The Week Ahead: Mixed messages from spirit world

ONE OF the abiding stock market mysteries is the clear run given to Diageo, the spirits behemoth created by the merger of Grand Metropolitan and Guinness.

True, the regulatory authorities huffed and puffed. But their demands were modest and comfortably accommodated by the biggest spirits power in the word.

With the regulators barking but not biting, it would not be long, the market and drinks industry reasoned, before the other major players, such as Allied Domecq, Seagram and Pernod Ricard, retaliated.

Nearly 18 months after the mammoth merger was rolled out there has been precious little sign of any response from the rest of the industry.

Talk that Canadian group Seagram will merge with Allied's spirits side, or that Pernod will throw in its lot with a US group, has so far come to nothing.

Allied, due to produce its annual results today, is to outward appearances little different from pre-Diageo days. It is still a mix of spirits production and varied forms of retailing. The Victoria Wine off-licence chain has been merged with Whitbread's Threshers business, and there are plans, as yet unrealised, to sell or float its Cantrell & Cochrane Irish drinks enterprise.

However, there is no indication of any spirits deal, with Seagram or anybody else, or even of the retailing and distilling demerger so widely expected by the market.

The Allied chairman, Sir Christopher Hogg, is unlikely to offer further enlightenment when he trots out what will be a flat set of figures. Sir Christopher has already let it be known that the results will not be a cause for celebration; pounds 612m against pounds 602m is expected.

The market is also fretting about the accompanying trading statement. Since Allied provided a trading update there have been some sobering indications of slackening consumer demand, particularly for leisure.

Bass has had to contend with dismal pub sales, and cheer has been in short supply from other operators.

Indeed the entire retailing climate is looking decidedly suspect, and it will be surprising if Allied's sprawling and largely mundane pubs estate has bucked the trend. Its spirits operations may also be encountering the chill winds of the worldwide economic slowdown.

Allied's figures would, at one time, have heralded the start of the City's brewing season. But the group is no longer a member of the beerage, having sold its brewery interests.

Whitbread, however, is still brewing as well as pulling pints. It could, therefore, claim to kick off the beer season tomorrow with its interim figures. Nick Williamson at Credit Lyonnais is looking for pounds 208m against pounds 198m.

Still, brewing has represented a declining slice of Whitbread's earnings for some years. Although it still has some 15 per cent of the beer market, brewing represents only about 12 per cent of its profits.

The group, which started as a City of London brewery more than 250 years ago, has spread determinedly into eating out through the Beefeater pub/restaurants and stand-alone establishments such as Cafe Rouge. It has also ventured into the coffee bar extravaganza as well as health clubs and - belatedly - hotels.

Worries that Whitbread has ended, or at least seriously curtailed, its spending on pubs is one of the influences causing much anxiety about the well being of the good, old-fashioned boozer.

Whitbread could, however, be planning to take advantage of the depressed state of the brewing and pub market. A bid for Greenalls, in talks to sell its franchised and tenanted pubs, is regarded as a distinct possibility.

With brewing down to such a relatively small percentage of profits, there is a feeling that Whitbread could be prepared to abandon its heritage and use the resulting freedom dramatically to increase its retail spread with a Greenalls bid.

If it called time on brewing it could comfortably swallow a wide range of retail outlets without encountering the Westminster-imposed restrictions on pub ownership. It wants hotels - Greenalls' De Vere chain would be a splendid capture - and it is clearly thinking about more retail muscle. First Leisure and Vaux's Swallow Hotels chain are seen as other bid candidates.

In a week which sees the opening of the Channel Islands Stock Exchange, the first to appear since the regional operations (even Oldham once had its own exchange) were annihilated by London more than 30 years ago, there will be plenty of talk about consumer demand.

J Sainsbury, for long under pressure and seemingly running hard to stay within sight of arch-rivals Tesco, is expected to show signs of a rally with interim profits of pounds 464m against pounds 411m. Here again it will be more the trading statement than the figures which will intrigue the market.

The supermarket sector was under pressure last week as the market fretted about price wars - real as opposed to the phoney exercises which have occurred lately - and their effect on margins. There is little doubt that costs are increasing and the supermarketeers no longer have the benefit of enchanting inflation profits.

Debenhams, which demerged from Burton (now Arcadia) in February, will also give an indication of retail attitudes. Around pounds 136m is expected for the year to August, but once again the accompanying trading statement could be more important than the unadorned figures.

The busy reporting week also includes nine months' figures from British American Tobacco, now shorn of its financial interests. Profits in the region of pounds 950m are expected.

Pilkington, the glass maker, is likely to announce interim profits of pounds 60m (pounds 67m) and Colt Telecom will again be in the red with third-quarter losses of some pounds 15m against pounds 9m.

BSkyB, the satellite TV station, takes time off from its pursuit of Manchester United with first-quarter figures of pounds 50m or so, down from pounds 62m. The digital launch has hit profits, although Sky Digital did not start operating until after the quarter's end. The market will be looking for a trading update, with hopes that Sky's digital customer base is already above 200,000.

Suggested Topics
Start your day with The Independent, sign up for daily news emails
ebooks
ebooksA celebration of British elections
  • Get to the point
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: Editor-in-chief - Financial Services - City, London

£60000 - £70000 per annum + benefits : Ashdown Group: A highly successful, glo...

Ashdown Group: Junior Application Support Analyst - Fluent German Speaker

£25000 - £30000 per annum + benefits: Ashdown Group: A global leader operating...

Guru Careers: Management Accountant

£27 - 35k + Bonus + Benefits: Guru Careers: A Management Accountant is needed ...

Guru Careers: Project Manager / Business Analyst

£40-50k + Benefits.: Guru Careers: A Project Manager / Business Analyst is nee...

Day In a Page

General Election 2015: Ed Miliband's unlikely journey from hapless geek to heart-throb

Miliband's unlikely journey from hapless geek to heart-throb

He was meant to be Labour's biggest handicap - but has become almost an asset
General Election 2015: A guide to the smaller parties, from the the National Health Action Party to the Church of the Militant Elvis Party

On the margins

From Militant Elvis to Women's Equality: a guide to the underdogs standing in the election
Amr Darrag: Ex-Muslim Brotherhood minister in exile still believes Egypt's military regime can be replaced with 'moderate' Islamic rule

'This is the battle of young Egypt for the future of our country'

Ex-Muslim Brotherhood minister Amr Darrag still believes the opposition can rid Egypt of its military regime and replace it with 'moderate' Islamic rule, he tells Robert Fisk
Why patients must rely less on doctors: Improving our own health is the 'blockbuster drug of the century'

Why patients must rely less on doctors

Improving our own health is the 'blockbuster drug of the century'
Sarah Lucas is the perfect artist to represent Britain at the Venice Biennale

Flesh in Venice

Sarah Lucas has filled the British pavilion at the Venice Biennale with slinky cats and casts of her female friends' private parts. It makes you proud to be a woman, says Karen Wright
11 best anti-ageing day creams

11 best anti-ageing day creams

Slow down the ageing process with one of these high-performance, hardworking anti-agers
Juventus 2 Real Madrid 1: Five things we learnt, including Iker Casillas is past it and Carlos Tevez remains effective

Juventus vs Real Madrid

Five things we learnt from the Italian's Champions League first leg win over the Spanish giants
Ashes 2015: Test series looks a lost cause for England... whoever takes over as ECB director of cricket

Ashes series looks a lost cause for England...

Whoever takes over as ECB director of cricket, says Stephen Brenkley
Fishing for votes with Nigel Farage: The Ukip leader shows how he can work an audience as he casts his line to the disaffected of Grimsby

Fishing is on Nigel Farage's mind

Ukip leader casts a line to the disaffected
Who is bombing whom in the Middle East? It's amazing they don't all hit each other

Who is bombing whom in the Middle East?

Robert Fisk untangles the countries and factions
China's influence on fashion: At the top of the game both creatively and commercially

China's influence on fashion

At the top of the game both creatively and commercially
Lord O’Donnell: Former cabinet secretary on the election and life away from the levers of power

The man known as GOD has a reputation for getting the job done

Lord O'Donnell's three principles of rule
Rainbow shades: It's all bright on the night

Rainbow shades

It's all bright on the night
'It was first time I had ever tasted chocolate. I kept a piece, and when Amsterdam was liberated, I gave it to the first Allied soldier I saw'

Bread from heaven

Dutch survivors thank RAF for World War II drop that saved millions
Britain will be 'run for the wealthy and powerful' if Tories retain power - Labour

How 'the Axe' helped Labour

UK will be 'run for the wealthy and powerful' if Tories retain power