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THE ROBERT MONDAVI CORPORATION
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GROWER LETTER
RTP
September 14, 2004
Dear [personalize with name]:
As you know from our ongoing conversations, Robert Mondavi Corporation is
undergoing a significant evolution designed to better serve the changing needs
of our market and the demands of our consumers. Today, we emerge from our Board
of Directors meeting with a new strategy that will be announced to the public.
Unveiling the New Strategy
The Robert Mondavi Corporation has announced that we will focus our efforts
entirely on our lifestyle brands. We understand that this is a significant
change. However, it is important to recognize that our current lifestyle
portfolio accounts for more than 80% of our revenues and profitability. The
reality is that we have been a lifestyle company for a long time.
We first launched lifestyle wines in order to reach the broader population
with the pleasures of wine, and that quest continues. In fact, it will continue
with an unrelenting focus and an ability to bring a host of quality wines at
accessible prices to consumers.
We believe that we have the ability to become the leading premium lifestyle
wine company in the world. We have a keen understanding of consumer insights
that has helped us to develop powerful brands like Woodbridge, which is the #1
wine brand in the world, in its segment. We have seen impressive growth with
Robert Mondavi Private Selection, when other wines in its segment are in
decline. And we have had proven success in launching new wines like Papio. Our
commitment to quality is steadfast. We are dedicated to producing the highest
quality wine for consumers to enjoy every day. We understand what it takes to
effectively manage vineyards, and appreciate how your partnership has helped us
in creating high quality wines that delight our consumers. In general, we
anticipate that under this new business model, we will rely even more heavily on
our outside grower partnerships.
Our lifestyle business is incredibly successful, yet can improve on
maximizing its potential. The lifestyle category is where we believe a
successful future lies for our company.
Moving forward, the new acutely focused Robert Mondavi Corporation will be
anchored by Woodbridge and Robert Mondavi Private Selection. We will serve the
broad popular market with our existing high quality value wines as well as
exciting new products, like Papio.
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As a result of this direction, we will pursue the divestiture our luxury
assets. These assets include:
Robert Mondavi Winery and its vineyards--we are taking actions to ensure
that Robert Mondavi Winery endures as one of the world's great wine
estates.
Opus One
Luce della Vite
Lucente
Ornellaia
Sena
Arboleda
The Byron Winery and its vineyards
The Arrowood Winery and its vineyards
Grand Archer
R. Michael Mondavi's Role Changes
We also need to tell you that, Michael Mondavi has decided to limit his
role with the company to serving as a member of the Company's Board of
Directors. As a founder of the Robert Mondavi Winery, Michael Mondavi has helped
shape our Company from its inception. The entire management team - past and
present - are very grateful for all of his contributions and wish him the best.
Impact to Employees
Frankly, the most difficult decision we had to make as leaders concerns the
impact to our employee population. However, as we sell certain parts of the
business, we have identified that our new business model does not need the same
number of employees. While some of these changes are a result of selling certain
facilities, other come as we try and right-size the organization given our new
lifestyle focus. Therefore, we will be notifying employees affected by job cuts.
We will be saying goodbye to many friends and colleagues who have
contributed to our success in the past. We thank them for their contributions.
Culturally and professionally, it will be challenging to go through this
change. However, we understand the importance of our relationship, and will
strive to minimize the impact felt to your business.
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Ensuring a Smooth Transition
We anticipate that there will be challenges in making these changes over
the next few months. However, we understand the importance of our relationship,
and will strive to minimize the impact felt to your business.
Working with Growers Moving Forward
These are evolving times. While some challenges will be energizing as we
share our plans on how we'll build the business together for the future; others
will be more difficult as we transition out of the luxury wine business. We will
be reaching out to you shortly to discuss how this announcement may impact your
business.
If you have questions before I have the opportunity to call, please don't
hesitate to call me directly.
Sincerely,
Greg Evans
Chief Executive Officer
Robert Mondavi Corporate
Important Information for Investors and Shareholders
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In connection with the proposed recapitalization plan, The Robert Mondavi
Corporation will file a combined proxy statement/prospectus and other relevant
documents with the Securities and Exchange Commission (the "SEC"). INVESTORS AND
SHAREHOLDERS ARE URGED TO READ THE PROXY STATEMENT/PROSPECTUS WHEN IT BECOMES
AVAILABLE AS IT WILL CONTAIN IMPORTANT INFORMATION ABOUT THE RECAPITALIZATION
PLAN AND RELATED MATTERS. INVESTORS AND SHAREHOLDERS WILL HAVE ACCESS TO FREE
COPIES OF THE PROXY STATEMENT/PROSPECTUS (WHEN AVAILABLE) AND OTHER DOCUMENTS
FILED WITH THE SEC BY THE COMPANY THROUGH THE SEC WEB SITE AT WWW.SEC.GOV. THE
PROXY STATEMENT/PROSPECTUS AND RELATED MATERIALS MAY ALSO BE OBTAINED FOR FREE
(WHEN AVAILABLE) FROM THE COMPANY BY DIRECTING A REQUEST TO THE OMPANY'S
INVESTOR RELATIONS DEPARTMENT AT 841 LATOUR COURT, NAPA, CA 94558; TELEPHONE
(707) 251-4850; E-MAIL MOND@ROBERTMONDAVI.COM.
The Company and its directors, executive officers, certain members of
management and employees may be deemed to be participants in the solicitation of
proxies in connection with the proposed merger. Information regarding the
persons who may, under the rules of the SEC, be considered to be participants in
the solicitation of the Company's shareholders in connection with the proposed
recapitalization plan is set forth in the Company's annual report on Form 10-K
for the fiscal year ended June 30, 2003 filed with the SEC on September 26, 2003
and proxy statement for its 2003 annual meeting of shareholders filed with the
SEC on October 28, 2003. Additional information regarding such persons and a
description of their direct and indirect interests in the recapitalization plan
will be set forth in the proxy statement/prospectus when it is filed with the
SEC.
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Forward-looking Statements
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This announcement and other information provided from time to time by the
company contain historical information as well as forward-looking statements
about the company, the premium wine industry and general business and economic
conditions. Such forward-looking statements include, for example, projections or
predictions about the company's future growth, consumer demand for its wines,
including new brands and brand extensions, margin trends, anticipated future
investment in vineyards and other capital projects, the premium wine grape
market and the premium wine industry in general. Actual results may differ
materially from the company's present expectations. Among other things, a soft
economy, a downturn in the travel and entertainment sector, risk associated with
continued conflict in the Middle East, reduced consumer spending, or changes in
consumer preferences could reduce demand for the company's wines. Similarly,
increased competition or changes in tourism to the company's California
properties could affect the company's volume and revenue growth outlook. The
supply and price of grapes, the company's most important raw material, is beyond
the company's control. A shortage of grapes might constrict the supply of wine
available for sale and cause higher grape costs, putting more pressure on gross
profit margins. A surplus of grapes might allow for greater sales and lower
grape costs, but it might also result in more competition and pressure on
selling prices or marketing spending. Interest rates and other business and
economic conditions could increase significantly the cost and risks of projected
capital spending. The separation of the company into two operating units may
impair management's ability to focus on other needed areas of business
execution. There are also significant risks associated with separating the
company's sizeable sales force into two operating units. Some of the company's
strategic alternatives would involve lay offs and significant restructuring
changes which could materially impair future earnings. For additional cautionary
statements identifying important factors that could cause actual results to
differ materially from such forward-looking information, please refer to Item 7,
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," in the company's Annual Report on Form 10-K for the fiscal year
ended June 30, 2004, on file with the Securities and Exchange Commission. For
these and other reasons, no forward-looking statement by the company can or
should be taken as a guarantee of what will happen in the future.
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