Fears that economic downturn will extend to the drinks market, typically one of the most resilient sectors, have prompted corporate giants Diageo and Allied Domecq to launch cost cutting drives.

While failing to detail measures, Diageo said it was reviewing costs, after warning of weaker sales at duty free counters and US military bases and resorts.

And Allied Domecq said it had already acted to "further reduce overheads" after the 11 September attacks.

A marketing shake-up is expected to slice �20m from spending on advertising, publicity and market research.

"It is clear that earnings growth will be harder to achieve than last year," said Allied Domecq chief executive Philip Bowman.

However, he added that the drinks trade had "historically weathered adversity better than others".

The resilience of the cigarettes market was also highlighted on Tuesday in a statement from British American Tobacco, which said that the turmoil stemming from last month's terrorist attack had had "little immediate impact" on trade.

Tequila shortage

Allied Domecq said that expansion in the wine market, including the bitterly fought takeover of New Zealand winemaker Montana, would see it ship 23 million cases in the year to the end of next August.

The firm, now the world's fourth biggest winemaker, shipped 9 million cases this financial year.

But Allied Domecq revealed less success in boosting tequila volumes, hit by a shortage of the agave cactus from which the spirit is made.

The shortage, which has driven the price of agave hearts up by 15 times in two years, contributed to a 30% plunge in Allied Domecq's trading profits in Latin America.

"Agave costs have stabilised but ongoing demand for tequila will continue to put pressure on raw material costs," the company said.

Overall pre-tax profits at Allied Domecq rose 12% to �453m in the year to the end of August.

'Muted' effects

Diageo said that while sales at American resorts and airports had fallen, trade at the key US off licence market had remained unchanged.

And outside North America, the affects of the terror attacks had been "muted", a company trading statement added, with the Smirnoff Ice and Archers Aqua alcopop brands boosting UK sales.

BAT, reporting pre-tax profits up by one quarter to �1.52bn in the first nine months of the year, revealed global cigarette sales had risen 3.5 billion to 602 billion over the period.

The firm, warning of the "considerable cost" involved in an ongoing legal challenge to European Union tobacco controls, said it had, with Philip Morris and Japan Tobacco, drawn up a set of cigarette marketing standards "in recognition of society's concerns".

The company also revealed plans to develop its State Express 555 brand, the favourite of Vietnamese resistance leader Ho Chi Minh.

In the City, Allied Domecq shares stood 10p lower at 352.5p in late morning trade.

Diageo stock was 10.5p lower at 676.5p, while BAT shares stood 13p higher at 599p.