Blog: Chris Brook-CarterAllied after shock

Chris Brook-Carter | 29 September 2005

The after shocks of the Allied Domecq sale are still being keenly felt around the spirits and wine industries. They were perhaps more noticeable than ever in the last week, with the news of a fresh Stolichnaya deal and re-organisation of the distribution giant Maxxium.
 
Allied’s acquisition raised serious questions about the future of both Stolichnaya and Maxxium, questions that  have not been completely answered with these announcements.
 
Late last week, Pernod Ricard said that it had renegotiated a global distribution deal for the Stolichnaya brand with owner SPI. But Pernod has managed  to go one better than former holder Allied, however, by getting SPI to agree to Pernod’s right of first refusal should SPI decide to sell the brand.
 
Pernod managing director Richard Burrows seemed confident  last week that SPI could be persuaded into those  negotiations. Much will still depend, though, on SPI’s  on-going battle with the Russian state over the legal  ownership of Stolichnaya. If that battle erupts on a grand scale – and particularly if it gets worse in the US – then  Pernod could have more on its hands than it bargained for.
 
The future of Maxxium also looked set to get more complicated. With part-owner Jim Beam Brands (JBB)  inheriting several brands that compete directly with its partner’s products, questions were asked about whether the  partnership would pull itself apart. Today’s reorganisation has gone some way to answering those  doubts, particularly in Spain and Germany, where Maxxium  will be expanding its operations. 

But the four shareholder partners have agreed that the former Allied brands Courvoisier, Teachers and Laphroaig,  now owned by JBB, will not be distributed by Maxxium. As a consequence JBB will make separate arrangements for their distribution in all markets. In the UK, since those brands constitute a large part of the volume of the brands acquired, JBB has decided to continue to operate independently, using the distribution infrastructure it  has acquired.
 
Only time will tell if this convoluted agreement has  long-term potential.


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