Allied sees demand slowing

October 30, 2001 Posted: 1144 GMT

LONDON (CNN) -- Allied Domecq, the world's second-largest wines and spirits group, said demand was slowing in some markets after last month's terror attacks.

Its larger rival Diageo echoed Allied's view of a slowdown, saying the effects of September 11 have been limited to its North American business primarily at airports and hotels.

Allied, which makes Ballantine's scotch, Sauza tequila, Beefeater gin and Kahlua liqueur, made the comments as it announced annual pretax profit rose 12 percent to £453 million ($657 million) before taking into account a Mexican tax rebate.

"We have seen some signs of slowdown in the second half with conditions difficult in Mexico and certain sectors of the United States," Allied chief executive Philip Bowman told Reuters.

"The events of September 11 were not helpful for the global economy and it will be harder to maintain our earnings growth of the last two years."

Bowman said the group would have to work "pretty hard" to match earnings growth of above 10 percent over the last two years.

Allied is also watching closely Daigeo's likely sale of its coconut rum Malibu brand. The U.S. Federal Trade Commission last week blocked Diageo and Pernod Ricard's takeover of Seagram's drinks empire, saying if Diageo buys Seagram's Captain Morgan rum and retains Malibu, it and Bacardi would dominate the U.S. rum market.

But Allied is still contesting the ownership of Captain Morgan in the Puerta Rican courts, and it needs to decide which rum -- Morgan or Malibu -- to aim for, analysts said.

After Allied lost out in the $8.15 billion race for Seagram last December, it went on a buying spree spending £1.2 billion on brands such as Mumm and Perrier Jouet champagnes and New Zealand's Montana wine.