Allied Domecq wins Stolichnaya

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The Independent Online

The battle for control of the world's top spirits brands took a new twist yesterday as Allied Domecq, the maker of Ballantine's whisky and Beefeater gin, said it had secured a 10-year contract to distribute Stolichnaya vodka in the US.

The battle for control of the world's top spirits brands took a new twist yesterday as Allied Domecq, the maker of Ballantine's whisky and Beefeater gin, said it had secured a 10-year contract to distribute Stolichnaya vodka in the US.

Allied seized control of the US rights to the brand from Diageo, the world's biggest spirits company, in the face of competition from Bacardi, the Bermuda-based drinks group. All three companies are bidding for the wine and spirits business of Canada's Seagram, which is expected to be worth about £4.8bn.

Philip Bowman, Allied's chief executive, said yesterday: "The ability to offer a premium vodka in the US market substantially enhances our international position and fills an important gap in our brand portfolio."

Analysts said Diageo might have had difficulty renewing its contract because Soyuzplodimport, Stolichnaya's owner, was worried Diageowould promote its own Smirnoff vodka brand more aggressively. But Diageo said it had not renewed the contract because it was concerned about a dispute over the ownership of Stolichnaya in Russia.

Paul Clinton, head of Diageo's US drinks business, said: "In recent weeks, the Russian government itself has challenged ownership of the brand....Equally troubling ... is the escalating concern over a consistent supply of Stolichnaya."

The controversy surrounding Allied's latest deal has echoes of the dispute over its strategic alliance with Destileria Serralles, a supplier of Seagram's Captain Morgan rum, which Allied says gives it the right of first refusal to the brand. But Seagram is disputing the claim.

Allied will take over the US rights from 1 January. Allied's shares closed flat at 425p. They have risen as much as 30 per cent since late October.

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