Allied mulls two-way split

Now that Allied Domecq has completed its withdrawal from brewing, attention will shift to the future of a group which has created a focus for its once sprawling empire, but which failed to transform it into the shareholder value being demanded by increasingly restive institutional investors.

The sale of Allied's stake in Carlsberg-Tetley is the latest move in a radical reconstruction of the group whose interests once spanned cup cakes to car sales and beer but which has reverted to two main operations, retailing and spirits. From Dunkin Donuts and Baskin Robbins on the retail side to Beefeater, Kahlua, Teachers and Sauza in spirits, Allied is a world away from the J Lyons teashop chain that flourished at the turn of the century.

The recent appointment of Sir Christopher Hogg as chairman has been seen as the prelude to a break-up of the group into its core retailing and spirits operations - a move which some analysts believe might attract higher ratings, if only because the constituent parts could attract a bid approach.

The market's scepticism about the group, whose expected profits for the year to the end of this month will be more than halved by the pounds 320m write- off accompanying the Carlsberg sale, is reflected in a dividend yield of almost 7 per cent and a sharp discount to the market average price- earnings ratio.

Chief executive Tony Hales is under pressure to reverse a dismal five years in which the company has seemed to stagger from one disaster to another. In 1991, the group lost heavily on the foreign exchange markets in a misjudged hedging operation and, in 1994, the acquisition of Domecq, the Spanish-Mexican spirits business, preceded by only a few hours a devaluation of the peso which massacred the business's profits.

The company has also been hit by stagnation in the global spirits market, which has suffered a hangover after the party of the 1980s.

As the boom collapsed, consumers refused to accept price rises of between 5 and 10 per cent a year, and rises of only one or two per cent are now normal. Own-label drinks are becoming a threat, and all the big spirits groups are paying the price for a lack of marketing spend.

As a result, Allied has seen its shares massively underperform the rest of the stock market. Since 1992, they have lost half their value relative to other stocks, and there has been increasing pressure from institutional investors for changes in management and strategy.

Sir Christopher, who pulled off a highly successful demerger at Courtaulds in the early 1990s, is expected to attempt something similar at Allied, although to date he has only said that all options for the group are under review.

Suggested Topics
Start your day with The Independent, sign up for daily news emails
PROMOTED VIDEO
News
ebooksNow available in paperback
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Ashdown Group: Marketing Services Manager - (communications, testing, DM)

£32000 - £35000 per annum + benefits: Ashdown Group: Marketing Services Manage...

Guru Careers: Finance Account Manager

£Neg. (DOE) + Excellent Benefits: Guru Careers: A Finance Account Manager with...

Ashdown Group: Java Developer - Hertfordshire - £47,000 + bonus + benefits

£40000 - £470000 per annum + bonus: Ashdown Group: Java Developer / J2EE Devel...

Ashdown Group: Direct Marketing Manager - B2C, Financial Services - Slough

£45000 - £55000 per annum + Benefits: Ashdown Group: An exciting opportunity h...

Day In a Page

Homeless Veterans appeal: 'You look for someone who's an inspiration and try to be like them'

Homeless Veterans appeal

In 2010, Sgt Gary Jamieson stepped on an IED in Afghanistan and lost his legs and an arm. He reveals what, and who, helped him to make a remarkable recovery
Could cannabis oil reverse the effects of cancer?

Could cannabis oil reverse effects of cancer?

As a film following six patients receiving the controversial treatment is released, Kate Hilpern uncovers a very slippery issue
The Interview movie review: You can't see Seth Rogen and James Franco's Kim Jong Un assassination film, but you can read about it here

The Interview movie review

You can't see Seth Rogen and James Franco's Kim Jong Un assassination film, but you can read about it here
Serial mania has propelled podcasts into the cultural mainstream

How podcasts became mainstream

People have consumed gripping armchair investigation Serial with a relish typically reserved for box-set binges
Jesus Christ has become an unlikely pin-up for hipster marketing companies

Jesus Christ has become an unlikely pin-up

Kevin Lee Light, aka "Jesus", is the newest client of creative agency Mother while rival agency Anomaly has launched Sexy Jesus, depicting the Messiah in a series of Athena-style poses
Rosetta space mission voted most important scientific breakthrough of 2014

A memorable year for science – if not for mice

The most important scientific breakthroughs of 2014
Christmas cocktails to make you merry: From eggnog to Brown Betty and Rum Bumpo

Christmas cocktails to make you merry

Mulled wine is an essential seasonal treat. But now drinkers are rediscovering other traditional festive tipples. Angela Clutton raises a glass to Christmas cocktails
5 best activity trackers

Fitness technology: 5 best activity trackers

Up the ante in your regimen and change the habits of a lifetime with this wearable tech
Paul Scholes column: It's a little-known fact, but I have played one of the seven dwarves

Paul Scholes column

It's a little-known fact, but I have played one of the seven dwarves
Fifa's travelling circus once again steals limelight from real stars

Fifa's travelling circus once again steals limelight from real stars

Club World Cup kicked into the long grass by the continued farce surrounding Blatter, Garcia, Russia and Qatar
Frank Warren column: 2014 – boxing is back and winning new fans

Frank Warren: Boxing is back and winning new fans

2014 proves it's now one of sport's biggest hitters again
Jeb Bush vs Hillary Clinton: The power dynamics of the two first families

Jeb Bush vs Hillary Clinton

Karen Tumulty explores the power dynamics of the two first families
Stockholm is rivalling Silicon Valley with a hotbed of technology start-ups

Stockholm is rivalling Silicon Valley

The Swedish capital is home to two of the most popular video games in the world, as well as thousands of technology start-ups worth hundreds of millions of pounds – and it's all happened since 2009
Did Japanese workers really get their symbols mixed up and display Santa on a crucifix?

Crucified Santa: Urban myth refuses to die

The story goes that Japanese store workers created a life-size effigy of a smiling "Father Kurisumasu" attached to a facsimile of Our Lord's final instrument of torture
Jennifer Saunders and Kate Moss join David Walliams on set for TV adaptation of The Boy in the Dress

The Boy in the Dress: On set with the stars

Walliams' story about a boy who goes to school in a dress will be shown this Christmas