We have recognised that, even prior to 11 September, we were slow to respond to more difficult economic indicators

Philip Bowman, Allied Domecq

The move followed declines in the volumes of some key brands, including Courvoisier cognac and Ballantine's whisky, sold in the September to February period.

"We recognise that we have some short term challenges," chief executive Philip Bowman said.

"These include lower volume performances than we had planned from some of our core brands."

Revival strategy

Allied admitted its performance in the US had been particularly poor, undermined by a poor response to the country's economic slowdown.

"We have recognised that, even prior to 11 September, we were slow to respond to more difficult economic indicators," Monday's statement said.

The firm had, in particular, failed in its management over pricing and marketing promotions.

Allied said it had shaken up its supply chain operations to save costs, increased prices, and launched a state-by-state advertising campaign among measures to boost its US performance.

"We have addressed the situation," Monday's briefing said.

"Early indications are that consumption trends of our brands have improved and the outlook for our business is positive."

Key acquisition

The comments came as Allied reported pre-tax profits of �251m for the six months to the end of February, 6% up on the same period a year before.

Malibu rum: "Dynamic profile"

In the UK, Teacher's and Tia Maria were among star performers.

Raising the price of Sauza Diablo, a tequila and citrus drink, helped Latin American operations raise profits by 19%.

And Ballantine's found residual support in Japan, where sales of the whisky grew 18% by volume.

Allied's future earnings will also be boosted by the �560m purchase of Malibu, the coconut flavoured rum drink

"The brand will be the third most profitable in our portfolio and has a dynamic growth profile," Monday's statement said.

'On track'

Mr Bowman added that the firm was continuing to perform in line with internal forecasts.

"We are confident in the underlying trends within the business," he said.

"We anticipate that we will continue to deliver earnings growth for the full year while continuing to invest strongly behind our brand portfolio."

Allied Domecq shares stood 11.5p higher at 430p in morning trade in London.