998 as compared to 18.4% for Fiscal 1997. The increase in percent of net
sales resulted from the one-time  charge for separation  costs and from a change
in the sales mix in the Canandaigua Wine segment towards branded products, which
have a higher percent of marketing and selling costs relative to sales.

     OPERATING INCOME

     The following table sets forth the operating profit/(loss) (in thousands of
dollars) by operating segment of the Company for Fiscal 1998 and Fiscal 1997.

                                         Fiscal 1998 Compared to Fiscal 1997
                                        -------------------------------------
                                               Operating Profit/(Loss)
                                        -------------------------------------
                                                                  %Increase/
                                          1998         1997      (Decrease)
                                        --------     --------    -----------
     Canandaigua Wine                   $ 45,440     $ 51,525       (11.8)%
     Barton                               77,010       73,073         5.4 %
     Corporate Operations and Other      (10,380)     (11,388)        8.9 %
                                        --------     --------
     Consolidated Operating Profit      $112,070     $113,210        (1.0)%
                                        ========     ========


     As a result of the above  factors,  operating  income  decreased  to $112.1
million for Fiscal 1998 from $113.2  million for Fiscal 1997, a decrease of $1.1
million, or 1.0%.

     INTEREST EXPENSE, NET

     Net interest expense  decreased to $32.2 million for Fiscal 1998 from $34.1
million for Fiscal 1997,  a decrease of $1.9  million or 5.5%.  The decrease was
primarily  due to a  decrease  in the  Company's  average  borrowings  which was
partially offset by an increase in the average interest rate.

     PROVISION FOR INCOME TAXES

     The Company's  effective  tax rate for Fiscal 1998  decreased to 41.0% from
41.7% for Fiscal 1997 as Fiscal 1997  reflected a higher  effective  tax rate in
California  caused by statutory  limitations on the Company's ability to utilize
certain deductions.

<PAGE>
                                     - 21 -

     NET INCOME

     As a result of the above factors, net income increased to $47.1 million for
Fiscal 1998 from $46.2 million for Fiscal 1997, an increase of $0.9 million,  or
2.1%.

     For  financial  analysis  purposes  only,  the  Company's  earnings  before
interest,  taxes,  depreciation and amortization ("EBITDA") for Fiscal 1998 were
$145.2  million,  an increase of $0.2 million over EBITDA of $145.0  million for
Fiscal  1997.  EBITDA  should not be construed  as an  alternative  to operating
income or net cash flow from operating activities and should not be construed as
an indication of operating performance or as a measure of liquidity.

FINANCIAL LIQUIDITY AND CAPITAL RESOURCES
-----------------------------------------

GENERAL

     The  Company's  principal  use of cash in its  operating  activities is for
purchasing and carrying  inventories.  The Company's primary source of liquidity
has historically  been cash flow from operations,  except during the annual fall
grape harvests when the Company has relied on short-term borrowings.  The annual
grape crush  normally  begins in August and runs  through  October.  The Company
generally  begins  purchasing  grapes in August  with  payments  for such grapes
beginning to come due in  September.  The  Company's  short-term  borrowings  to
support  such  purchases  generally  reach their  highest  levels in November or
December. Historically, the Company has used cash flow from operating activities
to repay  its  short-term  borrowings.  The  Company  will  continue  to use its
short-term borrowings to support its working capital  requirements.  The Company
believes  that  cash  provided  by  operating   activities   and  its  financing
activities,  primarily short-term borrowings, will provide adequate resources to
satisfy its working  capital,  liquidity  and  anticipated  capital  expenditure
requirements for both its short-term and long-term capital needs.

FISCAL 1999 CASH FLOWS

     OPERATING ACTIVITIES

     Net cash  provided  by  operating  activities  for  Fiscal  1999 was $107.3
million,  which resulted from $112.3 million in net income  adjusted for noncash
items, less $5.0 million  representing the net change in the Company's operating
assets and  liabilities.  The net  change in  operating  assets and  liabilities
resulted  primarily from post acquisition  activity  attributable to the Matthew
Clark  Acquisition  resulting  in a  decrease  in  other  accrued  expenses  and
liabilities  and accounts  payable,  partially  offset by a decrease in accounts
receivable.

     INVESTING ACTIVITIES AND FINANCING ACTIVITIES

     Net cash used in investing  activities for Fiscal 1999 was $382.4  million,
which  resulted  primarily  from net cash paid of $332.2 million for the Matthew
Clark  Acquisition  and $49.9 million of capital  expenditures,  including  $7.0
million for vineyards.

     Net cash  provided  by  financing  activities  for  Fiscal  1999 was $301.0
million,  which resulted primarily from proceeds of $635.1 million from issuance
of  long-term  debt,  including  $358.1  million of long-term  debt  incurred to
acquire Matthew Clark. This amount was partially offset by principal

<PAGE>
                                     - 22 -

payments of $264.1  million of long-term  debt,  repurchases of $44.9 million of
the Company's  Class A Common Stock,  payment of $17.1 million of long-term debt
issuance costs and repayment of $13.9 million of net revolving loan borrowings.

     As of February 28, 1999, under the 1998 Credit  Agreement,  the Company had
outstanding term loans of $625.6 million bearing interest at 7.6%, $83.1 million
of revolving loans bearing interest at 7.3%, undrawn revolving letters of credit
of $4.0 million, and $212.9 million in revolving loans available to be drawn.

     Total debt outstanding as of February 28, 1999, amounted to $925.4 million,
an increase of $500.2 million from February 28, 1998. The ratio of total debt to
total  capitalization  increased to 68.0% as of February 28, 1999, from 50.0% as
of February 28, 1998.

     During  June  1998,  the  Company's  Board  of  Directors   authorized  the
repurchase  of up to  $100.0  million  of its  Class A Common  Stock and Class B
Common Stock.  The  repurchase  of shares of common stock will be  accomplished,
from  time to  time,  in  management's  discretion  and  depending  upon  market
conditions,  through  open  market or  privately  negotiated  transactions.  The
Company may finance such  repurchases  through cash generated from operations or
through the bank credit agreement.  The repurchased  shares will become treasury
shares. As of May 28, 1999, the Company had purchased  1,018,836 shares of Class
A Common Stock at an aggregate cost of $44.9  million,  or at an average cost of
$44.05 per share.

THE COMPANY'S CREDIT AGREEMENT

     On December 14, 1998,  the Company,  its principal  operating  subsidiaries
(other than Matthew Clark and its  subsidiaries),  and a syndicate of banks, for
which The Chase  Manhattan  Bank acts as  administrative  agent,  entered into a
First  Amended and Restated  Credit  Agreement  (the "1998  Credit  Agreement"),
effective as of November 2, 1998,  which amends and restates in its entirety the
credit  agreement  entered into between the Company and The Chase Manhattan Bank
on  November  2, 1998.  The 1998 Credit  Agreement  includes  both US dollar and
British  pound  sterling  commitments  of the  syndicate  banks of up to, in the
aggregate,  the  equivalent  of $1.0  billion  (subject  to  increase as therein
provided to $1.2  billion)  with the  proceeds  available  for  repayment of all
outstanding principal and accrued interest on all loans under the Company's bank
credit  agreement  dated as of December 19, 1997,  payment of the purchase price
for the Matthew Clark shares,  repayment of Matthew  Clark's credit  facilities,
funding of permitted  acquisitions,  payment of transaction expenses and ongoing
working capital needs of the Company.

     The 1998 Credit Agreement provides for a $350.0 million Tranche I Term Loan
facility due in December  2004, a $200.0  million  Tranche II Term Loan facility
due in June  2000,  a $150.0  million  Tranche  III Term  Loan  facility  due in
December 2005, and a $300.0 million Revolving Credit facility (including letters
of credit up to a maximum of $20.0  million)  which  expires in  December  2004.
Portions of the Tranche I Term Loan facility and the Revolving  Credit  facility
are available for borrowing in British pound  sterling.  A brief  description of
the 1998 Credit  Agreement is contained in Note 6 to the Company's  consolidated
financial statements located in Item 8 of this Annual Report on Form 10-K.

     The  Company  expects  to  finance  the  purchase  price  for the  Simi and
Franciscan  Acquisitions  with borrowings  under an amendment to the 1998 Credit
Agreement.

<PAGE>
                                     - 23 -

SENIOR SUBORDINATED NOTES

     As of  February  28,  1999,  the  Company had  outstanding  $195.0  million
aggregate  principal  amount of 8 3/4% Senior  Subordinated  Notes due  December
2003,  being the $130.0  million  aggregate  principal  amount of 8 3/4%  Senior
Subordinated  Notes due  December  2003 issued in December  1993 (the  "Original
Notes")  and the $65.0  million  aggregate  principal  amount of 8 3/4% Series C
Senior Subordinated Notes due December 2003 issued in February 1997 (the "Series
C Notes").  The Original Notes and the Series C Notes are currently  redeemable,
in whole or in part, at the option of the Company.  A brief  description  of the
Original  Notes and the Series C Notes is contained  in Note 6 to the  Company's
consolidated  financial  statements  located in Item 8 of this Annual  Report on
Form 10-K.

     On March 4, 1999,  the Company issued $200.0  million  aggregate  principal
amount of 8 1/2%  Senior  Subordinated  Notes due March 2009 (the "$200  Million
Notes").  The Company used the proceeds  from the sale of the $200 Million Notes
to fund the Black Velvet  Acquisition  ($185.5  million) and to pay the fees and
expenses  related  thereto with the remainder of the net proceeds to be used for
general  corporate  purposes or to fund future  acquisitions.  The $200  Million
Notes are  redeemable at the option of the Company,  in whole or in part, at any
time on or after March 1, 2004.  The Company may also redeem up to $70.0 million
of the $200  Million  Notes  using the  proceeds  of  certain  equity  offerings
completed before March 1, 2002. A brief description of the $200 Million Notes is
contained in Note 17 to the Company's  consolidated financial statements located
in Item 8 of this Annual Report on Form 10-K.

CAPITAL EXPENDITURES

     During  Fiscal  1999,  the  Company  incurred  $49.9  million  for  capital
expenditures,  including $7.0 million related to vineyards. The Company plans to
spend  approximately  $49.6  million  for  capital  expenditures,  exclusive  of
vineyards,  in fiscal 2000. In addition,  the Company  continues to consider the
purchase,  lease and  development  of  vineyards.  See  "Business  - Sources and
Availability of Raw Materials"  under Item 1 of this Annual Report on Form 10-K.
The Company may incur  additional  expenditures  for vineyards if  opportunities
become   available.   Management   reviews  the  capital   expenditure   program
periodically and modifies it as required to meet current business needs.

COMMITMENTS

     The Company has agreements  with suppliers to purchase  various spirits and
blends of which certain  agreements are  denominated in British pound  sterling.
The future  obligations  under these  agreements,  based upon exchange  rates at
February 28, 1999, aggregate  approximately $17.2 million for contracts expiring
through December 2002.

     At February 28, 1999,  the Company had open currency  forward  contracts to
purchase various foreign  currencies of $12.4 million which mature within twelve
months.  The  Company's  use of such  contracts is limited to the  management of
currency rate risks related to purchases denominated in a foreign currency.  The
Company's  strategy is to enter only into currency  exchange  contracts that are
matched to specific purchases and not to enter into any speculative contracts.

<PAGE>
                                     - 24 -

EFFECTS OF INFLATION AND CHANGING PRICES

     The Company's  results of operations and financial  condition have not been
significantly  affected by inflation and changing  prices.  The Company has been
able,  subject to normal  competitive  conditions,  to pass along  rising  costs
through increased selling prices.

ACCOUNTING PRONOUNCEMENT

     In June 1998, the Financial  Accounting Standards Board issued Statement of
Financial  Accounting  Standards  No.  133  ("SFAS No.  133"),  "Accounting  for
Derivative  Instruments  and  Hedging  Activities."  SFAS  No.  133  establishes
accounting and reporting standards for derivative instruments, including certain
derivative instruments embedded in other contracts  (collectively referred to as
derivatives),  and for  hedging  activities.  SFAS No. 133  requires  that every
derivative  be recorded as either an asset or liability in the balance sheet and
measured  at its fair  value.  SFAS No. 133 also  requires  that  changes in the
derivative's  fair value be  recognized  currently in earnings  unless  specific
hedge  accounting  criteria are met.  Special  accounting for qualifying  hedges
allows a derivative's  gains and losses to offset related  results on the hedged
item in the income  statement,  and requires that a company  formally  document,
designate  and assess the  effectiveness  of  transactions  that  receive  hedge
accounting. The Company is required to adopt SFAS No. 133 on a prospective basis
for  interim  periods  and fiscal  years  beginning  March 1, 2000.  The Company
believes the effect of adoption on its financial statements will not be material
based on the Company's current risk management strategies.

YEAR 2000 ISSUE

     For  purposes  of the  following  Year  2000  discussion,  the  information
presented includes the effect of the Black Velvet  Acquisition.  The Company has
in place  detailed  programs  to address  Year 2000  readiness  in its  internal
systems and with its key  customers  and  suppliers.  The Year 2000 issue is the
result of computer  logic that was written  using two digits rather than four to
define the applicable  year.  Any computer  logic that processes  date-sensitive
information  may  recognize the date using "00" as the year 1900 rather than the
year 2000, which could result in miscalculations or system failures.

     Pursuant to the  Company's  readiness  programs,  all major  categories  of
information  technology  systems and  non-information  technology systems (i.e.,
equipment  with  embedded  microprocessors)  in use by  the  Company,  including
manufacturing,  sales, financial and human resources,  have been inventoried and
assessed.  In  addition,  plans have been  developed  for the  required  systems
modifications  or  replacements.  With  respect  to its  information  technology
systems, the Company has completed the entire assessment phase and approximately
75% of the remediation  phase.  With respect to its  non-information  technology
systems, the Company has completed the entire assessment phase and approximately
64% of the remediation  phase.  Selected areas, both internal and external,  are
being tested to assure the integrity of the Company's remediation programs.  The
testing is expected to be completed by September 1999. The Company plans to have
all  internal   mission-critical   information  technology  and  non-information
technology systems Year 2000 compliant by September 1999.

     The Company is also communicating  with its major customers,  suppliers and
financial   institutions  to  assess  the  potential  impact  on  the  Company's
operations if those third parties fail to become Year 2000 compliant in a timely
manner. While this process is not yet complete, based upon responses to date, it
appears that many of those customers and suppliers have only indicated that they
have in place Year 2000 readiness programs, without specifically confirming that
they will be Year 2000 compliant in a timely manner. Risk assessment,  readiness
evaluation,  action  plans  and  contingency  plans

<PAGE>
                                     - 25 -

related to the Company's  significant customers and suppliers are expected to be
completed by September 1999. The Company's key financial  institutions have been
surveyed  and it is the  Company's  understanding  that they are or will be Year
2000 compliant on or before December 31, 1999.

     The costs  incurred to date  related to its Year 2000  activities  have not
been material to the Company,  and,  based upon current  estimates,  the Company
does not believe that the total cost of its Year 2000  readiness  programs  will
have a material adverse impact on the Company's financial condition,  results of
operations or cash flows.

     The  Company's   readiness   programs  also  include  the   development  of
contingency  plans to protect its business and operations from Year 2000-related
interruptions.  These plans should be complete by September  1999 and, by way of
examples,   will  include  back-up   procedures,   identification  of  alternate
suppliers,  where possible,  and increases in inventory  levels.  Based upon the
Company's current  assessment of its  non-information  technology  systems,  the
Company does not believe it necessary to develop an extensive  contingency  plan
for  those  systems.  There  can  be no  assurances,  however,  that  any of the
Company's  contingency plans will be sufficient to handle all problems or issues
which may arise.

     The Company  believes  that it is taking  reasonable  steps to identify and
address those matters that could cause serious interruptions in its business and
operations due to Year 2000 issues. However, delays in the implementation of new
systems, a failure to fully identify all Year 2000 dependencies in the Company's
systems  and  in  the  systems  of  its   suppliers,   customers  and  financial
institutions,  a failure  of such  third  parties to  adequately  address  their
respective  Year 2000 issues,  or a failure of a  contingency  plan could have a
material adverse effect on the Company's business,  financial condition, results
of  operations  or cash flows.  For  example,  the Company  would  experience  a
material adverse impact on its business if significant  suppliers of beer, glass
or other raw  materials,  or utility  systems fail to timely provide the Company
with necessary inventories or services due to Year 2000 systems failures.

     The statements set forth herein  concerning  Year 2000 issues which are not
historical  facts  are   forward-looking   statements  that  involve  risks  and
uncertainties that could cause actual results to differ materially from those in
the  forward-looking  statements.  In particular,  the costs associated with the
Company's  Year 2000  programs and the  time-frame in which the Company plans to
complete Year 2000  modifications  are based upon  management's  best estimates.
These estimates were derived from internal assessments and assumptions of future
events. These estimates may be adversely affected by the continued  availability
of  personnel  and system  resources,  and by the failure of  significant  third
parties  to  properly  address  Year  2000  issues.  Therefore,  there can be no
guarantee  that any  estimates,  or  other  forward-looking  statements  will be
achieved, and actual results could differ significantly from those contemplated.

EURO CONVERSION ISSUES

     Effective  January 1, 1999,  eleven of the fifteen member  countries of the
European Union (the  "Participating  Countries")  established  fixed  conversion
rates between their existing sovereign  currencies and the euro. For three years
after the  introduction  of the euro,  the  Participating  Countries can perform
financial  transactions  in either the euro or their original local  currencies.
This will result in a fixed  exchange  rate among the  Participating  Countries,
whereas the euro (and the  Participating  Countries'  currency  in tandem)  will
continue to float freely  against the U.S.  dollar and other  currencies  of the
non-participating  countries.  The Company  does not believe that the effects of
the conversion will have a material adverse effect on the Company's business and
operations.

<PAGE>
                                     - 26 -

ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
--------  ----------------------------------------------------------

     The Company is exposed to market risk  associated  with changes in interest
rates and foreign currency exchange rates. To manage the volatility  relating to
these  risks,  the  Company  periodically  enters into  derivative  transactions
including foreign currency exchange contracts and interest rate swap agreements.
The Company has limited  involvement with derivative  financial  instruments and
does not use them for trading purposes.  The Company uses derivative instruments
solely to reduce the financial impact of these risks.

     The fair  value  of  long-term  debt is  subject  to  interest  rate  risk.
Generally, the fair value of long-term debt will increase as interest rates fall
and decrease as interest  rates rise.  The estimated fair value of the Company's
total long-term debt,  including current  maturities,  was approximately  $844.6
million at  February  28,  1999.  A  hypothetical  1% increase  from  prevailing
interest rates at February 28, 1999, would result in a decrease in fair value of
long-term debt by approximately  $7.7 million.  Also, a hypothetical 1% increase
from  prevailing  interest  rates at  February  28,  1999,  would  result  in an
approximate  increase in cash  required for interest on variable  interest  rate
debt during the next five fiscal years as follows:

                           2000        $ 6.2 million
                           2001        $ 5.1 million
                           2002        $ 3.8 million
                           2003        $ 3.4 million
                           2004        $ 2.9 million

     The Company  periodically  enters into  interest  rate swap  agreements  to
reduce its exposure to interest rate changes  relative to its long-term debt. At
February 28, 1999, the Company had no interest rate swap agreements outstanding.

     The Company has  exposure  to foreign  currency  risk as a result of having
international  subsidiaries  in the  United  Kingdom.  The  Company  uses  local
currency  borrowings  to hedge its  earnings  and cash flow  exposure to adverse
changes in foreign  currency  exchange rates.  At February 28, 1999,  management
believes that a  hypothetical  10% adverse change in foreign  currency  exchange
rates would not result in a material  adverse impact on either  earnings or cash
flow.  The Company  also has  exposure to foreign  currency  risk as a result of
contracts to purchase  inventory  items that are  denominated in various foreign
currencies.  In order to  reduce  the risk of  foreign  currency  exchange  rate
fluctuations  resulting from these contracts,  the Company  periodically  enters
into foreign  exchange hedging  agreements.  At February 28, 1999, the potential
loss on outstanding  foreign exchange hedging agreements from a hypothetical 10%
adverse change in foreign currency exchange rates would not be material.

<PAGE>
                                     - 27 -

ITEM 8.   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
-------   -------------------------------------------


                    CANANDAIGUA BRANDS, INC. AND SUBSIDIARIES
                    -----------------------------------------

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
                   ------------------------------------------
                                       AND
                                       ---
                             SUPPLEMENTARY SCHEDULES
                             -----------------------

                                FEBRUARY 28, 1999
                                -----------------

                                                                            Page
                                                                            ----
The following information is presented in this Annual Report on Form 10-K:

    Report of Independent Public Accountants.............................    28
    Consolidated Balance Sheets - February 28, 1999 and 1998.............    29
    Consolidated Statements of Income for the years ended
         February 28, 1999, 1998 and 1997................................    30
    Consolidated Statements of Changes in Stockholders' Equity
         for the years ended February 28, 1999, 1998 and 1997............    31
    Consolidated Statements of Cash Flows for the years ended
         February 28, 1999, 1998 and 1997................................    32
    Notes to Consolidated Financial Statements...........................    33
    Selected Financial Data..............................................    14
    Selected Quarterly Financial Information (unaudited).................    52

Schedules I through V are not submitted  because they are not  applicable or not
required under the rules of Regulation S-X.

Individual  financial statements of the Registrant have been omitted because the
Registrant is primarily an operating  company and no subsidiary  included in the
consolidated financial statements has minority equity interest and/or noncurrent
indebtedness,  not  guaranteed  by the  Registrant,  in  excess  of 5% of  total
consolidated assets.

<PAGE>
                                     - 28 -

                              ARTHUR ANDERSEN LLP



                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS


To Canandaigua Brands, Inc.:

We have audited the  accompanying  consolidated  balance  sheets of  Canandaigua
Brands,  Inc. (a Delaware  corporation) and subsidiaries as of February 28, 1999
and  1998,  and the  related  consolidated  statements  of  income,  changes  in
stockholders'  equity and cash  flows for each of the three  years in the period
ended February 28, 1999. These financial  statements are the  responsibility  of
the Company's  management.  Our responsibility is to express an opinion on these
financial statements based on our audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects,  the financial position of Canandaigua  Brands,  Inc. and
subsidiaries  as of  February  28,  1999  and  1998,  and the  results  of their
operations  and their cash flows for each of the three years in the period ended
February 28, 1999 in conformity with generally accepted accounting principles.

As  explained  in Note 1 to the  financial  statements,  the  Company  has given
retroactive effect to the change in accounting for inventories from the last-in,
first-out (LIFO) method to the first-in, first-out (FIFO) method.


                                               /s/ Arthur Andersen LLP


Rochester, New York
  April 22, 1999

<PAGE>
                                     - 29 -

                   CANANDAIGUA BRANDS, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                        (in thousands, except share data)

                                                          February 28,
                                                  ---------------------------
                                                      1999            1998
                                                  -----------     -----------
                    ASSETS
                    ------
CURRENT ASSETS:
  Cash and cash investments                       $    27,645     $     1,232
  Accounts receivable, net                            260,433         142,615
  Inventories, net                                    508,571         411,424
  Prepaid expenses and other current assets            59,090          26,463
                                                  -----------     -----------
    Total current assets                              855,739         581,734
PROPERTY, PLANT AND EQUIPMENT, net                    428,803         244,035
OTHER ASSETS                                          509,234         264,786
                                                  -----------     -----------
  Total assets                                    $ 1,793,776     $ 1,090,555
                                                  ===========     ===========

   LIABILITIES AND STOCKHOLDERS' EQUITY
   ------------------------------------
CURRENT LIABILITIES:
  Notes payable                                   $    87,728     $    91,900
  Current maturities of long-term debt                  6,005          24,118
  Accounts payable                                    122,746          52,055
  Accrued Federal and state excise taxes               49,342          17,498
  Other accrued expenses and liabilities              149,451         104,896
                                                  -----------     -----------
    Total current liabilities                         415,272         290,467
                                                  -----------     -----------
LONG-TERM DEBT, less current maturities               831,689         309,218
                                                  -----------     -----------
DEFERRED INCOME TAXES                                  88,179          59,237
                                                  -----------     -----------
OTHER LIABILITIES                                      23,364           6,206
                                                  -----------     -----------
COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY:
  Preferred Stock, $.01 par value-
    Authorized, 1,000,000 shares;
    Issued, none in 1999 and 1998                        --              --
  Class A Common Stock, $.01 par value-
    Authorized, 120,000,000 shares;
    Issued, 17,915,359 shares in 1999
    and 17,604,784 shares in 1998                         179             176
  Class B Convertible Common Stock,
    $.01 par value-
    Authorized, 20,000,000 shares;
    Issued, 3,849,173 shares in 1999 and
    3,956,183 shares in 1998                               39              40
  Additional paid-in capital                          239,912         231,687
  Retained earnings                                   281,081         230,609
  Accumulated other comprehensive income-
    Cumulative translation adjustment                  (4,173)           --
                                                  -----------     -----------
                                                      517,038         462,512
                                                  -----------     -----------
  Less-Treasury stock-
  Class A Common Stock, 3,168,306 shares in
    1999 and 2,199,320 shares in 1998,
    at cost                                           (79,559)        (34,878)
  Class B Convertible Common Stock, 625,725
    shares in 1999 and 1998, at cost                   (2,207)         (2,207)
                                                  -----------     -----------
                                                      (81,766)        (37,085)
                                                  -----------     -----------
    Total stockholders' equity                        435,272         425,427
                                                  -----------     -----------
  Total liabilities and stockholders' equity      $ 1,793,776     $ 1,090,555
                                                  ===========     ===========

           The accompanying notes to consolidated financial statements
                 are an integral part of these balance sheets.

<PAGE>
                                         - 30 -
<TABLE>
                        CANANDAIGUA BRANDS, INC. AND SUBSIDIARIES
                            CONSOLIDATED STATEMENTS OF INCOME
                          (in thousands, except per share data)
<CAPTION>
                                                 For the Years Ended February 28,
                                          ---------------------------------------------
                                              1999             1998             1997
                                          -----------      -----------      -----------
<S>                                       <C>              <C>              <C>
GROSS SALES                               $ 1,984,801      $ 1,632,357      $ 1,534,452
  Less - Excise taxes                        (487,458)        (419,569)        (399,439)
                                          -----------      -----------      -----------
    Net sales                               1,497,343        1,212,788        1,135,013
COST OF PRODUCT SOLD                       (1,049,309)        (869,038)        (812,812)
                                          -----------      -----------      -----------
    Gross profit                              448,034          343,750          322,201
SELLING, GENERAL AND ADMINISTRATIVE
  EXPENSES                                   (299,526)        (231,680)        (208,991)
NONRECURRING CHARGES                           (2,616)            --               --
                                          -----------      -----------      -----------
    Operating income                          145,892          112,070          113,210
INTEREST EXPENSE, net                         (41,462)         (32,189)         (34,050)
                                          -----------      -----------      -----------
    Income before taxes and
      extraordinary item                      104,430           79,881           79,160
PROVISION FOR INCOME TAXES                    (42,521)         (32,751)         (32,977)
                                          -----------      -----------      -----------
    Income before extraordinary item           61,909           47,130           46,183
EXTRAORDINARY ITEM, NET OF INCOME TAXES       (11,437)            --               --
                                          -----------      -----------      -----------
NET INCOME                                $    50,472      $    47,130      $    46,183
                                          ===========      ===========      ===========
SHARE DATA:
Earnings per common share:
  Basic:
    Income before extraordinary item      $      3.38      $      2.52      $      2.39
    Extraordinary item                          (0.62)            --               --
                                          -----------      -----------      -----------
  Earnings per common share - basic       $      2.76      $      2.52      $      2.39
                                          ===========      ===========      ===========
  Diluted:
    Income before extraordinary item      $      3.30      $      2.47      $      2.37
    Extraordinary item                          (0.61)            --               --
                                          -----------      -----------      -----------
  Earnings per common share - diluted     $      2.69      $      2.47      $      2.37
                                          ===========      ===========      ===========
Weighted average common shares
  outstanding:
    Basic                                      18,293           18,672           19,333
    Diluted                                    18,754           19,105           19,521

<FN>
               The accompanying notes to consolidated financial statements
                       are an integral part of these statements.
</FN>
</TABLE>
<PAGE>
                                                           - 31 -
<TABLE>
                                        CANANDAIGUA BRANDS, INC. AND SUBSIDIARIES
                               CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                                            (in thousands, except share data)
<CAPTION>
                                                                                     Accumulated
                                            Common Stock     Additional                 Other
                                          ----------------    Paid-In    Retained   Comprehensive  Treasury    Restricted
                                          Class A  Class B    Capital    Earnings      Income        Stock       Stock       Total
                                          -------  -------   ----------  --------   -------------  ---------   ----------  --------
<S>                                         <C>      <C>     <C>         <C>           <C>         <C>           <C>       <C>
BALANCE,  February 29, 1996                 $174     $40     $221,133    $137,296      $  -        $ (7,441)     $  -      $351,202
Net income and comprehensive income
  for fiscal 1997                             -       -          -         46,183         -            -            -        46,183
Conversion of 35,500 Class B Convertible
  Common shares to Class A Common shares      -       -          -           -            -            -            -          -
Exercise of 3,750 Class A stock options       -       -            17        -            -            -            -            17
Employee stock purchases of 37,768
  treasury shares                             -       -           884        -            -             114         -           998
Repurchase of 787,450 Class A Common
  shares                                      -       -          -           -            -         (20,765)        -       (20,765)
Acceleration of 18,500 Class A stock
  options                                     -       -           248        -            -            -            -           248
Tax benefit on Class A stock options
  exercised                                   -       -            27        -            -            -            -            27
Tax benefit on disposition of employee
  stock purchases                             -       -            27        -            -            -            -            27
                                            ----     ---     --------    --------      -------     --------       ------   --------

BALANCE,  February 28, 1997                  174      40      222,336     183,479         -         (28,092)        -       377,937
Net income and comprehensive income for
  fiscal 1998                                 -       -          -         47,130         -            -            -        47,130
Exercise of 117,452 Class A stock options      2      -         1,799        -            -            -            -         1,801
Employee stock purchases of 78,248
  treasury shares                             -       -         1,016        -            -             240         -         1,256
Repurchase of 362,100 Class A Common
  shares                                      -       -          -           -            -          (9,233)        -        (9,233)
Acceleration of 142,437 Class A stock
  options                                     -       -         3,625        -            -            -            -         3,625
Issuance of 25,000 restricted Class A
  Common shares                               -       -         1,144        -            -            -          (1,144)      -
Amortization of unearned restricted
  stock compensation                          -       -          -           -            -            -             267        267
Accelerated amortization of unearned
  restricted stock compensation               -       -           200        -            -            -             877      1,077
Tax benefit on Class A stock options
  exercised                                   -       -         1,382        -            -            -            -         1,382
Tax benefit on disposition of employee
  stock purchases                             -       -           185        -            -            -            -           185
                                            ----     ---     --------    --------      -------     --------       ------   --------

BALANCE,  February 28, 1998                  176      40      231,687     230,609         -         (37,085)        -       425,427
Comprehensive income:
  Net income for fiscal 1999                  -       -          -         50,472         -            -            -        50,472
  Cumulative translation adjustment           -       -          -           -          (4,173)        -            -        (4,173)
                                                                                                                           --------
Comprehensive income                                                                                                         46,299
                                                                                                                           --------
Conversion of 107,010 Class B Convertible
  Common shares to Class A Common shares       1      (1)        -           -            -            -            -          -
Exercise of 203,565 Class A stock options      2      -         4,085        -            -            -            -         4,087
Employee stock purchases of 49,850
  treasury shares                             -       -         1,643        -            -             197         -         1,840
Repurchase of 1,018,836 Class A Common
  shares                                      -       -          -           -            -         (44,878)        -       (44,878)
Acceleration of 1,250 Class A stock
  options                                     -       -            43        -            -            -            -            43
Tax benefit on Class A stock options
  exercised                                   -       -         2,320        -            -            -            -         2,320
Tax benefit on disposition of employee
  stock purchases                             -       -           134        -            -            -            -           134
                                            ----     ---     --------    --------      -------     --------      -------   --------

BALANCE,  February 28, 1999                 $179     $39     $239,912    $281,081      $(4,173)    $(81,766)     $  -      $435,272
                                            ====     ===     ========    ========      =======     ========      =======   ========
<FN>
              The accompanying notes to consolidated financial statements are an integral part of these statements.
</FN>
</TABLE>
<PAGE>
                                                   - 32 -
<TABLE>
                                CANANDAIGUA BRANDS, INC. AND SUBSIDIARIES
                                  CONSOLIDATED STATEMENTS OF CASH FLOWS
                                              (in thousands)
<CAPTION>
                                                               For the Years Ended February 28,
                                                           --------------------------------------
                                                              1999          1998          1997
                                                           ----------    ----------    ----------
<S>                                                        <C>           <C>           <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income                                               $  50,472     $  47,130     $  46,183

  Adjustments to reconcile net income to
    net cash provided by operating activities:
      Depreciation of property, plant and equipment           27,282        23,847        22,359
      Extraordinary item, net of income taxes                 11,437          -             -
      Amortization of intangible assets                       11,308         9,314         9,480
      Deferred tax provision                                  10,053         4,275        18,630
      Loss (gain) on sale of assets                            1,193        (3,001)       (3,371)
      Amortization of discount on long-term debt                 388           352           112
      Stock-based compensation expense                           144         1,747           275
      Change in operating assets and liabilities,
        net of effects from purchase of business:
          Accounts receivable, net                            44,081           749         3,523
          Inventories, net                                     1,190       (60,659)      (15,137)
          Prepaid expenses and other current assets          (14,115)       (4,354)        3,271
          Accounts payable                                   (17,560)       (3,288)         (431)
          Accrued Federal and state excise taxes              17,124           440        (2,641)
          Other accrued expenses and liabilities             (31,807)       14,655        24,617
          Other assets and liabilities, net                   (3,945)       (2,452)          898
                                                           ----------    ----------    ----------
          Total adjustments                                   56,773       (18,375)       61,585
                                                           ----------    ----------    ----------
          Net cash provided by operating activities          107,245        28,755       107,768
                                                           ----------    ----------    ----------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchase of business, net of cash acquired                (332,216)         -             -
  Purchases of property, plant and equipment                 (49,857)      (31,203)      (31,649)
  Purchase of joint venture minority interest                   (716)         -             -
  Proceeds from sale of assets                                   431        12,552         9,174
  Payment of accrued earn-out amounts                           -             -          (13,848)
                                                           ----------    ----------    ----------
          Net cash used in investing activities             (382,358)      (18,651)      (36,323)
                                                           ----------    ----------    ----------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from issuance of long-term debt, net
    of discount                                              635,090       140,000        61,668
  Exercise of employee stock options                           4,083         1,776            17
  Proceeds from employee stock purchases                       1,840         1,256           998
  Principal payments of long-term debt                      (264,101)     (186,367)      (50,842)
  Purchases of treasury stock                                (44,878)       (9,233)      (20,765)
  Payment of issuance costs of long-term debt                (17,109)       (1,214)       (1,550)
  Net (repayment of) proceeds from notes payable             (13,907)       34,900       (54,300)
                                                           ----------    ----------    ----------
          Net cash provided by (used in) financing
            activities                                       301,018       (18,882)      (64,774)
                                                           ----------    ----------    ----------

Effect of exchange rate changes on cash and
  cash investments                                               508          -             -
                                                           ----------    ----------    ----------

NET INCREASE (DECREASE) IN CASH AND CASH INVESTMENTS          26,413        (8,778)        6,671
CASH AND CASH INVESTMENTS, beginning of year                   1,232        10,010         3,339
                                                           ----------    ----------    ----------
CASH AND CASH INVESTMENTS, end of year                     $  27,645     $   1,232     $  10,010
                                                           ==========    ==========    ==========

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
  Cash paid during the year for:
    Interest                                               $  36,257     $  33,394     $  32,615
                                                           ==========    ==========    ==========
    Income taxes                                           $  40,714     $  32,164     $   4,411
                                                           ==========    ==========    ==========

SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING
  AND FINANCING ACTIVITIES:
    Fair value of assets acquired, including
      cash acquired                                        $ 740,880     $    -        $    -
    Liabilities assumed                                     (382,759)         -             -
                                                           ----------    ----------    ----------
    Cash paid                                                358,121          -             -
    Less - cash acquired                                     (25,905)         -             -
                                                           ----------    ----------    ----------
    Net cash paid for purchase of business                 $ 332,216     $    -        $    -
                                                           ==========    ==========    ==========

    Goodwill reduction on settlement of disputed
      final closing net current asset statement
      for Vintners Acquisition                             $    -        $    -        $   5,894
                                                           ==========    ==========    ==========
<FN>
The accompanying notes to consolidated financial statements are an integral part of these statements.
</FN>
</TABLE>
<PAGE>
                                     - 33 -

                   CANANDAIGUA BRANDS, INC., AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                FEBRUARY 28, 1999

1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

DESCRIPTION OF BUSINESS -
Canandaigua  Brands,  Inc., and its subsidiaries (the Company) operate primarily
in the beverage  alcohol  industry.  The Company is  principally  a producer and
supplier of wine and an importer and producer of beer and  distilled  spirits in
the United  States.  It  maintains a portfolio of over 170 national and regional
brands of  beverage  alcohol  which are  distributed  by over 1,000  wholesalers
throughout the United States and selected  international markets. The Company is
also a leading United  Kingdom-based  producer of its own brands of cider,  wine
and bottled water and a leading independent  beverage supplier to the on-premise
trade,  distributing  its own branded  products and those of other  companies to
more than 16,000 on-premise establishments in the U.K.

PRINCIPLES OF CONSOLIDATION -
The  consolidated  financial  statements of the Company  include the accounts of
Canandaigua Brands, Inc., and all of its subsidiaries. All intercompany accounts
and transactions have been eliminated.

MANAGEMENT'S USE OF ESTIMATES AND JUDGMENT -
The preparation of financial  statements in conformity  with generally  accepted
accounting principles requires management to make estimates and assumptions that
affect  the  reported  amounts  of assets  and  liabilities  and  disclosure  of
contingent  assets and  liabilities at the date of the financial  statements and
the  reported  amounts of revenues  and expenses  during the  reporting  period.
Actual results could differ from those estimates.

FOREIGN CURRENCY TRANSLATION -
The  "functional  currency"  for  translating  the  accounts  of  the  Company's
operations  outside the U.S. is the local  currency.  The  translation  from the
applicable  foreign  currencies  to U.S.  dollars is performed for balance sheet
accounts  using current  exchange  rates in effect at the balance sheet date and
for revenue and expense  accounts using a weighted  average exchange rate during
the period. The resulting translation adjustments are recorded as a component of
accumulated other comprehensive  income.  Gains or losses resulting from foreign
currency  transactions  are  included  in selling,  general  and  administrative
expenses.

CASH INVESTMENTS -
Cash investments  consist of highly liquid investments with an original maturity
when  purchased  of  three  months  or  less  and  are  stated  at  cost,  which
approximates  market value.  The amounts at February 28, 1999 and 1998,  are not
significant.

FAIR VALUE OF FINANCIAL INSTRUMENTS -
To  meet  the  reporting  requirements  of  Statement  of  Financial  Accounting
Standards No. 107, "Disclosures about Fair Value of Financial  Instruments," the
Company  calculates the fair value of financial  instruments using quoted market
prices  whenever  available.  When quoted market prices are not  available,  the
Company uses standard pricing models for various types of financial  instruments
(such as  forwards,  options,  swaps,  etc.) which take into account the present
value of  estimated  future cash flows.  The  methods  and  assumptions  used to
estimate the fair value of financial instruments are summarized as follows:

     ACCOUNTS RECEIVABLE: The carrying amount approximates fair value due to the
short maturity of these instruments,  the  creditworthiness of the customers and
the large number of customers constituting the accounts receivable balance.
     NOTES PAYABLE:  These  instruments are variable interest rate bearing notes
for which the carrying value approximates the fair value.
     LONG-TERM  DEBT: The carrying value of the debt  facilities with short-term
variable interest rates approximates the fair value. The fair value of the fixed
rate debt was estimated by discounting cash flows using interest rates currently
available for debt with similar terms and maturities.

<PAGE>
                                     - 34 -

     FOREIGN  EXCHANGE  HEDGING  AGREEMENTS:  The fair value of currency forward
contracts is estimated based on quoted market prices.
     LETTERS OF CREDIT:  At February 28, 1999 and 1998,  the Company had letters
of credit  outstanding  totaling  approximately  $4.0 million and $3.9  million,
respectively,  which  guarantee  payment  for certain  obligations.  The Company
recognizes  expense on these  obligations as incurred and no material losses are
anticipated.

The  carrying  amount  and  estimated  fair  value  of the  Company's  financial
instruments are summarized as follows as of February 28:

<TABLE>
<CAPTION>
                                                1999                                 1998
                                  ---------------------------------    --------------------------------
                                  Notional    Carrying      Fair       Notional    Carrying      Fair
                                   Amount      Amount       Value       Amount      Amount       Value
(in thousands)                    --------    --------    ---------    --------    --------    --------
<S>                                <C>        <C>         <C>            <C>       <C>         <C>
Liabilities:
------------
Notes payable                      $  --      $ 87,728    $ 87,728       $ --      $ 91,900    $ 91,900
Long-term debt, including
  current portion                  $  --      $837,694    $844,568       $ --      $333,336    $340,934

Derivative Instruments:
-----------------------
Foreign exchange hedging
  agreements:
    Currency forward contracts     $12,444    $   --      $ (1,732)      $ --      $   --      $   --

</TABLE>

INTEREST RATE FUTURES AND CURRENCY FORWARD CONTRACTS -
From time to time,  the Company  enters into interest rate futures and a variety
of currency  forward  contracts  in the  management  of  interest  rate risk and
foreign currency transaction exposure.  The Company has limited involvement with
derivative  instruments and does not use them for trading purposes.  The Company
uses  derivatives  solely to reduce the financial  impact of the related  risks.
Unrealized gains and losses on interest rate futures are deferred and recognized
as a component of interest expense over the borrowing  period.  Unrealized gains
and losses on currency  forward  contracts  are  deferred  and  recognized  as a
component of the related transactions in the accompanying  financial statements.
Discounts or premiums on currency forward contracts are recognized over the life
of the contract.  Cash flows from  derivative  instruments are classified in the
same category as the item being  hedged.  The  Company's  open currency  forward
contracts  at February 28,  1999,  hedge  purchase  commitments  denominated  in
foreign currencies and mature within twelve months.

INVENTORIES -
During the fourth  quarter of fiscal  1999,  the  Company  changed its method of
determining the cost of inventories from the last-in, first-out (LIFO) method to
the first-in,  first-out  (FIFO) method.  The primary  reasons for the change in
accounting  method are:  management's  belief that the FIFO method of accounting
better matches revenues and expenses of the Company, and therefore,  will result
in a better measurement of operating results;  and the FIFO method of accounting
will provide improved financial comparability to other publicly-traded companies
in the industry.  All previously  reported results have been restated to reflect
the retroactive  application of this accounting  change as required by generally
accepted  accounting  principles.  The  effect of this  change  was to  increase
current assets, current liabilities and retained earnings by $17.4 million, $7.1
million, and $10.3 million, respectively, as of February 28, 1998. The effect of
the change  increased  net income for the year ended  February 28, 1998, by $2.9
million, or $0.15 per share on a diluted basis, and increased net income for the
year ended February 28, 1997, by $18.5 million,  or $0.95 per share on a diluted
basis.  The  effect of the  change on the first  quarter  of fiscal  1999 was to
decrease net income $0.5  million,  or $0.02 per share on a diluted  basis.  The
effect of the  change on the  second and third  quarters  of fiscal  1999 was to
increase net income $1.0  million,  or $0.05 per share on a diluted  basis,  and
$0.5 million, or $0.03 per share on a diluted basis, respectively.

<PAGE>
                                     - 35 -

Elements  of cost  include  materials,  labor and  overhead  and  consist of the
following as of February 28:

                                                   1999          1998
                                                 --------      --------
      (in thousands)
      Raw materials and supplies                 $ 32,388      $ 14,439
      Wine and distilled spirits in process       344,175       304,037
      Finished case goods                         132,008        92,948
                                                 --------      --------
                                                 $508,571      $411,424
                                                 ========      ========

A substantial portion of barreled whiskey and brandy will not be sold within one
year because of the  duration of the aging  process.  All  barreled  whiskey and
brandy are  classified  as  in-process  inventories  and are included in current
assets,  in accordance with industry  practice.  Bulk wine  inventories are also
included  as work in process  within  current  assets,  in  accordance  with the
general  practices of the wine industry,  although a portion of such inventories
may be aged for  periods  greater  than one  year.  Warehousing,  insurance,  ad
valorem taxes and other  carrying  charges  applicable  to barreled  whiskey and
brandy held for aging are included in inventory costs.

PROPERTY, PLANT AND EQUIPMENT -
Property, plant and equipment is stated at cost. Major additions and betterments
are charged to property  accounts,  while maintenance and repairs are charged to
operations as incurred. The cost of properties sold or otherwise disposed of and
the related  accumulated  depreciation  are eliminated  from the accounts at the
time of disposal and  resulting  gains and losses are included as a component of
operating income.

DEPRECIATION -
Depreciation  is  computed  primarily  using the  straight-line  method over the
following estimated useful lives:

                                          Depreciable Life in Years
                                          -------------------------
            Buildings and improvements            10 to 33 1/3
            Machinery and equipment                3 to 15
            Motor vehicles                         3 to 7

Amortization  of  assets  capitalized  under  capital  leases is  included  with
depreciation expense.  Amortization is calculated using the straight-line method
over the shorter of the estimated useful life of the asset or the lease term.

OTHER ASSETS -
Other assets, which consist of goodwill, distribution rights, trademarks, agency
license  agreements,  deferred financing costs,  prepaid pension benefits,  cash
surrender  value of officers' life  insurance and other  amounts,  are stated at
cost,  net  of  accumulated  amortization.   Amortization  is  calculated  on  a
straight-line  or effective  interest basis over the following  estimated useful
lives:

                                           Useful Life in Years
                                           --------------------
            Goodwill                                40
            Distribution rights                     40
            Trademarks                              40
            Agency license agreements            16 to 40
            Deferred financing costs              5 to 10

At February 28, 1999, the weighted average remaining useful life of these assets
is  approximately  38 years.  The face  value of the  officers'  life  insurance
policies totaled $2.9 million at both February 28, 1999 and 1998.

<PAGE>
                                     - 36 -

LONG-LIVED ASSETS AND INTANGIBLES -
In  accordance  with  Statement  of  Financial  Accounting  Standards  No.  121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be  Disposed  of,"  the  Company  reviews  its  long-lived  assets  and  certain
identifiable   intangibles   for  impairment   whenever  events  or  changes  in
circumstances  indicate  that  the  carrying  amount  of an  asset  may  not  be
recoverable on an undiscounted cash flow basis. The statement also requires that
long-lived  assets and  certain  identifiable  intangibles  to be disposed of be
reported  at the lower of carrying  amount or fair value less cost to sell.  The
Company did not record any asset impairment in fiscal 1999.

ADVERTISING AND PROMOTION COSTS -
The Company  generally  expenses  advertising  and promotion  costs as incurred,
shown or distributed.  Prepaid  advertising costs at February 28, 1999 and 1998,
are not material. Advertising and promotion expense for the years ended February
28, 1999, 1998, and 1997, were approximately $173.1 million,  $111.7 million and
$101.3 million, respectively.

INCOME TAXES -
The Company  uses the  liability  method of  accounting  for income  taxes.  The
liability method accounts for deferred income taxes by applying  statutory rates
in effect at the balance  sheet date to the  difference  between  the  financial
reporting and tax basis of assets and liabilities.

ENVIRONMENTAL -
Environmental  expenditures  that relate to current  operations  are expensed as
appropriate.  Expenditures  that relate to an existing  condition caused by past
operations, and which do not contribute to current or future revenue generation,
are expensed.  Liabilities are recorded when  environmental  assessments  and/or
remedial  efforts  are  probable,  and the  cost  can be  reasonably  estimated.
Generally,  the timing of these  accruals  coincides  with the  completion  of a
feasibility  study  or the  Company's  commitment  to a formal  plan of  action.
Liabilities for  environmental  costs were not material at February 28, 1999 and
1998.

COMPREHENSIVE INCOME-
During  fiscal 1999,  the Company  adopted  Statement  of  Financial  Accounting
Standards  No.  130,  "Reporting  Comprehensive  Income"  (SFAS No.  130).  This
statement  establishes  rules for the reporting of comprehensive  income and its
components.  Comprehensive  income  consists of net income and foreign  currency
translation  adjustments  and is presented  in the  Consolidated  Statements  of
Changes in Stockholders'  Equity.  The adoption of SFAS No. 130 had no impact on
total  stockholders'   equity.   Prior  year  financial   statements  have  been
reclassified to conform with the SFAS No. 130 requirements.

EARNINGS PER COMMON SHARE -
Basic earnings per common share excludes the effect of common stock  equivalents
and is computed by  dividing  income  available  to common  stockholders  by the
weighted average number of common shares outstanding during the period for Class
A Common Stock and Class B Convertible Common Stock. Diluted earnings per common
share  reflects the potential  dilution that could result if securities or other
contracts to issue common stock were  exercised or converted  into common stock.
Diluted  earnings per common share  assumes the exercise of stock  options using
the treasury stock method and assumes the conversion of convertible  securities,
if any, using the "if converted" method.

2.  ACQUISITIONS:

MATTHEW CLARK ACQUISITION -
On December 1, 1998, the Company  acquired control of Matthew Clark plc (Matthew
Clark) and has since  acquired all of Matthew  Clark's  outstanding  shares (the
Matthew Clark Acquisition).  The total purchase price,  including  assumption of
indebtedness,  for the  acquisition  of Matthew  Clark shares was  approximately
$475.0  million,  net of cash  acquired.  Matthew  Clark,  founded in 1810, is a
leading U.K.-based producer and distributor of its own brands of cider, wine and
bottled water and a leading independent drinks wholesaler in the U.K.

The purchase  price for the Matthew  Clark shares was funded with  proceeds from
loans under a First  Amended and  Restated  Credit  Agreement  (the "1998 Credit
Agreement"), effective as of November 2, 1998, between the

<PAGE>
                                     - 37 -

Company and The Chase Manhattan Bank, as  administrative  agent, and a syndicate
of banks who are parties to the 1998 Credit Agreement.

The Matthew  Clark  Acquisition  was  accounted  for using the purchase  method;
accordingly,  the Matthew Clark assets were recorded at fair market value at the
date of acquisition, December 1, 1998. The excess of the purchase price over the
estimated fair market value of the net assets acquired (goodwill),  99.3 million
British  pound  sterling  ($164.3  million as of  December  1,  1998),  is being
amortized on a straight-line  basis over 40 years.  The results of operations of
the Matthew Clark Acquisition have been included in the Consolidated  Statements
of Income since the date of the acquisition.

During fiscal 1999, the Company incurred and paid  approximately $2.6 million in
nonrecurring  charges related to the closing of a Matthew Clark cider production
facility.  The charges were part of a production facility  consolidation program
that was begun prior to the  acquisition.  The  unaudited  pro forma  results of
operations for fiscal 1999 (shown in the table below) reflect total nonrecurring
charges of $21.5 million  ($0.69 per share on a diluted  basis)  related to this
facility consolidation program, of which $18.9 million was incurred prior to the
acquisition.

The following  table sets forth unaudited pro forma results of operations of the
Company for the years ended  February 28, 1999 and 1998. The unaudited pro forma
fiscal 1999 results of operations  give effect to the Matthew Clark  Acquisition
as if it occurred on March 1, 1998.  The unaudited pro forma fiscal 1998 results
of operations give effect to the Matthew Clark  Acquisition as if it occurred on
March 1, 1997.  The  unaudited  pro forma fiscal 1999 and fiscal 1998 results of
operations  are  presented  after  giving  effect  to  certain  adjustments  for
depreciation,  amortization  of goodwill,  interest  expense on the  acquisition
financing  and related  income tax effects.  The  unaudited pro forma results of
operations  are based upon  currently  available  information  and upon  certain
assumptions that the Company  believes are reasonable  under the  circumstances.
The unaudited pro forma results of operations do not purport to present what the
Company's  results of operations would actually have been if the  aforementioned
transactions had in fact occurred on such date or at the beginning of the period
indicated,  nor do they project the Company's  financial  position or results of
operations at any future date or for any future period.

                                                    1999              1998
                                                -----------       -----------
(in thousands, except per share data)
Net sales                                       $ 2,017,497       $ 1,883,813
Income before extraordinary item                $    49,126       $    55,879
Extraordinary item, net of income taxes         $   (11,437)      $      --
Net income                                      $    37,689       $    55,879

Earnings per common share:
  Basic:
    Income before extraordinary item            $      2.68       $      2.99
    Extraordinary item                                (0.62)             --
                                                -----------       -----------
  Earnings per common share - basic             $      2.06       $      2.99
                                                ===========       ===========
  Diluted:
    Income before extraordinary item            $      2.62       $      2.92
    Extraordinary item                                (0.61)             --
                                                -----------       -----------
  Earnings per common share - diluted           $      2.01       $      2.92
                                                ===========       ===========
Weighted average common shares outstanding:
  Basic                                              18,293            18,672
  Diluted                                            18,754            19,105

<PAGE>
                                     - 38 -

3.  PROPERTY, PLANT AND EQUIPMENT:

The major  components  of  property,  plant and  equipment  are as follows as of
February 28:

                                               1999           1998
                                            ---------      ---------
      (in thousands)
      Land                                  $  25,700      $  15,103
      Buildings and improvements              104,152         74,706
      Machinery and equipment                 380,069        244,204
      Motor vehicles                           20,191          5,316
      Construction in progress                 35,468         17,485
                                            ---------      ---------
                                              565,580        356,814
      Less - Accumulated depreciation        (136,777)      (112,779)
                                            ---------      ---------
                                            $ 428,803      $ 244,035
                                            =========      =========

4. OTHER ASSETS:

The major components of other assets are as follows as of February 28:

                                                  1999            1998
                                               ---------       ---------
    (in thousands)
    Goodwill                                   $ 311,908       $ 150,595
    Distribution rights, agency license
      agreements and trademarks                  179,077         119,346
    Other                                         53,779          23,686
                                               ---------       ---------
                                                 544,764         293,627
    Less - Accumulated amortization              (35,530)        (28,841)
                                               ---------       ---------
                                               $ 509,234       $ 264,786
                                               =========       =========

5. OTHER ACCRUED EXPENSES AND LIABILITIES:

The major components of other accrued expenses and liabilities are as follows as
of February 28:

                                                   1999          1998
                                                 --------      --------
         (in thousands)
         Accrued advertising and promotions      $ 38,604      $ 16,048
         Accrued salaries and commissions          15,584        23,704
         Other                                     95,263        65,144
                                                 --------      --------
                                                 $149,451      $104,896
                                                 ========      ========

<PAGE>
                                     - 39 -

6. BORROWINGS:

Borrowings consist of the following as of February 28:

<TABLE>
<CAPTION>
                                                                              1999                            1998
                                                             ----------------------------------------       ---------
(in thousands)                                               Current        Long-term         Total           Total
                                                             --------       ---------       ---------       ---------
<S>                                                          <C>            <C>             <C>             <C>
Notes Payable:
--------------
  Senior Credit Facility:
    Revolving Credit Loans                                   $ 83,075       $    --         $  83,075       $  91,900
  Other                                                         4,653            --             4,653            --
                                                             --------       ---------       ---------       ---------
                                                             $ 87,728       $    --         $  87,728       $  91,900
                                                             ========       =========       =========       =========
Long-term Debt:
---------------
  Senior Credit Facility:
    Term Loan, variable rate, aggregate proceeds of
      $140,000, due in installments through June 2003        $   --         $    --         $    --         $ 140,000
    Tranche I Term Loan, variable rate, aggregate
      proceeds of $275,630 (denominated in British
      pound sterling), due in installments beginning
      December 1999 through December 2004                       4,934         270,696         275,630            --
    Tranche II Term Loan, variable rate, aggregate
      proceeds of $200,000, due in June 2000                     --           200,000         200,000            --
    Tranche III Term Loan, variable rate, aggregate
      proceeds of $150,000, due in installments
      beginning December 1999 through December 2005               375         149,625         150,000            --
  Senior Subordinated Notes:
    8.75% currently redeemable due December 2003                 --           130,000         130,000         130,000
    8.75% Series C currently redeemable, due December
      2003 (less unamortized discount of $2,480 -
      effective rate 9.76%)                                      --            62,520          62,520          62,132
  Other Long-term Debt                                            696          18,848          19,544           1,204
                                                             --------       ---------       ---------       ---------
                                                             $  6,005       $ 831,689       $ 837,694       $ 333,336
                                                             ========       =========       =========       =========
</TABLE>

SENIOR  CREDIT  FACILITY - On December 14,  1998,  the  Company,  its  principal
operating  subsidiaries  (other than Matthew Clark and its subsidiaries),  and a
syndicate of banks (the  Syndicate  Banks),  for which The Chase  Manhattan Bank
acts as administrative agent, entered into the 1998 Credit Agreement,  effective
as of November 2, 1998,  which  amends and  restates in its  entirety the credit
agreement  entered  into  between the Company  and The Chase  Manhattan  Bank on
November  2, 1998.  The 1998  Credit  Agreement  includes  both U.S.  dollar and
British  pound  sterling  commitments  of the  Syndicate  Banks of up to, in the
aggregate,  the  equivalent  of $1.0  billion  (subject  to  increase as therein
provided to $1.2  billion)  with the  proceeds  available  for  repayment of all
outstanding principal and accrued interest on all loans under the Company's bank
credit  agreement  dated as of December 19, 1997,  payment of the purchase price
for the Matthew Clark shares,  repayment of Matthew  Clark's credit  facilities,
funding of permitted  acquisitions,  payment of transaction expenses and ongoing
working capital needs of the Company. The Company incurred an extraordinary loss
of $19.3  million  ($11.4  million  after  taxes) in the fourth  quarter of 1999
resulting  from fees related to the  replacement  of the bank credit  agreement,
including extinguishment of the Term Loan.

<PAGE>
                                     - 40 -

The 1998 Credit  Agreement  provides  for a $350.0  million  Tranche I Term Loan
facility due in December  2004, a $200.0  million  Tranche II Term Loan facility
due in June  2000,  a $150.0  million  Tranche  III Term  Loan  facility  due in
December 2005, and a $300.0 million Revolving Credit facility (including letters
of credit up to a maximum of $20.0  million)  which  expires in  December  2004.
Portions of the Tranche I Term Loan facility and the Revolving  Credit  facility
are available for borrowing in British pound sterling.

The Tranche I Term Loan facility requires quarterly repayments, starting at $6.3
million in December 1999,  increasing annually thereafter with a balloon payment
at maturity of approximately  $110.0 million.  The Tranche II Term Loan facility
requires no principal  payments  prior to the stated  maturity.  The Tranche III
Term Loan facility requires  quarterly  repayments,  starting at $0.4 million in
December 1999 and increasing to approximately $18.0 million in March 2004. There
are certain  mandatory term loan  prepayments,  including  those based on excess
cash flow,  sale of assets,  issuance of debt or equity,  and fluctuation in the
U.S.  dollar/British  pound  sterling  exchange  rate,  in each case  subject to
baskets and  thresholds  which (other than with respect to those  pertaining  to
fluctuations in the U.S. dollar/British pound sterling exchange rate, which were
inapplicable  under the  previous  bank credit  agreement)  are  generally  more
favorable  to the  Company  than those  contained  in its  previous  bank credit
agreement.

The rate of interest  payable,  at the  Company's  option,  is a function of the
London interbank offering rate (LIBOR) plus a margin,  federal funds rate plus a
margin, or the prime rate plus a margin. The margin is adjustable based upon the
Company's  Debt Ratio (as  defined in the 1998  Credit  Agreement).  The initial
margin on LIBOR  borrowings  ranges  between 1.75% and 2.50% and (other than for
the Tranche II Term Loan  facility) may be reduced  after  November 30, 1999, to
between 1.125% and 1.50%, depending on the Company's Debt Ratio. Conversely,  if
the Debt Ratio of the  Company  should  increase,  the margin  would be adjusted
upwards to between  2.0% and 2.75% for LIBOR  based  borrowings.  In addition to
interest,  the Company pays a facility fee on the Revolving Credit  commitments,
initially at 0.50% per annum and subject to reduction  after  November 30, 1999,
to 0.375%, depending on the Company's Debt Ratio.

Each of the Company's principal operating subsidiaries (other than Matthew Clark
and its  subsidiaries)  has guaranteed the Company's  obligation  under the 1998
Credit  Agreement,  and the Company and those  subsidiaries  have given security
interests to the  Syndicate  Banks in  substantially  all of their  assets.  The
Company and its subsidiaries are subject to customary  secured lending covenants
including those restricting additional liens, incurring additional indebtedness,
the sale of assets,  the payment of dividends,  transactions with affiliates and
the making of certain  investments.  The primary financial covenants require the
maintenance  of a debt coverage  ratio,  a senior debt coverage  ratio,  a fixed
charges  ratio  and an  interest  coverage  ratio.  Among  the most  restrictive
covenants  contained in the 1998 Credit Agreement is the requirement to maintain
a fixed  charges  ratio  of not less  than  1.0 at the  last day of each  fiscal
quarter for the most recent four quarters.

As of  February  28,  1999,  under the 1998  Credit  Agreement,  the Company had
outstanding  term loans of $625.6  million  bearing  interest at 7.62% and $83.1
million of revolving  loans bearing  interest at 7.25%.  The Company had average
outstanding Revolving Credit Loans of approximately $75.5 million, $59.9 million
and  $88.8  million  for the  years  ended  February  28,  1999,  1998 and 1997,
respectively.  Amounts  available  to be drawn down under the  Revolving  Credit
Loans were  $212.9  million  and $89.2  million at  February  28, 1999 and 1998,
respectively. The average interest rate on the Revolving Credit Loans was 6.23%,
6.57% and 6.58% for fiscal 1999, fiscal 1998, and fiscal 1997, respectively.

SENIOR SUBORDINATED NOTES -
On December 27, 1993,  the Company  issued $130.0  million  aggregate  principal
amount of 8.75% Senior  Subordinated  Notes due in December  2003 (the  Original
Notes).  Interest on the Original Notes is payable  semiannually  on June 15 and
December 15 of each year. The Original Notes are unsecured and  subordinated  to
the prior  payment  in full of all senior  indebtedness  of the  Company,  which
includes the 1998 Credit  Agreement.  The Original  Notes are  guaranteed,  on a
senior  subordinated  basis,  by  all  of the  Company's  significant  operating
subsidiaries (other than Matthew Clark and its subsidiaries).

<PAGE>
                                     - 41 -

The Trust Indenture  relating to the Original Notes contains certain  covenants,
including,  but not limited to, (i) limitation on indebtedness;  (ii) limitation
on restricted payments;  (iii) limitation on transactions with affiliates;  (iv)
limitation on senior  subordinated  indebtedness;  (v) limitation on liens; (vi)
limitation on sale of assets;  (vii) limitation on issuance of guarantees of and
pledges  for  indebtedness;  (viii)  restriction  on  transfer  of assets;  (ix)
limitation on subsidiary  capital  stock;  (x) limitation on the creation of any
restriction on the ability of the Company's  subsidiaries to make  distributions
and other payments;  and (xi)  restrictions on mergers,  consolidations  and the
transfer  of all or  substantially  all of the assets of the  Company to another
person.  The limitation on  indebtedness  covenant is governed by a rolling four
quarter fixed charge ratio requiring a specified minimum.

On October 29, 1996, the Company issued $65.0 million aggregate principal amount
of 8.75% Series B Senior  Subordinated  Notes due in December 2003 (the Series B
Notes).  In  February  1997,  the  Company  exchanged  $65.0  million  aggregate
principal  amount of 8.75%  Series C Senior  Subordinated  Notes due in December
2003 (the  Series C Notes)  for the  Series B Notes.  The terms of the  Series C
Notes are  substantially  identical  in all  material  respects to the  Original
Notes.

DEBT PAYMENTS -
Principal  payments  required under long-term debt  obligations  during the next
five fiscal years and thereafter are as follows:

                                 (in thousands)
                             2000          $   6,005
                             2001            224,972
                             2002             35,963
                             2003             42,876
                             2004            244,826
                          Thereafter         285,532
                                           ---------
                                           $ 840,174
                                           =========

7. INCOME TAXES:

The  provision  for income taxes  consists of the  following for the years ended
February 28:

<TABLE>
<CAPTION>
                                                    1999                         1998       1997
                                -------------------------------------------    --------   --------
                                              State
                                               and
                                 Federal      Local     Foreign      Total       Total      Total
                                --------    --------    -------    --------    --------   --------
(in thousands)
<S>                             <C>         <C>         <C>        <C>         <C>        <C>
Current income tax provision    $ 23,827    $  8,539    $   102    $ 32,468    $ 28,476   $ 14,347
Deferred income tax provision      5,732       2,195      2,126      10,053       4,275     18,630
                                --------    --------    -------    --------    --------   --------
                                $ 29,559    $ 10,734    $ 2,228    $ 42,521    $ 32,751   $ 32,977          $
                                ========    ========    =======    ========    ========   ========
</TABLE>
<PAGE>
                                     - 42 -

A  reconciliation  of the total tax provision to the amount computed by applying
the expected U.S.  Federal income tax rate to income before provision for income
taxes is as follows for the years ended February 28:

<TABLE>
<CAPTION>
                                            1999                  1998                  1997
                                     ------------------    ------------------    ------------------
                                                  % of                  % of                  % of
                                                 Pretax                Pretax                Pretax
                                      Amount     Income     Amount     Income     Amount     Income
                                     --------    ------    --------    ------    --------    ------
(in thousands)
<S>                                  <C>          <C>      <C>          <C>      <C>          <C>
Computed "expected" tax provision    $ 36,551     35.0     $ 27,958     35.0     $ 27,706     35.0

State and local income taxes, net
  of Federal income tax benefit         6,977      6.7        4,793      6.0        5,462      6.9

Miscellaneous items, net               (1,007)    (1.0)        -         -           (191)    (0.2)
                                     --------    ------    --------    ------    --------    ------
                                     $ 42,521     40.7     $ 32,751     41.0     $ 32,977     41.7
                                     ========    ======    ========    ======    ========    ======
</TABLE>

Deferred tax liabilities  (assets) are comprised of the following as of February
28:

                                               1999           1998
                                             --------       --------
          (in thousands)
          Depreciation and amortization      $ 89,447       $ 70,303
          LIFO reserve                         16,546          6,469
          Inventory reserves                    6,975          6,974
          Other accruals                      (15,009)       (18,193)
                                             --------       --------
                                             $ 97,959       $ 65,553
                                             ========       ========

At February 28, 1999, the Company has state and U.S.  Federal net operating loss
(NOL)  carryforwards of $5.4 million and $2.7 million,  respectively,  to offset
future taxable income that, if not otherwise  utilized,  will expire as follows:
state NOLs of $0.6 million and $4.8 million  during fiscal 2002 and fiscal 2003,
respectively, and Federal NOL of $2.7 million during fiscal 2011.

8. PROFIT SHARING RETIREMENT PLANS AND RETIREMENT SAVINGS PLAN:

Effective March 1, 1998, the Company's  existing  retirement  savings and profit
sharing  retirement  plans and the Barton  profit  sharing  and 401(k) plan were
merged into the  Canandaigua  Brands,  Inc.  401(k) and Profit Sharing Plan (the
Plan). The Plan covers  substantially  all employees,  excluding those employees
covered by collective  bargaining  agreements and Matthew Clark  employees.  The
401(k)  portion of the Plan  permits  eligible  employees  to defer a portion of
their compensation (as defined in the Plan) on a pretax basis.  Participants may
defer up to 10% of their  compensation  for the year,  subject to limitations of
the Plan.  The Company makes a matching  contribution  of 50% of the first 6% of
compensation  a participant  defers.  The amount of the  Company's  contribution
under the profit sharing portion of the Plan is in such discretionary  amount as
the Board of Directors may annually  determine,  subject to  limitations  of the
Plan. Company contributions were $6.8 million, $5.9 million and $5.7 million for
the years ended February 28, 1999, 1998 and 1997, respectively.

<PAGE>
                                     - 43 -

The Company's  subsidiary,  Matthew  Clark,  currently  provides for two pension
plans:  the Matthew Clark Group Pension  Plan;  and the Matthew Clark  Executive
Pension Plan (the Plans).  The Plans are defined  benefit plans with assets held
by a Trustee who administers funds separately from the Company's  finances.  The
following table summarizes the funded status of the Company's  pension plans and
the  related  amounts  that are  primarily  included  in "other  assets"  in the
Consolidated Balance Sheets.

     (in thousands)
     Change in benefit obligation:
     Benefit obligation at December 1, 1998                    $ 165,997
     Service cost                                                  1,335
     Interest cost                                                 2,671
     Plan participants' contributions                                481
     Benefits paid                                                (1,517)
     Foreign currency exchange rate changes                       (5,287)
                                                               ---------
     Benefit obligation at February 28, 1999                   $ 163,680
                                                               =========
     Change in plan assets:
     Fair value of plan assets at December 1, 1998             $ 194,001
     Actual return on plan assets                                  7,935
     Plan participants' contributions                                481
     Benefits paid                                                (1,517)
     Foreign currency exchange rate changes                       (6,294)
                                                               ---------
     Fair value of plan assets at February 28, 1999            $ 194,606
                                                               =========
     Funded status of the plan as of February 28, 1999:
     Funded status                                             $  30,927
     Unrecognized actuarial loss                                  (3,950)
                                                               ---------
     Prepaid benefit cost                                      $  26,977
                                                               =========
     Assumptions as of February 28, 1999:
     Rate of return on plan assets                                   8.0%
     Discount rate                                                   6.5%
     Increase in compensation levels                                 4.5%

     Components of net periodic benefit cost for the
       three month period ended February 28, 1999:
     Service cost                                              $   1,335
     Interest cost                                                 2,671
     Expected return on plan assets                               (3,848)
                                                               ---------
     Net periodic benefit cost                                 $     158
                                                               =========

<PAGE>
                                     - 44 -

9.  STOCKHOLDERS' EQUITY:

COMMON STOCK -
The Company has two classes of common  stock:  Class A Common  Stock and Class B
Convertible   Common  Stock.   Class  B  Convertible  Common  Stock  shares  are
convertible  into shares of Class A Common  Stock on a  one-to-one  basis at any
time at the option of the holder.  Holders of Class B  Convertible  Common Stock
are  entitled  to ten  votes  per  share.  Holders  of Class A Common  Stock are
entitled to only one vote per share but are entitled to a cash dividend premium.
If the Company pays a cash  dividend on Class B Convertible  Common Stock,  each
share of Class A Common  Stock  will  receive  an amount  at least  ten  percent
greater  than  the  amount  of the  cash  dividend  per  share  paid on  Class B
Convertible  Common Stock.  In addition,  the Board of Directors may declare and
pay a dividend on Class A Common  Stock  without  paying any dividend on Class B
Convertible Common Stock.

At February 28, 1999,  there were 14,747,053  shares of Class A Common Stock and
3,223,448  shares  of  Class B  Convertible  Common  Stock  outstanding,  net of
treasury stock.

STOCK REPURCHASE AUTHORIZATION -
In January 1996, the Company's  Board of Directors  authorized the repurchase of
up to $30.0 million of its Class A Common Stock and Class B  Convertible  Common
stock.  The  Company was  permitted  to finance  such  purchases,  which  became
treasury  shares,  through cash  generated  from  operations or through the bank
credit  agreement.  Throughout  the year ended  February 28,  1997,  the Company
repurchased  787,450 shares of Class A Common Stock totaling $20.8 million.  The
Company  completed  its  repurchase  program  during  fiscal 1998,  repurchasing
362,100 shares of Class A Common Stock for $9.2 million.

In June 1998, the Company's  Board of Directors  authorized the repurchase of up
to $100.0  million of its Class A Common  Stock and Class B  Convertible  Common
Stock.  The Company  may  finance  such  purchases,  which will become  treasury
shares,  through  cash  generated  from  operations  or through  the bank credit
agreement. During fiscal 1999, the Company repurchased 1,018,836 shares of Class
A Common Stock for $44.9 million.

INCREASE IN NUMBER OF AUTHORIZED SHARES OF CLASS A COMMON STOCK-
In July 1998, the stockholders of the Company approved an increase in the number
of  authorized  shares  of  Class A  Common  Stock  from  60,000,000  shares  to
120,000,000 shares, thereby increasing the aggregate number of authorized shares
of the Company to 141,000,000 shares.

LONG-TERM STOCK INCENTIVE PLAN -
Under the Company's Long-Term Stock Incentive Plan,  nonqualified stock options,
stock appreciation rights,  restricted stock and other stock-based awards may be
granted to  employees,  officers and  directors of the Company.  Grants,  in the
aggregate,  may not  exceed  4,000,000  shares of the  Company's  Class A Common
Stock. The exercise price, vesting period and term of nonqualified stock options
granted are established by the committee administering the plan (the Committee).
Grants of stock  appreciation  rights,  restricted  stock and other  stock-based
awards may contain such vesting, terms, conditions and other requirements as the
Committee  may  establish.   During  fiscal  1999  and  fiscal  1998,  no  stock
appreciation  rights were granted.  During fiscal 1999, no restricted  stock was
granted and during fiscal 1998, 25,000 shares of restricted Class A Common Stock
were granted.  At February 28, 1999,  there were 1,228,753  shares available for
future grant.

<PAGE>
                                     - 45 -

A summary of nonqualified stock option activity is as follows:

                                             Weighted                   Weighted
                                Shares         Avg.                       Avg.
                                 Under       Exercise      Options      Exercise
                                Option        Price      Exercisable     Price
                               ---------     --------    -----------    --------
Balance, February 29, 1996     1,093,725     $ 28.70        28,675      $  4.44
Options granted                1,647,700     $ 22.77
Options exercised                 (3,750)    $  4.44
Options forfeited/canceled    (1,304,700)    $ 32.09
                               ---------
Balance, February 28, 1997     1,432,975     $ 18.85        51,425      $ 10.67
Options granted                  569,400     $ 38.72
Options exercised               (117,452)    $ 15.33
Options forfeited/canceled       (38,108)    $ 17.66
                               ---------
Balance, February 28, 1998     1,846,815     $ 25.23       360,630      $ 25.46
Options granted                  728,200     $ 50.57
Options exercised               (203,565)    $ 20.08
Options forfeited/canceled      (116,695)    $ 37.13
                               ---------
Balance, February 28, 1999     2,254,755     $ 33.26       492,285      $ 24.55
                               =========

The following table summarizes  information  about stock options  outstanding at
February 28, 1999:

                            Options Outstanding             Options Exercisable
                  -------------------------------------   ----------------------
                               Weighted Avg.   Weighted                 Weighted
                                 Remaining       Avg.                     Avg.
   Range of          Number     Contractual    Exercise     Number      Exercise
Exercise Prices   Outstanding      Life         Price     Exercisable    Price
---------------   -----------  -------------   --------   -----------   --------
$ 4.44 - $11.50       21,525     2.7 years     $  9.64       21,525     $  9.64
$17.00 - $25.63      817,015     6.5 years     $ 17.25      256,775     $ 17.57
$26.75 - $31.25      340,440     7.5 years     $ 28.47      106,400     $ 27.37
$35.38 - $57.13    1,075,775     9.2 years     $ 47.41      107,585     $ 41.39
                   ---------                                -------
                   2,254,755     7.9 years     $ 33.26      492,285     $ 24.55
                   =========                                =======

The weighted  average fair value of options  granted during fiscal 1999,  fiscal
1998 and fiscal 1997 was $26.21, $20.81 and $10.27, respectively. The fair value
of  options  is  estimated  on  the  date  of  grant  using  the   Black-Scholes
option-pricing model with the following weighted average assumptions:  risk-free
interest rate of 5.3% for fiscal 1999,  6.4% for fiscal 1998 and 6.6% for fiscal
1997;  volatility of 40.6% for fiscal 1999,  41.3% for fiscal 1998 and 42.7% for
fiscal 1997;  expected  option life of 7.0 years for fiscal 1999,  6.9 years for
fiscal 1998 and 4.7 years for fiscal 1997.  The dividend yield was 0% for fiscal
1999, 1998 and 1997. Forfeitures are recognized as they occur.

INCENTIVE STOCK OPTION PLAN -
Under the Company's Incentive Stock Option Plan,  incentive stock options may be
granted  to  employees,  including  officers,  of the  Company.  Grants,  in the
aggregate,  may not  exceed  1,000,000  shares of the  Company's  Class A Common
Stock. The exercise price of any incentive stock option may not be less than the
fair market  value of the  Company's  Class A Common Stock on the date of grant.
The vesting period and term of incentive  stock options  granted are established
by the  Committee.  The maximum  term of incentive  stock  options is ten years.
During fiscal 1999 and fiscal 1998, no incentive stock options were granted.

<PAGE>
                                     - 46 -

EMPLOYEE STOCK PURCHASE PLAN -
The Company has a stock  purchase plan under which  1,125,000  shares of Class A
Common Stock can be issued.  Under the terms of the plan, eligible employees may
purchase   shares  of  the  Company's  Class  A  Common  Stock  through  payroll
deductions.  The purchase  price is the lower of 85% of the fair market value of
the stock on the first or last day of the purchase  period.  During fiscal 1999,
fiscal  1998 and fiscal  1997,  employees  purchased  49,850,  78,248 and 37,768
shares, respectively.

The weighted  average fair value of purchase  rights granted during fiscal 1999,
fiscal 1998 and fiscal 1997 was $12.35, $11.90 and $8.41, respectively. The fair
value  of  purchase  rights  is  estimated  on  the  date  of  grant  using  the
Black-Scholes   option-pricing   model  with  the  following   weighted  average
assumptions:  risk-free  interest rate of 4.7% for fiscal 1999,  5.3% for fiscal
1998 and 5.6% for fiscal 1997;  volatility  of 33.5% for fiscal 1999,  35.1% for
fiscal 1998 and 65.4% for fiscal 1997; expected purchase right life of 0.5 years
for fiscal 1999,  0.5 years for fiscal 1998 and 0.8 years for fiscal  1997.  The
dividend yield was 0% for fiscal 1999, 1998 and 1997.

PRO FORMA DISCLOSURE -
The Company applies Accounting  Principles Board Opinion No. 25, "Accounting for
Stock Issued to Employees,"  and related  interpretations  in accounting for its
plans.  The Company  adopted the  disclosure-only  provisions  of  Statement  of
Financial   Accounting   Standards   No.  123,   "Accounting   for   Stock-Based
Compensation," (SFAS No. 123). Accordingly,  no incremental compensation expense
has been  recognized for its  stock-based  compensation  plans.  Had the Company
recognized the compensation  cost based upon the fair value at the date of grant
for awards under its plans  consistent with the  methodology  prescribed by SFAS
No. 123, net income and earnings per common share would have been reduced to the
pro forma amounts as follows for the years ended February 28:

<TABLE>
<CAPTION>
                                                1999                    1998                    1997
                                        --------------------    ---------------------   --------------------
                                           As                      As                      As
                                        Reported   Pro Forma    Reported    Pro Forma   Reported   Pro Forma
                                        --------   ---------    --------    ---------   --------   ---------
(in thousands, except per share data)
<S>                                     <C>         <C>         <C>         <C>         <C>         <C>
Net income                              $ 50,472    $ 46,942    $ 47,130    $ 43,230    $ 46,183    $ 43,546
                                        ========    ========    ========    ========    ========    ========
Earnings per common share:
  Basic                                 $   2.76    $   2.57    $   2.52    $   2.32    $   2.39    $  2.25
  Diluted                               $   2.69    $   2.50    $   2.47    $   2.26    $   2.37    $  2.23

</TABLE>

The pro  forma  effect on net  income  may not be  representative  of that to be
expected in future years.

<PAGE>
                                     - 47 -

10.  EARNINGS PER COMMON SHARE:

The  following  table  presents  earnings  per common  share for the years ended
February 28:

                                               1999         1998         1997
                                             --------     --------     --------
(in thousands, except per share data)
Income before extraordinary item             $ 61,909     $ 47,130     $ 46,183
Extraordinary item, net of income taxes       (11,437)        --           --
                                             --------     --------     --------
Income applicable to common shares           $ 50,472     $ 47,130     $ 46,183
                                             ========     ========     ========
Weighted average common shares
  outstanding - basic                          18,293       18,672       19,333
Stock options                                     461          433          188
                                             --------     --------     --------
Weighted average common shares
  outstanding - diluted                        18,754       19,105       19,521
                                             ========     ========     ========
Earnings per common share:
  Basic:
    Income before extraordinary item         $   3.38     $   2.52     $   2.39
    Extraordinary item                          (0.62)        --           --
                                             --------     --------     --------
  Earnings per common share - basic          $   2.76     $   2.52     $   2.39
                                             ========     ========     ========
  Diluted:
    Income before extraordinary item         $   3.30     $   2.47     $   2.37
    Extraordinary item                          (0.61)        --           --
                                             --------     --------     --------
  Earnings per common share - diluted        $   2.69     $   2.47     $   2.37
                                             ========     ========     ========

11. COMMITMENTS AND CONTINGENCIES:

OPERATING LEASES -
Future payments under noncancelable operating leases having initial or remaining
terms of one year or more are as follows  during the next five fiscal  years and
thereafter:

                                 (in thousands)
                              2000           $ 13,292
                              2001             11,478
                              2002             10,576
                              2003             10,109
                              2004              9,624
                           Thereafter         102,122
                                             --------
                                             $157,201
                                             ========

Rental expense was approximately $8.2 million, $5.6 million and $4.7 million for
fiscal 1999, fiscal 1998 and fiscal 1997, respectively.

PURCHASE COMMITMENTS AND CONTINGENCIES -
The Company has  agreements  with three  suppliers  to purchase  blended  Scotch
whisky  through  December  2002.  The purchase  prices under the  agreements are
denominated in British pound sterling. Based upon exchange rates at February 28,
1999, the Company's  aggregate future obligation is approximately  $17.2 million
for the contracts expiring through December 2002.

<PAGE>
                                     - 48 -

At February 28, 1999, the Company had two agreements with Diageo plc (Diageo) to
purchase  Canadian  blended  whisky  through  September 1, 2000,  with a maximum
obligation of approximately $4.9 million. The Company also had an agreement with
Diageo to purchase  Canadian new  distillation  whisky through  December 1999 at
purchase prices of approximately $1.4 million to $1.7 million.  These agreements
have been  superseded as a result of the  Company's  definitive  agreement  with
Diageo.  See Note 17 - Subsequent Events. At February 28, 1999, the Company also
had an agreement with a different supplier to purchase Canadian new distillation
whisky through December 2005, with a maximum  obligation of  approximately  $6.4
million.

All of the  Company's  imported  beer products are marketed and sold pursuant to
exclusive  distribution  agreements  from the suppliers of these  products.  The
Company's agreement to distribute Corona Extra and its other Mexican beer brands
exclusively  throughout  25  primarily  western  states  was  renewed  effective
November 22, 1996, and expires  December 2006, with automatic five year renewals
thereafter,  subject to compliance with certain  performance  criteria and other
terms under the agreement.  The remaining  agreements  expire  through  December
2007.  Prior to their  expiration,  these  agreements  may be  terminated if the
Company fails to meet certain  performance  criteria.  At February 28, 1999, the
Company  believes  it is in  compliance  with all of its  material  distribution
agreements and, given the Company's long-term  relationships with its suppliers,
the Company does not believe that these agreements will be terminated.

In connection with previous acquisitions, the Company assumed purchase contracts
with certain  growers and suppliers.  In addition,  the Company has entered into
other purchase contracts with various growers and suppliers in the normal course
of business.  Under the grape  purchase  contracts,  the Company is committed to
purchase all grape  production  yielded  from a specified  number of acres for a
period of time  ranging up to nineteen  years.  The actual  tonnage and price of
grapes that must be purchased  by the Company  will vary each year  depending on
certain factors,  including weather, time of harvest,  overall market conditions
and the  agricultural  practices and location of the growers and suppliers under
contract.  The Company  purchased $126.6 million of grapes under these contracts
during  fiscal 1999.  Based on current  production  yields and  published  grape
prices, the Company estimates that the aggregate purchases under these contracts
over the remaining term of the contracts will be approximately $846.4 million.

The Company's  aggregate  obligations under bulk wine purchase contracts will be
approximately  $40.6  million over the  remaining  term of the  contracts  which
expire through fiscal 2001.

EMPLOYMENT CONTRACTS -
The Company has employment  contracts with certain of its executive officers and
certain other management personnel with remaining terms ranging up to two years.
These agreements provide for minimum salaries, as adjusted for annual increases,
and may include incentive bonuses based upon attainment of specified  management
goals. In addition, these agreements provide for severance payments in the event
of specified  termination  of  employment.  The aggregate  commitment for future
compensation and severance,  excluding incentive bonuses, was approximately $6.4
million as of February 28, 1999, of which  approximately $1.8 million is accrued
in other liabilities as of February 28, 1999.

EMPLOYEES COVERED BY COLLECTIVE BARGAINING AGREEMENTS -
Approximately 32% of the Company's full-time employees are covered by collective
bargaining  agreements at February 28, 1999. Agreements expiring within one year
cover approximately 5% of the Company's full-time employees.

LEGAL MATTERS -
The Company is subject to litigation from time to time in the ordinary course of
business.  Although the amount of any liability with respect to such  litigation
cannot be determined,  in the opinion of management such liability will not have
a material  adverse  effect on the  Company's  financial  condition,  results of
operations or cash flows.

<PAGE>
                                     - 49 -

12. SIGNIFICANT CUSTOMERS AND CONCENTRATION OF CREDIT RISK:

Gross sales to the five  largest  customers  of the Company  represented  25.2%,
26.4% and 22.9% of the Company's gross sales for the fiscal years ended February
28, 1999,  1998 and 1997,  respectively.  Gross sales to the  Company's  largest
customer,  Southern Wine and Spirits,  represented 10.9%, 12.1% and 10.5% of the
Company's  gross sales for the fiscal years ended  February  28, 1999,  1998 and
1997,  respectively.  Accounts  receivable from the Company's  largest  customer
represented 8.5%, 14.1% and 11.3% of the Company's total accounts  receivable as
of February 28, 1999, 1998 and 1997, respectively.  Gross sales to the Company's
five  largest  customers  are  expected to continue to  represent a  significant
portion of the Company's  revenues.  The Company's  arrangements with certain of
its customers may,  generally,  be terminated by either party with prior notice.
The Company  performs  ongoing credit  evaluations  of its customers'  financial
position,  and  management  of the  Company is of the  opinion  that any risk of
significant  loss is reduced due to the  diversity of customers  and  geographic
sales area.

13. SUMMARIZED FINANCIAL INFORMATION - SUBSIDIARY GUARANTORS:

The following table presents summarized  financial  information for the Company,
the parent company, the combined subsidiaries of the Company which guarantee the
Company's senior  subordinated  notes  (Subsidiary  Guarantors) and the combined
subsidiaries  of the  Company  which are not  Subsidiary  Guarantors,  primarily
Matthew Clark (Subsidiary  Nonguarantors).  The Subsidiary Guarantors are wholly
owned and the guarantees are full, unconditional,  joint and several obligations
of each of the  Subsidiary  Guarantors.  Separate  financial  statements for the
Subsidiary  Guarantors of the Company are not presented  because the Company has
determined  that such financial  statements  would not be material to investors.
The Subsidiary  Guarantors comprise all of the direct and indirect  subsidiaries
of the Company,  other than Matthew Clark and certain other  subsidiaries  which
individually,   and  in  the  aggregate,  are  inconsequential.   There  are  no
restrictions  on the ability of the  Subsidiary  Guarantors to transfer funds to
the Company in the form of cash dividends, loans or advances.

<TABLE>
<CAPTION>
                                          Parent       Subsidiary    Subsidiary
                                         Company       Guarantors   Nonguarantors    Eliminations    Consolidated
(in thousands)                           -------       ----------   -------------    ------------    ------------
<S>                                      <C>           <C>             <C>            <C>             <C>
BALANCE SHEET DATA:
February 28, 1999
-----------------
  Current assets                         $114,243      $  532,028      $209,468       $    --         $  855,739
  Noncurrent assets                      $646,133      $  396,125      $421,867       $(526,088)      $  938,037
  Current liabilities                    $157,648      $  126,803      $130,821       $    --         $  415,272
  Noncurrent liabilities                 $815,421      $   73,178      $ 54,633       $    --         $  943,232

February 28, 1998
-----------------
  Current assets                         $102,869      $  478,013      $    852       $    --         $  581,734
  Noncurrent assets                      $481,574      $  395,225      $     93       $(368,071)      $  508,821
  Current liabilities                    $180,420      $  109,339      $    708       $    --         $  290,467
  Noncurrent liabilities                 $312,877      $   61,784      $   --         $    --         $  374,661

INCOME STATEMENT DATA:
For the year ended February 28, 1999
------------------------------------
  Net sales                              $615,270      $1,080,466      $158,761       $(357,154)      $1,497,343
  Gross profit                           $168,575      $  237,437      $ 42,022       $    --         $  448,034
  Income before taxes and
    extraordinary item                   $  4,849      $   96,935      $  2,646       $    --         $  104,430
  Net income                             $  2,861      $   45,781      $  1,830       $    --         $   50,472

<PAGE>
                                     - 50 -
<CAPTION>
                                          Parent       Subsidiary     Subsidiary
                                         Company       Guarantors    Nonguarantors   Eliminations    Consolidated
                                         -------       ----------    -------------   ------------    ------------
<S>                                      <C>           <C>             <C>            <C>             <C>
For the year ended February 28, 1998
------------------------------------
  Net sales                              $562,760      $  985,757      $  2,197       $(337,926)      $1,212,788
  Gross profit                           $151,092      $  191,658      $  1,000       $    --         $  343,750
  Income (loss) before taxes             $ 21,024      $   59,285      $   (428)      $    --         $   79,881
  Net income (loss)                      $ 12,404      $   35,154      $   (428)      $    --         $   47,130

For the year ended February 28, 1997
------------------------------------
  Net sales                              $552,424      $  907,387      $    508       $(325,306)      $1,135,013
  Gross profit                           $127,289      $  195,841      $   (929)      $    --         $  322,201
  Income (loss) before taxes             $  2,581      $   78,672      $ (2,093)      $    --         $   79,160
  Net income (loss)                      $  1,506      $   45,898      $ (1,221)      $    --         $   46,183

</TABLE>

14. ACCOUNTING PRONOUNCEMENT:

In June 1998,  the  Financial  Accounting  Standards  Board issued  Statement of
Financial  Accounting  Standards  No.  133  (SFAS  No.  133),   "Accounting  for
Derivative  Instruments  and  Hedging  Activities."  SFAS  No.  133  establishes
accounting and reporting standards for derivative instruments, including certain
derivative instruments embedded in other contracts  (collectively referred to as
derivatives),  and for  hedging  activities.  SFAS No. 133  requires  that every
derivative  be recorded as either an asset or liability in the balance sheet and
measured  at its fair  value.  SFAS No. 133 also  requires  that  changes in the
derivative's  fair value be  recognized  currently in earnings  unless  specific
hedge  accounting  criteria are met.  Special  accounting for qualifying  hedges
allows a derivative's  gains and losses to offset related  results on the hedged
item in the income  statement,  and requires that a company  formally  document,
designate  and assess the  effectiveness  of  transactions  that  receive  hedge
accounting. The Company is required to adopt SFAS No. 133 on a prospective basis
for  interim  periods  and fiscal  years  beginning  March 1, 2000.  The Company
believes the effect of adoption on its financial statements will not be material
based on the Company's current risk management strategies.

15.  BUSINESS SEGMENT INFORMATION:

Effective  March 1, 1998, the Company has adopted the provisions of Statement of
Financial  Accounting  Standards  No.  131,  "Disclosures  about  Segments of an
Enterprise  and Related  Information."  This  statement  establishes  annual and
interim reporting  standards for an enterprise's  operating segments and related
disclosures about its products, services,  geographic areas and major customers.
Adoption of this statement had no impact on the Company's consolidated financial
position,  results of  operations  or cash flows.  Comparative  information  for
earlier years has been restated. The restatement of comparative  information for
interim  periods in the initial  year of adoption is to be reported  for interim
periods in the second year of  application.  The Company  reports its  operating
results in four segments:  Canandaigua Wine (branded wine and brandy, and other,
primarily grape juice concentrate); Barton (primarily beer and spirits); Matthew
Clark  (branded  wine,  cider and bottled  water,  and  wholesale  wine,  cider,
spirits,  beer and soft drinks);  and Corporate  Operations and Other (primarily
corporate   related   items).   Segment   selection   was  based  upon  internal
organizational  structure,  the way in which  these  operations  are managed and
their performance  evaluated by management and the Company's Board of Directors,
the availability of separate financial results, and materiality  considerations.
The accounting  policies of the segments are the same as those  described in the
summary of significant  accounting policies.  The Company evaluates  performance
based on operating profits of the respective business units.

<PAGE>
                                     - 51 -

Segment  information for the years ended February 28, 1999, 1998 and 1997, is as
follows:

(in thousands)                          1999            1998            1997
                                     ----------      ----------      ----------
CANANDAIGUA WINE:
Net sales:
  Branded                            $  598,782      $  570,807      $  537,745
  Other                                  70,711          71,988         112,546
                                     ----------      ----------      ----------
Net sales                            $  669,493      $  642,795      $  650,291
Operating profit                     $   46,283      $   45,440      $   51,525
Long-lived assets                    $  191,762      $  185,317      $  185,298
Total assets                         $  650,578      $  632,636      $  608,759
Capital expenditures                 $   25,275      $   25,666      $   24,452
Depreciation and amortization        $   20,838      $   21,189      $   19,955

BARTON:
Net sales:
  Beer                               $  478,611      $  376,607      $  298,925
  Spirits                               185,938         191,190         185,289
                                     ----------      ----------      ----------
Net sales                            $  664,549      $  567,797      $  484,214
Operating profit                     $  102,624      $   77,010      $   73,073
Long-lived assets                    $   50,221      $   51,574      $   51,504
Total assets                         $  478,580      $  439,317      $  410,351
Capital expenditures                 $    3,269      $    5,021      $    4,988
Depreciation and amortization        $   10,765      $   10,455      $    9,453

MATTHEW CLARK:
Net sales:
  Branded                            $   64,879      $     --        $     --
  Wholesale                              93,881            --              --
                                     ----------      ----------      ----------
Net sales                            $  158,760      $     --        $     --
Operating profit                     $    8,998      $     --        $     --
Long-lived assets                    $  169,693      $     --        $     --
Total assets                         $  631,313      $     --        $     --
Capital expenditures                 $   10,444      $     --        $     --
Depreciation and amortization        $    4,836      $     --        $     --

<PAGE>
                                     - 52 -

(in thousands)                          1999            1998            1997
                                     ----------      ----------      ----------
CORPORATE OPERATIONS AND OTHER:
Net sales                            $    4,541      $    2,196      $      508
Operating  loss                      $  (12,013)     $  (10,380)     $  (11,388)
Long-lived assets                    $   17,127      $    7,144      $   12,750
Total assets                         $   33,305      $   18,602      $   24,171
Capital expenditures                 $   10,869      $      516      $    2,209
Depreciation and amortization        $    2,151      $    1,517      $    2,431

CONSOLIDATED:
Net sales                            $1,497,343      $1,212,788      $1,135,013
Operating profit                     $  145,892      $  112,070      $  113,210
Long-lived assets                    $  428,803      $  244,035      $  249,552
Total assets                         $1,793,776      $1,090,555      $1,043,281
Capital expenditures                 $   49,857      $   31,203      $   31,649
Depreciation and amortization        $   38,590      $   33,161      $   31,839

The  Company's  areas  of  operations  are  principally  in the  United  States.
Operations  outside the United  States  consist of Matthew  Clark's  operations,
which are primarily in the United  Kingdom.  No other single foreign  country or
geographic area is significant to the consolidated operations.

16.  SELECTED QUARTERLY FINANCIAL INFORMATION (UNAUDITED):

A summary of selected quarterly financial information is as follows:

<TABLE>
<CAPTION>
                                                                  QUARTER ENDED
                                               ----------------------------------------------------
                                                May 31,     August 31,   November 30,  February 28,
            Fiscal 1999 (1)                       1998          1998          1998          1999         Full Year
-------------------------------------          --------     ----------   ------------  ------------    -----------
(in thousands, except per share data)
<S>                                            <C>           <C>           <C>           <C>           <C>
Net sales                                      $312,928      $349,386      $375,586      $459,443      $1,497,343
Gross profit                                   $ 92,061      $103,236      $115,695      $137,042      $  448,034
Income before extraordinary item               $ 13,099      $ 16,731      $ 20,161      $ 11,918      $   61,909
Extraordinary item, net of income taxes (2)    $   --        $   --        $   --        $(11,437)     $  (11,437)
Net income                                     $ 13,099      $ 16,731      $ 20,161      $    481      $   50,472
Earnings per common share: (3)
  Basic:
    Income before extraordinary item           $   0.70      $   0.90      $   1.13      $   0.67      $     3.38
    Extraordinary item                             --            --            --           (0.64)          (0.62)
                                               --------      --------      --------      --------      ----------
  Earnings per common share - basic            $   0.70      $   0.90      $   1.13      $   0.03      $     2.76
                                               ========      ========      ========      ========      ==========
  Diluted:
    Income before extraordinary item           $   0.68      $   0.88      $   1.10      $   0.65      $     3.30
    Extraordinary item                             --            --            --           (0.62)          (0.61)
                                               --------      --------      --------      --------      ----------
  Earnings per common share - diluted          $   0.68      $   0.88      $   1.10      $   0.03      $     2.69
                                               ========      ========      ========      ========      ==========
</TABLE>
<PAGE>
                                     - 53 -
<TABLE>
<CAPTION>
                                                                  QUARTER ENDED
                                               ----------------------------------------------------
                                                May 31,     August 31,   November 30,  February 28,
          Fiscal 1998 (1)                        1997          1997          1997          1998         Full Year
-------------------------------------          --------     ----------   ------------  ------------    -----------
(in thousands, except per share data)
<S>                                            <C>           <C>           <C>           <C>           <C>
Net sales                                      $306,011      $301,524      $322,703      $282,550      $1,212,788
Gross profit                                   $ 83,108      $ 85,324      $ 96,184      $ 79,134      $  343,750
Net income                                     $ 11,448      $ 12,698      $ 16,540      $  6,444      $   47,130
Earnings per common share: (3)
  Basic                                        $   0.61      $   0.68      $   0.89      $   0.34      $     2.52
  Diluted                                      $   0.60      $   0.67      $   0.86      $   0.33      $     2.47

<FN>
(1)  Restated for the change in  accounting  for  inventories  from the last-in,
     first-out (LIFO) method to the first-in, first-out (FIFO) method.
(2)  Represents  fees related to the  replacement  of the bank credit  facility,
     including extinguishment of the term loan.
(3)  The sum of the  quarterly  earnings  per  common  share in fiscal  1999 and
     fiscal 1998 may not equal the total  computed for the  respective  years as
     the earnings per common  share are computed  independently  for each of the
     quarters presented and for the full year.
</FN>
</TABLE>

17.  SUBSEQUENT EVENTS:

DEBT OFFERING -
On March 4, 1999, the Company issued $200.0 million  aggregate  principal amount
of 8 1/2% Senior Subordinated Notes due March 2009 (the $200 Million Notes). The
net proceeds of the offering  (approximately  $195.0  million) were used to fund
the  acquisition of the Black Velvet Canadian Whisky brand and other assets from
affiliates  of  Diageo  plc  (see  Acquisitions  below)  and to pay the fees and
expenses  related  thereto with the remainder of the net proceeds to be used for
general corporate purposes or to fund future acquisitions.  Interest on the $200
Million Notes is payable  semiannually  on March 1 and September 1 of each year,
beginning September 1, 1999. The $200 Million Notes are redeemable at the option
of the Company,  in whole or in part, at any time on or after March 1, 2004. The
Company may also redeem up to $70.0  million of the $200 Million Notes using the
proceeds of certain equity  offerings  completed  before March 1, 2002. The $200
Million Notes are unsecured and subordinated to the prior payment in full of all
senior  indebtedness of the Company,  which includes the 1998 Credit  Agreement.
The $200  Million  Notes are  guaranteed,  on a senior  subordinated  basis,  by
certain of the Company's significant operating subsidiaries.

The  Indenture  and  Supplemental  Indenture  governing  the $200 Million  Notes
contains  certain  covenants,  including,  but not limited to, (i) limitation on
indebtedness;  (ii)  limitation  on  restricted  payments;  (iii)  limitation on
transactions   with   affiliates;   (iv)   limitation  on  senior   subordinated
indebtedness;  (v) limitation on liens; (vi) limitation on sale of assets; (vii)
limitation  on  guarantees  by certain  subsidiaries  for  indebtedness;  (viii)
limitation on certain  subsidiary capital stock; (ix) limitation on the creation
of any  restriction  on  the  ability  of the  Company's  subsidiaries  to  make
distributions   and  other   payments;   and  (x)   restrictions   on   mergers,
consolidations and the transfer of all or substantially all of the assets of the
Company to another person.  The limitation on indebtedness  covenant is governed
by a rolling four quarter fixed charge ratio requiring a specified minimum.

ACQUISITIONS-
On  April 9,  1999,  in an  asset  acquisition,  the  Company  acquired  several
well-known Canadian whisky brands, including Black Velvet, production facilities
located in Alberta and Quebec,  Canada,  case goods and bulk whisky  inventories
and other related assets from affiliates of Diageo plc. Other  principal  brands
acquired in the transaction were Golden Wedding,  OFC,  MacNaughton,  McMaster's
and Triple Crown. In connection with the  transaction,  the Company also entered
into  multi-year  agreements  with Diageo to provide  packaging  and  distilling
services  for  various  brands  retained  by  Diageo.  The  purchase  price  was
approximately  $185.5  million and was financed by the proceeds from the sale of
the $200 Million Notes.

On April 1, 1999,  the Company  entered  into a definitive  agreement  with Moet
Hennessy,  Inc. to purchase all of the outstanding capital stock of Simi Winery,
Inc.  (the Simi  Acquisition).  The Simi  Acquisition  includes the Simi winery,
equipment,  vineyards, inventory and worldwide ownership of the Simi brand name.
The Simi  Acquisition

<PAGE>
                                     - 54 -

is expected to close in the second quarter of fiscal 2000 and the purchase price
is expected to be financed through the Company's bank credit facility.

On April 21, 1999, the Company entered into definitive  purchase agreements with
Franciscan  Vineyards,  Inc.  (Franciscan)  and its  shareholders,  and  certain
parties  related to  Franciscan  to,  among other  matters,  purchase all of the
outstanding  capital  stock of  Franciscan  and acquire  certain  vineyards  and
related vineyard assets (collectively, the Franciscan Acquisition).  Pursuant to
the  Franciscan  Acquisition,  the Company  will:  (i)  acquire  the  Franciscan
Oakville Estate,  Estancia and Mt. Veeder brands;  (ii) acquire wineries located
in Rutherford,  Monterey and Mt. Veeder, California;  (iii) acquire vineyards in
the Napa Valley,  Alexander  Valley,  Monterey and Paso Robles  appellations and
additionally,  will enter into long-term  grape  contracts with certain  parties
related  to  Franciscan  to  purchase  additional  grapes  grown in the Napa and
Alexander Valley appellations; (iv) acquire distribution rights to the Quintessa
and Veramonte brands;  and (v) acquire equity interests in entities that own the
Veramonte brand and the Veramonte  winery and certain  vineyards  located in the
Casablanca Valley, Chile. The Franciscan Acquisition is expected to close in the
second  quarter of fiscal 2000 and the purchase price is expected to be financed
through the Company's bank credit facility.

<PAGE>
                                     - 55 -

ITEM 9.  CHANGES  IN  AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON  ACCOUNTING  AND
-------  -----------------------------------------------------------------------
         FINANCIAL DISCLOSURE
         --------------------

         Not Applicable.


                                    PART III


ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
-------- --------------------------------------------------

     The information required by this Item (except for the information regarding
executive  officers  required by Item 401 of Regulation S-K which is included in
Part I hereof in  accordance  with  General  Instruction  G(3)) is  incorporated
herein by reference to the Company's  proxy statement to be issued in connection
with the Annual  Meeting of  Stockholders  of the Company to be held on July 20,
1999, under those sections of the proxy statement titled "Election of Directors"
and "Section  16(a)  Beneficial  Ownership  Reporting  Compliance",  which proxy
statement  will be filed within 120 days after the end of the  Company's  fiscal
year.


ITEM 11. EXECUTIVE COMPENSATION
-------- ----------------------

     The information  required by this Item is incorporated  herein by reference
to the  Company's  proxy  statement to be issued in  connection  with the Annual
Meeting of Stockholders  of the Company to be held on July 20, 1999,  under that
section of the proxy statement titled "Executive  Compensation" and that caption
titled  "Director  Compensation"  under  "Election  of  Directors",  which proxy
statement  will be filed within 120 days after the end of the  Company's  fiscal
year.


ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
-------- --------------------------------------------------------------

     The information  required by this Item is incorporated  herein by reference
to the  Company's  proxy  statement to be issued in  connection  with the Annual
Meeting of Stockholders of the Company to be held on July 20, 1999,  under those
sections  of the  proxy  statement  titled  "Beneficial  Ownership"  and  "Stock
Ownership of  Management",  which proxy  statement will be filed within 120 days
after the end of the Company's fiscal year.


ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
-------- ----------------------------------------------

     The information  required by this Item is incorporated  herein by reference
to the  Company's  proxy  statement to be issued in  connection  with the Annual
Meeting of Stockholders  of the Company to be held on July 20, 1999,  under that
section of the proxy  statement  titled  "Executive  Compensation",  which proxy
statement  will be filed within 120 days after the end of the  Company's  fiscal
year.

<PAGE>
                                     - 56 -

                                     PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
-------- ----------------------------------------------------------------

(a)  1.   Financial Statements

          The  following  consolidated  financial  statements of the Company are
          submitted herewith:

               Report of Independent Public Accountants

               Consolidated Balance Sheets - February 28, 1999 and 1998

               Consolidated  Statements  of Income for the years ended  February
               28, 1999, 1998 and 1997

               Consolidated  Statements of Changes in  Stockholders'  Equity for
               the years ended February 28, 1999, 1998 and 1997

               Consolidated  Statements  of  Cash  Flows  for  the  years  ended
               February 28, 1999, 1998 and 1997

               Notes to Consolidated Financial Statements

     2.   Financial Statement Schedules

          The  following   consolidated   financial   information  is  submitted
          herewith:

               Selected Financial Data

               Selected Quarterly Financial Information (unaudited)

All other  schedules  are not submitted  because they are not  applicable or not
required under Regulation S-X or because the required information is included in
the financial statements or notes thereto.

Individual  financial statements of the Registrant have been omitted because the
Registrant is primarily an operating  company and no subsidiary  included in the
consolidated   financial   statements  has  minority  equity   interests  and/or
noncurrent  indebtedness,  not guaranteed by the Registrant,  in excess of 5% of
total consolidated assets.

    3.  Exhibits required to be filed by Item 601 of Regulation S-K

        The  following  exhibits are filed  herewith or  incorporated  herein by
        reference, as indicated:

        2.1     Asset  Purchase  Agreement  dated  August  3, 1994  between  the
                Company  and  Heublein,  Inc.  (filed  as  Exhibit  2(a)  to the
                Company's  Current  Report on Form 8-K dated  August 5, 1994 and
                incorporated herein by reference).

<PAGE>
                                     - 57 -

        2.2     Amendment  dated  November 8, 1994 to Asset  Purchase  Agreement
                between Heublein,  Inc. and the Company (filed as Exhibit 2.2 to
                the Company's  Registration Statement on Form S-3 (Amendment No.
                2)  (Registration  No.  33-55997)  filed with the Securities and
                Exchange  Commission on November 8, 1994 and incorporated herein
                by reference).

        2.3     Amendment  dated November 18, 1994 to Asset  Purchase  Agreement
                between Heublein,  Inc. and the Company (filed as Exhibit 2.8 to
                the  Company's  Annual  Report on Form 10-K for the fiscal  year
                ended August 31, 1994 and incorporated herein by reference).

        2.4     Amendment  dated November 30, 1994 to Asset  Purchase  Agreement
                between Heublein,  Inc. and the Company (filed as Exhibit 2.9 to
                the  Company's  Quarterly  Report  on Form  10-Q for the  fiscal
                quarter  ended  November  30,  1994 and  incorporated  herein by
                reference).

        2.5     Asset   Purchase   Agreement   among  Barton   Incorporated   (a
                wholly-owned  subsidiary  of  the  Company),  United  Distillers
                Glenmore,  Inc.,  Schenley  Industries,  Inc., Medley Distilling
                Company, United Distillers  Manufacturing,  Inc., and The Viking
                Distillery,  Inc.,  dated August 29, 1995 (filed as Exhibit 2(a)
                to the Company's  Current  Report on Form 8-K,  dated August 29,
                1995 and incorporated herein by reference).

        2.6     Recommended  Cash Offer,  by Schroders on behalf of  Canandaigua
                Limited,  a wholly-owned  subsidiary of the Company,  to acquire
                Matthew Clark plc (filed as Exhibit 2.1 to the Company's Current
                Report  on Form 8-K  dated  December  1,  1998 and  incorporated
                herein by reference).

        2.7     Asset  Purchase  Agreement  dated as of February 21, 1999 by and
                among Diageo Inc.,  UDV Canada Inc.,  United  Distillers  Canada
                Inc.  and the  Company  (filed  as  Exhibit  2 to the  Company's
                Current Report on Form 8-K dated April 9, 1999 and  incorporated
                herein by reference).

        3.1     Restated  Certificate of  Incorporation of the Company (filed as
                Exhibit 3.1 to the Company's  Quarterly  Report on Form 10-Q for
                the fiscal quarter ended August 31, 1998 and incorporated herein
                by reference).

        3.2     Amended and  Restated  By-Laws of the Company  (filed as Exhibit
                3.2 to the  Company's  Quarterly  Report  on Form  10-Q  for the
                fiscal quarter ended August 31, 1998 and incorporated  herein by
                reference).

        4.1     Indenture, dated as of December 27, 1993, among the Company, its
                Subsidiaries  and The  Chase  Manhattan  Bank (as  successor  to
                Chemical Bank) (filed as Exhibit 4.1 to the Company's  Quarterly
                Report on Form 10-Q for the fiscal  quarter  ended  November 30,
                1993 and incorporated herein by reference).

        4.2     First Supplemental Indenture,  dated as of August 3, 1994, among
                the Company, Canandaigua West, Inc. (a subsidiary of the Company
                now  known as  Canandaigua  Wine  Company,  Inc.)  and The Chase
                Manhattan Bank (as

<PAGE>
                                     - 58 -

                successor  to  Chemical  Bank)  (filed  as  Exhibit  4.5  to the
                Company's  Registration  Statement on Form S-8 (Registration No.
                33-56557) and incorporated herein by reference).

        4.3     Second Supplemental Indenture,  dated August 25, 1995, among the
                Company,  V  Acquisition  Corp. (a subsidiary of the Company now
                known as The Viking  Distillery,  Inc.) and The Chase  Manhattan
                Bank (as  successor  to Chemical  Bank) (filed as Exhibit 4.5 to
                the  Company's  Annual  Report on Form 10-K for the fiscal  year
                ended August 31, 1995 and incorporated herein by reference).

        4.4     Third  Supplemental  Indenture,  dated as of December  19, 1997,
                among the Company,  Canandaigua Europe Limited,  Roberts Trading
                Corp. and The Chase  Manhattan Bank (filed as Exhibit 4.4 to the
                Company's  Annual  Report on Form 10-K for the fiscal year ended
                February 28, 1998 and incorporated herein by reference).

        4.5     Fourth  Supplemental  Indenture,  dated as of  October  2, 1998,
                among the Company,  Polyphenolics,  Inc. and The Chase Manhattan
                Bank (filed as Exhibit 4.5 to the Company's  Quarterly Report on
                Form 10-Q for the fiscal  quarter  ended  November  30, 1998 and
                incorporated herein by reference).

        4.6     Fifth  Supplemental  Indenture,  dated as of December  11, 1998,
                among the Company, Canandaigua B.V., Canandaigua Limited and The
                Chase Manhattan Bank (filed herewith).

        4.7     Indenture   with   respect  to  the  8  3/4%   Series  C  Senior
                Subordinated Notes due 2003, dated as of October 29, 1996, among
                the Company,  its Subsidiaries and Harris Trust and Savings Bank
                (filed as Exhibit 4.2 to the Company's Registration Statement on
                Form S-4 (Registration No. 333-17673) and incorporated herein by
                reference).

        4.8     First  Supplemental  Indenture,  dated as of December  19, 1997,
                among the Company,  Canandaigua Europe Limited,  Roberts Trading
                Corp. and Harris Trust and Savings Bank (filed as Exhibit 4.6 to
                the  Company's  Annual  Report on Form 10-K for the fiscal  year
                ended February 28, 1998 and incorporated herein by reference).

        4.9     Second  Supplemental  Indenture,  dated as of  October  2, 1998,
                among the  Company,  Polyphenolics,  Inc.  and Harris  Trust and
                Savings  Bank (filed as Exhibit 4.8 to the  Company's  Quarterly
                Report on Form 10-Q for the fiscal  quarter  ended  November 30,
                1998 and incorporated herein by reference).

        4.10    Third  Supplemental  Indenture,  dated as of December  11, 1998,
                among the Company,  Canandaigua  B.V.,  Canandaigua  Limited and
                Harris Trust and Savings Bank (filed herewith).

        4.11    First  Amended  and  Restated  Credit  Agreement,  dated  as  of
                November 2, 1998, between the Company,  its principal  operating
                subsidiaries,  and certain  banks for which The Chase  Manhattan
                Bank acts as  Administrative  Agent (filed as Exhibit

<PAGE>
                                     - 59 -

                4.1 to the Company's  Current  Report on Form 8-K dated December
                1, 1998 and incorporated herein by reference).

        4.12    Indenture with respect to 8 1/2% Senior  Subordinated  Notes due
                2009,  dated as of February  25,  1999,  among the  Company,  as
                issuer, its principal operating subsidiaries, as Guarantors, and
                Harris Trust and Savings Bank, as Trustee (filed as Exhibit 99.1
                to the Company's  Current  Report on Form 8-K dated February 25,
                1999 and incorporated herein by reference).

        4.13    Supplemental  Indenture No. 1, dated as of February 25, 1999, by
                and  among the  Company,  as  Issuer,  its  principal  operating
                subsidiaries,  as Guarantors, and Harris Trust and Savings Bank,
                as  Trustee  (filed as  Exhibit  99.2 to the  Company's  Current
                Report  on Form 8-K dated  February  25,  1999 and  incorporated
                herein by reference).

        10.1    Barton Incorporated  Management Incentive Plan (filed as Exhibit
                10.6 to the Company's  Annual Report on Form 10-K for the fiscal
                year  ended   August  31,  1993  and   incorporated   herein  by
                reference).

        10.2    Marvin Sands Split Dollar Insurance  Agreement (filed as Exhibit
                10.9 to the Company's  Annual Report on Form 10-K for the fiscal
                year  ended   August  31,  1993  and   incorporated   herein  by
                reference).

        10.3    Letter  agreement,  effective as of October 7, 1995, as amended,
                addressing compensation,  between the Company and Daniel Barnett
                (filed as Exhibit  10.23 to the Company's  Transition  Report on
                Form 10-K for the  Transition  Period from  September 1, 1995 to
                February 29, 1996 and incorporated herein by reference).

        10.4    Employment  Agreement between Barton  Incorporated and Alexander
                L. Berk dated as of  September  1, 1990 as amended by  Amendment
                No. 1 to Employment  Agreement  between Barton  Incorporated and
                Alexander L. Berk dated November 11, 1996 (filed as Exhibit 10.7
                to the Company's  Annual Report on Form 10-K for the fiscal year
                ended February 28, 1998 and incorporated herein by reference).

        10.5    Amendment  No.  2  to  Employment   Agreement   between   Barton
                Incorporated and Alexander L. Berk dated October 20, 1998 (filed
                herewith).

        10.6    First  Amended  and  Restated  Credit  Agreement,  dated  as  of
                November 2, 1998, between the Company,  its principal  operating
                subsidiaries,  and certain  banks for which The Chase  Manhattan
                Bank acts as  Administrative  Agent (filed as Exhibit 4.1 to the
                Company's  Current Report on Form 8-K dated December 1, 1998 and
                incorporated herein by reference).

        10.7    Long-Term Stock  Incentive  Plan,  which amends and restates the
                Canandaigua   Wine   Company,   Inc.   Stock  Option  and  Stock
                Appreciation  Right Plan (filed as Exhibit 10.1 to the Company's
                Quarterly  Report on Form 10-Q for the fiscal  quarter ended May
                31, 1997 and incorporated  herein by reference).

<PAGE>
                                     - 60 -

        10.8    Amendment  Number One to the Long-Term  Stock  Incentive Plan of
                the Company  (filed as Exhibit 10.1 to the  Company's  Quarterly
                Report on Form 10-Q for the fiscal quarter ended August 31, 1997
                and incorporated herein by reference).

        10.9    Incentive  Stock  Option Plan of the  Company  (filed as Exhibit
                10.2 of the  Company's  Quarterly  Report  on Form  10-Q for the
                fiscal quarter ended August 31, 1997 and incorporated  herein by
                reference).

        10.10   Amendment  Number One to the Incentive  Stock Option Plan of the
                Company (filed as Exhibit 10.3 of the Company's Quarterly Report
                on Form 10-Q for the fiscal  quarter  ended  August 31, 1997 and
                incorporated herein by reference).

        10.11   Annual  Management  Incentive  Plan  of the  Company  (filed  as
                Exhibit 10.4 of the Company's  Quarterly Report on Form 10-Q for
                the fiscal quarter ended August 31, 1997 and incorporated herein
                by reference).

        10.12   Amendment Number One to the Annual Management  Incentive Plan of
                the  Company  (filed as Exhibit  10.14 to the  Company's  Annual
                Report on Form 10-K for the fiscal year ended  February 28, 1998
                and incorporated herein by reference).

        10.13   Lease,  effective  December 25, 1997, by and among Matthew Clark
                Brands   Limited  and  Pontsarn   Investments   Limited   (filed
                herewith).

        10.14   Supplemental  Executive  Retirement  Plan of the Company  (filed
                herewith).

        11.1    Statement re Computation of Per Share Earnings (filed herewith).

        18.1    Letter re Change in Accounting Principles (filed herewith).

        21.1    Subsidiaries of Company (filed herewith).

        23.1    Consent of Arthur Andersen LLP (filed herewith).

        27.1    Financial  Data Schedule for fiscal year ended February 28, 1999
                (filed herewith).

        27.2    Restated  Financial  Data Schedule for the fiscal  quarter ended
                November 30, 1998 (filed herewith).

        27.3    Restated  Financial  Data Schedule for the fiscal  quarter ended
                August 31, 1998 (filed herewith).

        27.4    Restated  Financial  Data Schedule for the fiscal  quarter ended
                May 31, 1998 (filed herewith).

        27.5    Restated  Financial  Data  Schedule  for the  fiscal  year ended
                February 28, 1998 (filed herewith).

        27.6    Restated  Financial  Data Schedule for the fiscal  quarter ended
                November 30, 1997 (filed herewith).

<PAGE>
                                     - 61 -

        27.7    Restated  Financial  Data Schedule for the fiscal  quarter ended
                August 31, 1997 (filed herewith).

        27.8    Restated  Financial  Data Schedule for the fiscal  quarter ended
                May 31, 1997 (filed herewith).

        27.9    Restated  Financial  Data  Schedule  for the  fiscal  year ended
                February 28, 1997 (filed herewith).

        99.1    1989 Employee Stock Purchase Plan of the Company,  as amended by
                Amendment Number 1 through  Amendment Number 5 (filed as Exhibit
                99.1 to the Company's  Annual Report on Form 10-K for the fiscal
                year  ended  February  28,  1998  and  incorporated   herein  by
                reference).

        99.2    Amendment  Number 6 to the 1989 Employee  Stock Purchase Plan of
                the Company (filed herewith).

(b)  Reports on Form 8-K

     The  following  Reports  on Form 8-K were  filed  by the  Company  with the
     Securities and Exchange  Commission during the fourth quarter of the fiscal
     year ended February 28, 1999:

        (i)     Form  8-K  dated  December  1,  1998.  This  Form  8-K  reported
                information  under Item 2 (Acquisition or Disposition of Assets)
                and Item 7 (Financial  Statements and  Exhibits).  The following
                financial statements were filed with this Form 8-K:

                    The Matthew  Clark plc Balance  Sheets,  as of 30 April 1998
                    and  1997,  and the  related  Consolidated  Profit  and Loss
                    Accounts and  Consolidated  Cash Flow Statements for each of
                    the three years in the period  ended 30 April 1998,  and the
                    report of KPMG Audit  Plc,  independent  auditors,  thereon,
                    together with the notes thereto.

                    The pro forma condensed  combined balance sheet  (unaudited)
                    as of August 31, 1998, and the pro forma condensed  combined
                    statement of income  (unaudited) for the year ended February
                    28, 1998, and the pro forma condensed  combined statement of
                    income (unaudited) for the six months ended August 31, 1998,
                    and the notes thereto.

        (ii)    Form 8-K/A  dated  December  1, 1998.  This Form 8-K/A  reported
                information  under Item 7 (Financial  Statements  and Exhibits).
                The  following  financial  statements  were filed with this Form
                8-K/A:

                    The Matthew  Clark plc Balance  Sheets,  as of 30 April 1998
                    and  1997,  and the  related  Consolidated  Profit  and Loss
                    Accounts and  Consolidated  Cash Flow Statements for each of
                    the three years in the period  ended 30 April 1998,  and the
                    report of KPMG  Audit  Plc,  independent  auditor,  thereon,
                    together with the notes thereto.

<PAGE>
                                     - 62 -

                    The Matthew  Clark plc  Balance  Sheets  (unaudited),  as of
                    October  31,  1998  and 1997  and the  related  Consolidated
                    Profit and Loss Accounts  (unaudited) and Consolidated  Cash
                    Flow Statements  (unaudited) for the six month periods ended
                    October 31, 1998 and 1997, together with the notes thereto.

                    The pro forma condensed  combined balance sheet  (unaudited)
                    as of November 30, 1998, the pro forma combined statement of
                    income (unaudited) for the year ended February 28, 1998, the
                    pro forma combined  statement of income  (unaudited) for the
                    nine months ended  November 30, 1998, and the notes thereto,
                    and the pro forma combined  statement of income  (unaudited)
                    for the twelve months ended November 30, 1998, and the notes
                    thereto.

        (iii)   Form  8-K  dated  December  2,  1998.  This  Form  8-K  reported
                information under Item 5 (Other Events).

        (iv)    Form 8-K  dated  February  22,  1999.  This  Form  8-K  reported
                information under Item 5 (Other Events).

<PAGE>
                                     - 63 -

                                   SIGNATURES

     Pursuant  to the  requirements  of  Section  13 or 15(d) of the  Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed on
its behalf by the undersigned, thereunto duly authorized.

Dated:  June 1, 1999                         CANANDAIGUA BRANDS, INC.


                                             By:/s/ Richard Sands
                                             ----------------------------------
                                             Richard Sands, President and Chief
                                             Executive Officer

     Pursuant to the  requirements of the Securities  Exchange Act of 1934, this
Report  has  been  signed  below  by the  following  persons  on  behalf  of the
Registrant and in the capacities and on the dates indicated.


/s/ Richard Sands                            /s/ Thomas S. Summer
----------------------------------           ----------------------------------
Richard Sands, President, Chief              Thomas S. Summer, Senior Vice
Executive Officer and Director               President and Chief Financial
(Principal Executive Officer )               Officer (Principal Financial
Dated:  June 1, 1999                         Officer and Principal Accounting
                                             Officer)
                                             Dated:  June 1, 1999


/s/ Marvin Sands                             /s/ Robert Sands
----------------------------------           ----------------------------------
Marvin Sands, Chairman of the Board          Robert Sands, Director
Dated:  June 1, 1999                         Dated:  June 1, 1999


/s/ George Bresler                           /s/ James A. Locke
----------------------------------           ----------------------------------
George Bresler, Director                     James A. Locke, III, Director
Dated:  June 1, 1999                         Dated:  June 1, 1999


/s/ Thomas C. McDermott                      /s/ Paul L. Smith
----------------------------------           ----------------------------------
Thomas C. McDermott, Director                Paul L. Smith, Director
Dated:  June 1, 1999                         Dated:  June 1, 1999

<PAGE>
                                     - 64 -

                                   SIGNATURES

     Pursuant  to the  requirements  of  Section  13 or 15(d) of the  Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed on
its behalf by the undersigned, thereunto duly authorized.

Dated:  June 1, 1999                         BATAVIA WINE CELLARS, INC.



                                             By: /s/ Ned Cooper
                                             ----------------------------------
                                             Ned Cooper, President

     Pursuant to the  requirements of the Securities  Exchange Act of 1934, this
Report  has  been  signed  below  by the  following  persons  on  behalf  of the
Registrant and in the capacities and on the dates indicated.


Dated:  June 1, 1999                         /s/ Ned Cooper
                                             ----------------------------------
                                             Ned Cooper, President
                                             (Principal Executive Officer)


Dated:  June 1, 1999                         /s/ Thomas S. Summer
                                             ----------------------------------
                                             Thomas S. Summer, Treasurer
                                             (Principal Financial Officer and
                                             Principal Accounting Officer)


Dated:  June 1, 1999                         /s/ Richard Sands
                                             ----------------------------------
                                             Richard Sands, Director


Dated:  June 1, 1999                         /s/ Robert Sands
                                             ----------------------------------
                                             Robert Sands, Director

<PAGE>
                                     - 65 -

                                   SIGNATURES

     Pursuant  to the  requirements  of  Section  13 or 15(d) of the  Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed on
its behalf by the undersigned, thereunto duly authorized.

Dated:  June 1, 1999                         CANANDAIGUA WINE COMPANY, INC.


                                             By: /s/ Robert Sands
                                             ----------------------------------
                                             Robert Sands, President and
                                             Chief Executive Officer

     Pursuant to the  requirements of the Securities  Exchange Act of 1934, this
Report  has  been  signed  below  by the  following  persons  on  behalf  of the
Registrant and in the capacities and on the dates indicated.


Dated:  June 1, 1999                         /s/ Robert Sands
                                             ----------------------------------
                                             Robert Sands, President, Chief
                                             Executive Officer and Director
                                             (Principal Executive Officer)


Dated:  June 1, 1999                         /s/ Thomas S. Summer
                                             ----------------------------------
                                             Thomas S. Summer, Treasurer
                                             (Principal Financial Officer and
                                             Principal Accounting Officer)


Dated:  June 1, 1999                         /s/ Richard Sands
                                             ----------------------------------
                                             Richard Sands, Director

<PAGE>
                                     - 66 -

                                   SIGNATURES

     Pursuant  to the  requirements  of  Section  13 or 15(d) of the  Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed on
its behalf by the undersigned, thereunto duly authorized.

Dated:  June 1, 1999                         CANANDAIGUA EUROPE LIMITED


                                             By: /s/ Douglas Kahle
                                             ----------------------------------
                                             Douglas Kahle, President

     Pursuant to the  requirements of the Securities  Exchange Act of 1934, this
Report  has  been  signed  below  by the  following  persons  on  behalf  of the
Registrant and in the capacities and on the dates indicated.


Dated:  June 1, 1999                         /s/ Douglas Kahle
                                             ----------------------------------
                                             Douglas Kahle, President
                                             (Principal Executive Officer)


Dated:  June 1, 1999                         /s/ Thomas S. Summer
                                             ----------------------------------
                                             Thomas S. Summer, Treasurer
                                             (Principal Financial Officer and
                                             Principal Accounting Officer)


Dated:  June 1, 1999                         /s/ Richard Sands
                                             ----------------------------------
                                             Richard Sands, Director

<PAGE>
                                     - 67 -

                                   SIGNATURES

     Pursuant  to the  requirements  of  Section  13 or 15(d) of the  Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed on
its behalf by the undersigned, thereunto duly authorized.

Dated:  June 1, 1999                         CANANDAIGUA LIMITED


                                             By: /s/ Robert Sands
                                             ----------------------------------
                                             Robert Sands, Chief Executive
                                             Officer

     Pursuant to the  requirements of the Securities  Exchange Act of 1934, this
Report  has  been  signed  below  by the  following  persons  on  behalf  of the
Registrant and in the capacities and on the dates indicated.


Dated:  June 1, 1999                         /s/ Robert Sands
                                             ----------------------------------
                                             Robert Sands, Chief Executive
                                             Officer and Director
                                             (Principal Executive Officer)


Dated:  June 1, 1999                         /s/ Thomas S. Summer
                                             ----------------------------------
                                             Thomas S. Summer, Finance Director
                                             (Principal Financial Officer and
                                             Principal Accounting Officer)


Dated:  June 1, 1999                         /s/ Richard Sands
                                             ----------------------------------
                                             Richard Sands, Director

<PAGE>
                                     - 68 -

                                   SIGNATURES

     Pursuant  to the  requirements  of  Section  13 or 15(d) of the  Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed on
its behalf by the undersigned, thereunto duly authorized.

Dated:  June 1, 1999                         POLYPHENOLICS, INC.


                                             By: /s/ Richard Keeley
                                             ----------------------------------
                                             Richard Keeley, President

     Pursuant to the  requirements of the Securities  Exchange Act of 1934, this
Report  has  been  signed  below  by the  following  persons  on  behalf  of the
Registrant and in the capacities and on the dates indicated.


Dated:  June 1, 1999                         /s/ Richard Keeley
                                             ----------------------------------
                                             Richard Keeley, President and
                                             Director (Principal Executive
                                             Officer)


Dated:  June 1, 1999                         /s/ Thomas S. Summer
                                             ----------------------------------
                                             Thomas S. Summer, Vice President
                                             and Treasurer (Principal Financial
                                             Officer and Principal Accounting
                                             Officer)

<PAGE>
                                     - 69 -

                                   SIGNATURES

     Pursuant  to the  requirements  of  Section  13 or 15(d) of the  Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed on
its behalf by the undersigned, thereunto duly authorized.

Dated:  June 1, 1999                         ROBERTS TRADING CORP.


                                             By: /s/ Thomas S. Summer
                                             ----------------------------------
                                             Thomas S. Summer, President and
                                             Treasurer

     Pursuant to the  requirements of the Securities  Exchange Act of 1934, this
Report  has  been  signed  below  by the  following  persons  on  behalf  of the
Registrant and in the capacities and on the dates indicated.


Dated:  June 1, 1999                         /s/ Thomas S. Summer
                                             ----------------------------------
                                             Thomas S. Summer, President and
                                             Treasurer (Principal Executive
                                             Officer, Principal Financial
                                             Officer and Principal Accounting
                                             Officer)


Dated:  June 1, 1999                         /s/ Richard Sands
                                             ----------------------------------
                                             Richard Sands, Director


Dated:  June 1, 1999                         /s/ Robert Sands
                                             ----------------------------------
                                             Robert Sands, Director

<PAGE>
                                     - 70 -

                                   SIGNATURES

     Pursuant  to the  requirements  of  Section  13 or 15(d) of the  Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed on
its behalf by the undersigned, thereunto duly authorized.

Dated:  June 1, 1999                         BARTON INCORPORATED


                                             By: /s/ Alexander L. Berk
                                             ----------------------------------
                                             Alexander L. Berk, President and
                                             Chief Executive Officer

     Pursuant to the  requirements of the Securities  Exchange Act of 1934, this
Report  has  been  signed  below  by the  following  persons  on  behalf  of the
Registrant and in the capacities and on the dates indicated.

Dated:  June 1, 1999                         /s/ Alexander L. Berk
                                             ----------------------------------
                                             Alexander L. Berk, President,
                                             Chief Executive Officer and
                                             Director (Principal Executive
                                             Officer)


Dated:  June 1, 1999                         /s/ Raymond E. Powers
                                             ----------------------------------
                                             Raymond E. Powers, Executive Vice
                                             President, Treasurer, Assistant
                                             Secretary and Director (Principal
                                             Financial Officer and Principal
                                             Accounting Officer)


Dated:  June 1, 1999                         /s/ Edward L. Golden
                                             ----------------------------------
                                             Edward L. Golden, Director


Dated:  June 1, 1999                         /s/ William F. Hackett
                                             ----------------------------------
                                             William F. Hackett, Director


Dated:  June 1, 1999                         /s/ Richard Sands
                                             ----------------------------------
                                             Richard Sands, Director


Dated:  June 1, 1999                         /s/ Robert Sands
                                             ----------------------------------
                                             Robert Sands, Director

<PAGE>
                                     - 71 -

                                   SIGNATURES

     Pursuant  to the  requirements  of  Section  13 or 15(d) of the  Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed on
its behalf by the undersigned, thereunto duly authorized.

Dated:  June 1, 1999                         BARTON BRANDS, LTD.


                                             By: /s/ Edward L. Golden
                                             ----------------------------------
                                             Edward L. Golden, President

     Pursuant to the  requirements of the Securities  Exchange Act of 1934, this
Report  has  been  signed  below  by the  following  persons  on  behalf  of the
Registrant and in the capacities and on the dates indicated.


Dated:  June 1, 1999                         /s/ Edward L. Golden
                                             ----------------------------------
                                             Edward L. Golden, President and
                                             Director (Principal Executive
                                             Officer)


Dated:  June 1, 1999                         /s/ Raymond E. Powers
                                             ----------------------------------
                                             Raymond E. Powers, Executive Vice
                                             President, Treasurer, Assistant
                                             Secretary and Director (Principal
                                             Financial Officer and Principal
                                             Accounting Officer)


Dated:  June 1, 1999                         /s/ Alexander L. Berk
                                             ----------------------------------
                                             Alexander L. Berk, Director

<PAGE>
                                     - 72 -

                                   SIGNATURES

     Pursuant  to the  requirements  of  Section  13 or 15(d) of the  Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed on
its behalf by the undersigned, thereunto duly authorized.

Dated:  June 1, 1999                         BARTON BEERS, LTD.


                                             By: /s/ Richard Sands
                                             ----------------------------------
                                             Richard Sands, Chief Executive
                                             Officer

     Pursuant to the  requirements of the Securities  Exchange Act of 1934, this
Report  has  been  signed  below  by the  following  persons  on  behalf  of the
Registrant and in the capacities and on the dates indicated.


Dated:  June 1, 1999                         /s/ Richard Sands
                                             ----------------------------------
                                             Richard Sands, Chief Executive
                                             Officer and Director (Principal
                                             Executive Officer)


Dated:  June 1, 1999                         /s/ Raymond E. Powers
                                             ----------------------------------
                                             Raymond E. Powers, Executive Vice
                                             President, Treasurer, Assistant
                                             Secretary and Director (Principal
                                             Financial Officer and Principal
                                             Accounting Officer)


Dated:  June 1, 1999                         /s/ Alexander L. Berk
                                             ----------------------------------
                                             Alexander L. Berk, Director


Dated:  June 1, 1999                         /s/ William F. Hackett
                                             ----------------------------------
                                             William F. Hackett, Director

<PAGE>
                                     - 73 -

                                   SIGNATURES

     Pursuant  to the  requirements  of  Section  13 or 15(d) of the  Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed on
its behalf by the undersigned, thereunto duly authorized.

Dated:  June 1, 1999                         BARTON BRANDS OF CALIFORNIA, INC.


                                             By: /s/ Alexander L. Berk
                                             ----------------------------------
                                             Alexander L. Berk, President

     Pursuant to the  requirements of the Securities  Exchange Act of 1934, this
Report  has  been  signed  below  by the  following  persons  on  behalf  of the
Registrant and in the capacities and on the dates indicated.


Dated:  June 1, 1999                         /s/ Alexander L. Berk
                                             ----------------------------------
                                             Alexander L. Berk, President and
                                             Director (Principal Executive
                                             Officer)


Dated:  June 1, 1999                         /s/ Raymond E. Powers
                                             ----------------------------------
                                             Raymond E. Powers, Executive Vice
                                             President, Treasurer, Assistant
                                             Secretary and Director (Principal
                                             Financial Officer and Principal
                                             Accounting Officer)


Dated:  June 1, 1999                         /s/ Edward L. Golden
                                             ----------------------------------
                                             Edward L. Golden, Director

<PAGE>
                                     - 74 -

                                   SIGNATURES

         Pursuant to the  requirements  of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed on
its behalf by the undersigned, thereunto duly authorized.

Dated:  June 1, 1999                         BARTON BRANDS OF GEORGIA, INC.


                                             By: /s/ Alexander L. Berk
                                             ----------------------------------
                                             Alexander L. Berk, President

     Pursuant to the  requirements of the Securities  Exchange Act of 1934, this
Report  has  been  signed  below  by the  following  persons  on  behalf  of the
Registrant and in the capacities and on the dates indicated.


Dated:  June 1, 1999                         /s/ Alexander L. Berk
                                             ----------------------------------
                                             Alexander L. Berk, President and
                                             Director (Principal Executive
                                             Officer)


Dated:  June 1, 1999                         /s/ Raymond E. Powers
                                             ----------------------------------
                                             Raymond E. Powers, Executive Vice
                                             President, Treasurer, Assistant
                                             Secretary and Director (Principal
                                             Financial Officer and Principal
                                             Accounting Officer)


Dated:  June 1, 1999                         /s/ Edward L. Golden
                                             ----------------------------------
                                             Edward L. Golden, Director

<PAGE>
                                     - 75 -

                                   SIGNATURES

     Pursuant  to the  requirements  of  Section  13 or 15(d) of the  Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed on
its behalf by the undersigned, thereunto duly authorized.

Dated:  June 1, 1999                         BARTON DISTILLERS IMPORT CORP.


                                             By: /s/ Alexander L. Berk
                                             ----------------------------------
                                             Alexander L. Berk, President

     Pursuant to the  requirements of the Securities  Exchange Act of 1934, this
Report  has  been  signed  below  by the  following  persons  on  behalf  of the
Registrant and in the capacities and on the dates indicated.


Dated:  June 1, 1999                         /s/ Alexander L. Berk
                                            -----------------------------------
                                             Alexander L. Berk, President and
                                             Director (Principal Executive
                                             Officer)


Dated:  June 1, 1999                         /s/ Raymond E. Powers
                                             ----------------------------------
                                             Raymond E. Powers, Executive Vice
                                             President, Treasurer, Assistant
                                             Secretary and Director (Principal
                                             Financial Officer and Principal
                                             Accounting Officer)


Dated:  June 1, 1999                         /s/ Edward L. Golden
                                             ----------------------------------
                                             Edward L. Golden, Director

<PAGE>
                                     - 76 -

                                   SIGNATURES

     Pursuant  to the  requirements  of  Section  13 or 15(d) of the  Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed on
its behalf by the undersigned, thereunto duly authorized.

Dated:  June 1, 1999                         BARTON FINANCIAL CORPORATION


                                             By: /s/ Raymond E. Powers
                                             ----------------------------------
                                             Raymond E. Powers, President

     Pursuant to the  requirements of the Securities  Exchange Act of 1934, this
Report  has  been  signed  below  by the  following  persons  on  behalf  of the
Registrant and in the capacities and on the dates indicated.


Dated:  June 1, 1999                         /s/ Raymond E. Powers
                                             ----------------------------------
                                             Raymond E. Powers, President,
                                             Secretary and Director (Principal
                                             Executive Officer)


Dated:  June 1, 1999                         /s/ Charles T. Schlau
                                             ----------------------------------
                                             Charles T. Schlau, Treasurer and
                                             Director (Principal Financial
                                             Officer and Principal Accounting
                                             Officer)

<PAGE>
                                     - 77 -

                                   SIGNATURES

     Pursuant  to the  requirements  of  Section  13 or 15(d) of the  Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed on
its behalf by the undersigned, thereunto duly authorized.

Dated:  June 1, 1999                         STEVENS POINT BEVERAGE CO.


                                             By: /s/ James P. Ryan
                                             ----------------------------------
                                             James P. Ryan, President and Chief
                                             Executive Officer

     Pursuant to the  requirements of the Securities  Exchange Act of 1934, this
Report  has  been  signed  below  by the  following  persons  on  behalf  of the
Registrant and in the capacities and on the dates indicated.


Dated:  June 1, 1999                         /s/ James P. Ryan
                                             ----------------------------------
                                             James P. Ryan, President, Chief
                                             Executive Officer and Director
                                             (Principal Executive Officer)


Dated:  June 1, 1999                         /s/ Raymond E. Powers
                                             ----------------------------------
                                             Raymond E. Powers, Executive Vice
                                             President, Treasurer, Assistant
                                             Secretary and Director (Principal
                                             Financial Officer and Principal
                                             Accounting Officer)


Dated:  June 1, 1999                         /s/ Alexander L. Berk
                                             ----------------------------------
                                             Alexander L. Berk, Director


Dated:  June 1, 1999                         /s/ William F. Hackett
                                             ----------------------------------
                                             William F. Hackett, Director

<PAGE>
                                     - 78 -

                                   SIGNATURES

     Pursuant  to the  requirements  of  Section  13 or 15(d) of the  Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed on
its behalf by the undersigned, thereunto duly authorized.

Dated:  June 1, 1999                         MONARCH IMPORT COMPANY


                                             By: /s/ James P. Ryan
                                             James P. Ryan, Chief Executive
                                             Officer

     Pursuant to the  requirements of the Securities  Exchange Act of 1934, this
Report  has  been  signed  below  by the  following  persons  on  behalf  of the
Registrant and in the capacities and on the dates indicated.


Dated:  June 1, 1999                         /s/ James P. Ryan
                                             ----------------------------------
                                             James P. Ryan, Chief Executive
                                             Officer (Principal Executive
                                             Officer)


Dated:  June 1, 1999                         /s/ Raymond E. Powers
                                             ----------------------------------
                                             Raymond E. Powers, Executive Vice
                                             President, Treasurer, Assistant
                                             Secretary and Director (Principal
                                             Financial Officer and Principal
                                             Accounting Officer)


Dated:  June 1, 1999                         /s/ Alexander L. Berk
                                             ----------------------------------
                                             Alexander L. Berk, Director


Dated:  June 1, 1999                         /s/ William F. Hackett
                                             ----------------------------------
                                             William F. Hackett, Director

<PAGE>
                                     - 79 -

                                   SIGNATURES

     Pursuant  to the  requirements  of  Section  13 or 15(d) of the  Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed on
its behalf by the undersigned, thereunto duly authorized.

Dated:  June 1, 1999                         THE VIKING DISTILLERY, INC.


                                             By: /s/ Alexander L. Berk
                                             ----------------------------------
                                             Alexander L. Berk, President

     Pursuant to the  requirements of the Securities  Exchange Act of 1934, this
Report  has  been  signed  below  by the  following  persons  on  behalf  of the
Registrant and in the capacities and on the dates indicated.


Dated:  June 1, 1999                         /s/ Alexander L. Berk
                                             ----------------------------------
                                             Alexander L. Berk, President and
                                             Director (Principal Executive
                                             Officer)


Dated:  June 1, 1999                         /s/ Raymond E. Powers
                                             ----------------------------------
                                             Raymond E. Powers, Executive Vice
                                             President, Treasurer, Assistant
                                             Secretary and Director (Principal
                                             Financial Officer and Principal
                                             Accounting Officer)


Dated:  June 1, 1999                         /s/ Edward L. Golden
                                             ----------------------------------
                                             Edward L. Golden, Director

<PAGE>
                                     - 80 -

                                INDEX TO EXHIBITS

EXHIBIT NO.
-----------

      2.1   Asset  Purchase  Agreement  dated August 3, 1994 between the Company
            and Heublein,  Inc. (filed as Exhibit 2(a) to the Company's  Current
            Report on Form 8-K dated August 5, 1994 and  incorporated  herein by
            reference).

      2.2   Amendment dated November 8, 1994 to Asset Purchase Agreement between
            Heublein,  Inc.  and  the  Company  (filed  as  Exhibit  2.2  to the
            Company's  Registration  Statement  on  Form S-3  (Amendment  No. 2)
            (Registration  No.  33-55997) filed with the Securities and Exchange
            Commission   on  November  8,  1994  and   incorporated   herein  by
            reference).

      2.3   Amendment  dated  November  18,  1994 to  Asset  Purchase  Agreement
            between Heublein,  Inc. and the Company (filed as Exhibit 2.8 to the
            Company's  Annual  Report on Form  10-K for the  fiscal  year  ended
            August 31, 1994 and incorporated herein by reference).

      2.4   Amendment  dated  November  30,  1994 to  Asset  Purchase  Agreement
            between Heublein,  Inc. and the Company (filed as Exhibit 2.9 to the
            Company's Quarterly Report on Form 10-Q for the fiscal quarter ended
            November 30, 1994 and incorporated herein by reference).

      2.5   Asset Purchase  Agreement among Barton  Incorporated (a wholly-owned
            subsidiary  of  the  Company),  United  Distillers  Glenmore,  Inc.,
            Schenley  Industries,   Inc.,  Medley  Distilling  Company,   United
            Distillers  Manufacturing,  Inc., and The Viking  Distillery,  Inc.,
            dated  August  29,  1995  (filed as  Exhibit  2(a) to the  Company's
            Current Report on Form 8-K,  dated August 29, 1995 and  incorporated
            herein by reference).

      2.6   Recommended  Cash  Offer,  by  Schroders  on behalf  of  Canandaigua
            Limited,  a  wholly-owned  subsidiary  of the  Company,  to  acquire
            Matthew  Clark plc (filed as Exhibit  2.1 to the  Company's  Current
            Report on Form 8-K dated December 1, 1998 and incorporated herein by
            reference).

      2.7   Asset Purchase  Agreement dated as of February 21, 1999 by and among
            Diageo Inc., UDV Canada Inc.,  United Distillers Canada Inc. and the
            Company (filed as Exhibit 2 to the Company's  Current Report on Form
            8-K dated April 9, 1999 and incorporated herein by reference).

      3.1   Restated  Certificate  of  Incorporation  of the  Company  (filed as
            Exhibit 3.1 to the Company's  Quarterly  Report on Form 10-Q for the
            fiscal  quarter  ended  August 31, 1998 and  incorporated  herein by
            reference).

      3.2   Amended and Restated By-Laws of the Company (filed as Exhibit 3.2 to
            the Company's  Quarterly  Report on Form 10-Q for the fiscal quarter
            ended August 31, 1998 and incorporated herein by reference).

      4.1   Indenture,  dated as of December  27, 1993,  among the Company,  its
            Subsidiaries  and The Chase Manhattan Bank (as successor to Chemical
            Bank)  (filed as Exhibit 4.1 to the  Company's  Quarterly  Report on
            Form  10-Q  for the  fiscal  quarter  ended  November  30,  1993 and
            incorporated herein by reference).

<PAGE>
                                     - 81 -

      4.2   First Supplemental Indenture,  dated as of August 3, 1994, among the
            Company,  Canandaigua  West,  Inc. (a  subsidiary of the Company now
            known as  Canandaigua  Wine Company,  Inc.) and The Chase  Manhattan
            Bank (as  successor  to Chemical  Bank) (filed as Exhibit 4.5 to the
            Company's  Registration  Statement  on Form  S-8  (Registration  No.
            33-56557) and incorporated herein by reference).

      4.3   Second  Supplemental  Indenture,  dated August 25,  1995,  among the
            Company,  V Acquisition Corp. (a subsidiary of the Company now known
            as The Viking  Distillery,  Inc.) and The Chase  Manhattan  Bank (as
            successor to Chemical  Bank) (filed as Exhibit 4.5 to the  Company's
            Annual Report on Form 10-K for the fiscal year ended August 31, 1995
            and incorporated herein by reference).

      4.4   Third Supplemental  Indenture,  dated as of December 19, 1997, among
            the Company,  Canandaigua Europe Limited,  Roberts Trading Corp. and
            The Chase  Manhattan  Bank  (filed as Exhibit  4.4 to the  Company's
            Annual  Report on Form 10-K for the fiscal year ended  February  28,
            1998 and incorporated herein by reference).

      4.5   Fourth  Supplemental  Indenture,  dated as of October 2, 1998, among
            the Company, Polyphenolics, Inc. and The Chase Manhattan Bank (filed
            as Exhibit 4.5 to the  Company's  Quarterly  Report on Form 10-Q for
            the fiscal quarter ended November 30, 1998 and  incorporated  herein
            by reference).

      4.6   Fifth Supplemental  Indenture,  dated as of December 11, 1998, among
            the Company,  Canandaigua  B.V.,  Canandaigua  Limited and The Chase
            Manhattan Bank (filed herewith).

      4.7   Indenture  with  respect to the 8 3/4% Series C Senior  Subordinated
            Notes due 2003, dated as of October 29, 1996, among the Company, its
            Subsidiaries and Harris Trust and Savings Bank (filed as Exhibit 4.2
            to the Company's  Registration  Statement on Form S-4  (Registration
            No. 333-17673) and incorporated herein by reference).

      4.8   First Supplemental  Indenture,  dated as of December 19, 1997, among
            the Company,  Canandaigua Europe Limited,  Roberts Trading Corp. and
            Harris Trust and Savings Bank (filed as Exhibit 4.6 to the Company's
            Annual  Report on Form 10-K for the fiscal year ended  February  28,
            1998 and incorporated herein by reference).

      4.9   Second  Supplemental  Indenture,  dated as of October 2, 1998, among
            the Company,  Polyphenolics,  Inc. and Harris Trust and Savings Bank
            (filed as Exhibit 4.8 to the Company's Quarterly Report on Form 10-Q
            for the fiscal  quarter  ended  November  30, 1998 and  incorporated
            herein by reference).

      4.10  Third Supplemental  Indenture,  dated as of December 11, 1998, among
            the Company,  Canandaigua B.V., Canandaigua Limited and Harris Trust
            and Savings Bank (filed herewith).

      4.11  First Amended and Restated Credit Agreement, dated as of November 2,
            1998, between the Company, its principal operating subsidiaries, and
            certain   banks  for  which  The  Chase   Manhattan   Bank  acts  as
            Administrative  Agent (filed as Exhibit 4.1 to the Company's Current
            Report on Form 8-K dated December 1, 1998 and incorporated herein by
            reference).

<PAGE>
                                     - 82 -

      4.12  Indenture with respect to 8 1/2% Senior Subordinated Notes due 2009,
            dated as of February 25, 1999,  among the  Company,  as issuer,  its
            principal operating  subsidiaries,  as Guarantors,  and Harris Trust
            and Savings Bank, as Trustee (filed as Exhibit 99.1 to the Company's
            Current Report on Form 8-K dated February 25, 1999 and  incorporated
            herein by reference).

      4.13  Supplemental  Indenture No. 1, dated as of February 25, 1999, by and
            among the Company, as Issuer, its principal operating  subsidiaries,
            as Guarantors,  and Harris Trust and Savings Bank, as Trustee (filed
            as Exhibit 99.2 to the  Company's  Current  Report on Form 8-K dated
            February 25, 1999 and incorporated herein by reference).

      10.1  Barton Incorporated Management Incentive Plan (filed as Exhibit 10.6
            to the  Company's  Annual  Report on Form 10-K for the  fiscal  year
            ended August 31, 1993 and incorporated herein by reference).

      10.2  Marvin Sands Split Dollar Insurance Agreement (filed as Exhibit 10.9
            to the  Company's  Annual  Report on Form 10-K for the  fiscal  year
            ended August 31, 1993 and incorporated herein by reference).

      10.3  Letter  agreement,  effective  as of October 7,  1995,  as  amended,
            addressing  compensation,  between the  Company  and Daniel  Barnett
            (filed as Exhibit 10.23 to the Company's  Transition  Report on Form
            10-K for the  Transition  Period from  September 1, 1995 to February
            29, 1996 and incorporated herein by reference).

      10.4  Employment  Agreement  between Barton  Incorporated and Alexander L.
            Berk dated as of September 1, 1990 as amended by Amendment  No. 1 to
            Employment  Agreement  between Barton  Incorporated and Alexander L.
            Berk dated November 11, 1996 (filed as Exhibit 10.7 to the Company's
            Annual  Report on Form 10-K for the fiscal year ended  February  28,
            1998 and incorporated herein by reference).

      10.5  Amendment No. 2 to Employment  Agreement between Barton Incorporated
            and Alexander L. Berk dated October 20, 1998 (filed herewith).

      10.6  First Amended and Restated Credit Agreement, dated as of November 2,
            1998, between the Company, its principal operating subsidiaries, and
            certain   banks  for  which  The  Chase   Manhattan   Bank  acts  as
            Administrative  Agent (filed as Exhibit 4.1 to the Company's Current
            Report on Form 8-K dated December 1, 1998 and incorporated herein by
            reference).

      10.7  Long-Term  Stock  Incentive  Plan,  which  amends and  restates  the
            Canandaigua Wine Company,  Inc. Stock Option and Stock  Appreciation
            Right Plan (filed as Exhibit 10.1 to the Company's  Quarterly Report
            on  Form  10-Q  for the  fiscal  quarter  ended  May  31,  1997  and
            incorporated herein by reference).

      10.8  Amendment  Number One to the Long-Term  Stock  Incentive Plan of the
            Company (filed as Exhibit 10.1 to the Company's  Quarterly Report on
            Form  10-Q  for  the  fiscal  quarter  ended  August  31,  1997  and
            incorporated herein by reference).

      10.9  Incentive Stock Option Plan of the Company (filed as Exhibit 10.2 of
            the Company's  Quarterly  Report on Form 10-Q for the fiscal quarter
            ended August 31, 1997 and incorporated herein by reference).

<PAGE>
                                     - 83 -

      10.10 Amendment  Number  One to the  Incentive  Stock  Option  Plan of the
            Company (filed as Exhibit 10.3 of the Company's  Quarterly Report on
            Form  10-Q  for  the  fiscal  quarter  ended  August  31,  1997  and
            incorporated herein by reference).

      10.11 Annual  Management  Incentive  Plan of the Company (filed as Exhibit
            10.4 of the Company's  Quarterly  Report on Form 10-Q for the fiscal
            quarter ended August 31, 1997 and incorporated herein by reference).

      10.12 Amendment Number One to the Annual Management  Incentive Plan of the
            Company  (filed as Exhibit 10.14 to the  Company's  Annual Report on
            Form  10-K  for  the  fiscal  year  ended   February  28,  1998  and
            incorporated herein by reference).

      10.13 Lease,  effective  December 25,  1997,  by and among  Matthew  Clark
            Brands Limited and Pontsarn Investments Limited (filed herewith).

      10.14 Supplemental   Executive  Retirement  Plan  of  the  Company  (filed
            herewith).

      11.1  Statement re Computation of Per Share Earnings (filed herewith).

      18.1  Letter re Change in Accounting Principles (filed herewith).

      21.1  Subsidiaries of Company (filed herewith).

      23.1  Consent of Arthur Andersen LLP (filed herewith).

      27.1  Financial  Data  Schedule  for fiscal year ended  February  28, 1999
            (filed herewith).

      27.2  Restated  Financial  Data  Schedule  for the  fiscal  quarter  ended
            November 30, 1998 (filed herewith).

      27.3  Restated Financial Data Schedule for the fiscal quarter ended August
            31, 1998 (filed herewith).

      27.4  Restated  Financial  Data Schedule for the fiscal  quarter ended May
            31, 1998 (filed herewith).

      27.5  Restated  Financial Data Schedule for the fiscal year ended February
            28, 1998 (filed herewith).

      27.6  Restated  Financial  Data  Schedule  for the  fiscal  quarter  ended
            November 30, 1997 (filed herewith).

      27.7  Restated Financial Data Schedule for the fiscal quarter ended August
            31, 1997 (filed herewith).

      27.8  Restated  Financial  Data Schedule for the fiscal  quarter ended May
            31, 1997 (filed herewith).

      27.9  Restated  Financial Data Schedule for the fiscal year ended February
            28, 1997 (filed herewith).

      99.1  1989  Employee  Stock  Purchase  Plan of the Company,  as amended by
            Amendment Number 1 through Amendment Number 5 (filed as Exhibit 99.1
            to the  Company's  Annual  Report on Form 10-K for the  fiscal  year
            ended February 28, 1998 and incorporated herein by reference).

      99.2  Amendment  Number 6 to the 1989 Employee  Stock Purchase Plan of the
            Company (filed herewith).