ALLIED DOMECQ CREATES A WINE DIVISION

Published: 23 July, 2008

Allied Domecq has announced that it is to operate its wine assets as a separate business. In announcing a trading profit of 543 million - an 11% increase - for the year to August 2001, and pre-tax profits of 453 million, chief executive Philip Bowman said that the company culture was changing, from being production-driven to focusing on the profitable growth of its brands. On developing a world-class premium wine business, he said: The premium wine industry is very attractive, with volume growth of some 12% over the last five years, coupled with strong revenue and profit growth. Our acquisitions have targeted brands that command superior margins and have the potential to be developed in export markets,' said Bowman. The combination of strong profit margins, cost synergies and careful management of the capital base will progressively generate increasing returns on capital,' he said. This strategy, applied to our Spanish and Californian wine businesses over the past five years, has delivered a post-tax return on capital well in excess of 10%.' If Allied completes the purchase of Bodegas y Bebidas, its wine volumes will rise from 9 million cases to 23 million cases - representing 20% of the spirits and wine contribution, making Allied the world's fourth largest wine company. European wine business president, David Scotland, will lead the new wine division from 1 January.

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