Outlook: Bavarians take another drive down nostalgia lane

On The German bid for rolls, the value of brands and the departure of Sir Desmond Pitcher
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The Independent Online
BERND Pischetsrieder, the chairman of BMW, has a nostalgic attachment to Britain's motoring heritage and a pair of very deep pockets. It was his obsession with the Wolseley and Riley that made him buy Rover four years ago.

Yesterday he was overcome by the Spirit of Ecstasy and walked off with Rolls-Royce, the only important marque left in British hands.

The boys from Bavaria are still waiting for Mr Pischetsrieder's previous bout of nostalgia to pay off. Since 1994 BMW has invested more than pounds 2bn in Rover only to see it run up losses of pounds 350m and allow its market share to drift down to around 10 per cent.

It might have got within sight of a profit this year, even under German accounting conventions, but the strong pound has dashed those hopes.

Rolls-Royce is not quite the same. Unlike Rover, it is genuinely a trophy asset. Whatever else is said about British craftmanship, the Roller remains a byword for luxury and style.

It is the most famous marque in the world. Unlike Rover, Rolls is also profitable. Six years ago its current owners, Vickers, sensibly allied some modern management techniques to all the walnut, leather and wool at Crewe and turned Rolls into a business that could break-even at 1400 cars a year.

Current production is bumping along at just under 2,000. But Mr Pischetsrieder has big plans to triple production at Crewe, double the workforce and stretch the Bentley brand to include a sports car.

He already has a rather dashing proto type to work on. The Java, which Vickers unveiled at Geneva five years ago but then ran out of money to develop, was based on a BMW5 platform and is just waiting to be taken from the drawing board.

There's the rub. Vickers just didn't have the cash to keep refuelling Rolls and in the absence of a credible British bid, there was a horrible inevitability about the business passing into foreign hands

The pantomime horse called the Rolls-Royce Acquisition Consortium may make life uncomfortable for Sir Colin Chandler at the egm. But unless they have taken leave of their senses, Vickers shareholders will not turn down an offer that values Rolls at thirty times earnings and gives it as secure a future as it is every going to have.

Bacardi pays a rum old price

THE astronomic price fetched by Dewar's and Bombay Gin is another striking example of the power of brands. . The directors of Diageo could scarcely have dreamed they would get pounds 1.15bn for the the two brands when they were forced to action them off to get the Grand Guinness merger past the competition authorities. But in stepped Bacardi, desperate to become a force to be reckoned with in the spirits market and keen not to miss out on a buying opportunity unlikely to be repeated for some time.

Diageo probably cannot believe its luck. The group played a successful game of poker with the competition authorities, offering first to sell minor brands but knowing all the time it was willing to sacrifice Dewar's. The Federal Trade Commission and the EC took the bait and left Diageo with the brands it really wanted. Dewar's may be the leading whisky in the US, but its sales have been falling over the last few years in a tough market. Diageo has been allowed to keep international best sellers Johnnie Walker and J&B . And the loss of Bombay Sapphire will not be too hard to bear as Diageo has held on to the much bigger gin brands Gordon's and Gilbey's. No wonder Diageo's shareholders remain in party mood.

The rise and fall of King Des

SO FAREWELL then Sir Desmond Pitcher on this your last day in charge at United Utilities. Progress With Responsibility, that was your catchphrase. Bad luck for you the shareholders decided they would get more progress if someone else was made responsible.

Once you were King Des of the North West, the man who mixed water with electricity and lived to tell the tale. You invented the multi-utility and spawned a host of imitators with silly names like Hyder.

For a time all was well and the good citizens of Manchester were grateful indeed for their water rebate. But then the muttering began. No man is an island and no share price can underperform the index for two years without questions being asked. And lo, the Court of King Des was split asunder. A man called Staples came from the east (Tarmac Construction, actually) and wondered aloud whether a Footsie stock should be run like one man's personal fiefdom. You did for him before he could dethrone you. But the damage was done and the Army of Good Corporate Governance scented blood. Your successor comes from a land to the west, Sellafield, where the water is warm all year round, at least in the sea. Sir Christopher Harding not have your vision. But then he is only there as non-exec chairman having plenty of other jobs to keep him busy.

You, however, do not. This is also your last day as chairman of the Merseyside Development Corporation, which is being closed down to make way for New Labour's regional development agencies. That just leaves the job as deputy chairman of Everton and even they look like candidates for the drop this season.

But never fear, your legacy lives on. Some day we will all live in the kingdom of King Des. One supplier, one utility bill, one regulator. In the meantime, enjoy the golf.

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