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
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

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

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Collections Agent

£14000 - £16000 per annum: Recruitment Genius: This company was established in...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE 40k: SThree: SThree are a global FTSE 250 busi...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + competitive: SThree: SThree are a global FTSE 250 ...

Reach Volunteering: Trustees with Finance, Fundraising and IT skills

Voluntary and unpaid, reasonable expenses reimbursable: Reach Volunteering: St...

Day In a Page

Isis profits from destruction of antiquities by selling relics to dealers - and then blowing up the buildings they come from to conceal the evidence of looting

How Isis profits from destruction of antiquities

Robert Fisk on the terrorist group's manipulation of the market to increase the price of artefacts
Labour leadership: Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea

'If we lose touch we’ll end up with two decades of the Tories'

In an exclusive interview, Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea
King Arthur: Legendary figure was real and lived most of his life in Strathclyde, academic claims

Academic claims King Arthur was real - and reveals where he lived

Dr Andrew Breeze says the legendary figure did exist – but was a general, not a king
Earth has 'lost more than half its trees' since humans first started cutting them down

Axe-wielding Man fells half the world’s trees – leaving us just 422 each

However, the number of trees may be eight times higher than previously thought
Theme parks continue to draw in thrill-seekers despite the risks - so why are we so addicted?

Why are we addicted to theme parks?

Now that Banksy has unveiled his own dystopian version, Christopher Beanland considers the ups and downs of our endless quest for amusement
Tourism in Iran: The country will soon be opening up again after years of isolation

Iran is opening up again to tourists

After years of isolation, Iran is reopening its embassies abroad. Soon, there'll be the chance for the adventurous to holiday there
10 best PS4 games

10 best PS4 games

Can’t wait for the new round of blockbusters due out this autumn? We played through last year’s offering
Migrant crisis: UN official Philippe Douste-Blazy reveals the harrowing sights he encountered among refugees arriving on Lampedusa

‘Can we really just turn away?’

Dead bodies, men drowning, women miscarrying – a senior UN figure on the horrors he has witnessed among migrants arriving on Lampedusa, and urges politicians not to underestimate our caring nature
Nine of Syria and Iraq's 10 world heritage sites are in danger as Isis ravages centuries of history

Nine of Syria and Iraq's 10 world heritage sites are in danger...

... and not just because of Isis vandalism
Girl on a Plane: An exclusive extract of the novelisation inspired by the 1970 Palestinian fighters hijack

Girl on a Plane

An exclusive extract of the novelisation inspired by the 1970 Palestinian fighters hijack
Why Frederick Forsyth's spying days could spell disaster for today's journalists

Why Frederick Forsyth's spying days could spell disaster for today's journalists

The author of 'The Day of the Jackal' has revealed he spied for MI6 while a foreign correspondent
Markus Persson: If being that rich is so bad, why not just give it all away?

That's a bit rich

The billionaire inventor of computer game Minecraft says he is bored, lonely and isolated by his vast wealth. If it’s that bad, says Simon Kelner, why not just give it all away?
Euro 2016: Chris Coleman on course to end half a century of hurt for Wales

Coleman on course to end half a century of hurt for Wales

Wales last qualified for major tournament in 1958 but after several near misses the current crop can book place at Euro 2016 and end all the indifference
Rugby World Cup 2015: The tournament's forgotten XV

Forgotten XV of the rugby World Cup

Now the squads are out, Chris Hewett picks a side of stars who missed the cut
A groundbreaking study of 'Britain's Atlantis' long buried at the bottom of the North Sea could revolutionise how we see our prehistoric past

Britain's Atlantis

Scientific study beneath North Sea could revolutionise how we see the past