The rumours last week that US-based drinks group Brown-Forman was considering a bid for the UK's Allied Domecq have once again raised the question of how the world's leading spirits makers will cope with the ever-increasing dominance of Diageo.
AD's shares rose yesterday following the rumours that B-F, which makes Jack Daniel's and Southern Comfort, was considering a takeover, possibly in association with Bacardi. While the rumours were for the most part dismissed - AD is seen more as the buyer rather than target in any takeover deal - market observers are increasingly concerned at the clear blue water appearing between Diageo and the rest of the pack.
After Allied Domecq, the third major drinks group is Pernod Ricard of France, which has been perhaps the most acquisitive of the major players in recent times and has considerably strengthened its hand as a result - in fact, with recent additions such as Martell and Chivas Regal, as well as existing stalwarts such as Jacob's Creek and Jameson, it could be argued that the French group's brand portfolio is second only to Diageo.
Global reach
But have either of these two groups really got what it takes to tackle Diageo on their own? Well, probably not, but together - or in partnership with one of any number of potential partners - they might just be able to manage it.
That the market reacted so positively to the AD rumours is indicative of analysts' growing concerns about the company's ability to go it alone - anxieties which were not eased by the company's announcement earlier this year that profits would be severely impacted by a pension shortfall and a poor performance in one key market, Spain.
It is that last fact which is perhaps the most telling. Where Diageo's global brands are truly that - global - Allied Domecq's top products are rather more reliant on a handful of major markets. Beefeater gin, for example, was badly hit by the Spanish market downturn, while the brand's other major market, the US, is also going through recession - although the launch of a new pear-infused Beefeater variant, called Wet, is aimed at maintaining interest there.
Pernod Ricard's portfolio is rather more international, although some of its top 15 or so brands are decidedly parochial, not least the two pastis brands which give the company its name.
Certainly, Chivas and Martell have great potential in Asia - though both have suffered because of a downturn there - and Jacob's Creek is already one of the biggest international wine brands, but who outside of Italy or Germany has heard of Ramazzotti, or indeed who other than the Spanish know of Larios gin?
Diageo, of course, has its own local brands too, but the key to its success is that drinks such as Smirnoff, Baileys, Guinness or Johnnie Walker are known - and more importantly consumed - the world over, enabling it to better cope with the increasingly turbulent economic climate.
Winds of change
So after several frenetic years of major change in the drinks industry, could we be about to see yet another major group change hands, along the lines of the Seagram group which was shared by Diageo and Pernod?
With the world's leading rum brand to its name, as well as handful of other relatively large, but not global, brands, Bacardi would undoubtedly benefit from the addition of a number of other major products, and its recent moves towards opening its capital to non-family members would suggest that it is preparing some kind of acquisition programme.
But Bacardi is just as likely to be a target as a bidder - though hostile bids would be hard, given the family control - and the company would certainly be of interest to Allied or Pernod, if a deal could be struck.
But instead it may opt instead for a Maxxium-style distribution agreement, with Brown-Forman a likely partner after the two companies signed a recent deal in Europe. Maxxium, a joint venture between US-based Jim Beam Brands, Edrington (which owns The Famous Grouse Scotch whisky), Rémy Cointreau and V&S (the Swedish owner of Absolut), has been a great success, allowing all four partners to build on the strengths of the others to boost brand sales while at the same time retaining control of the products themselves.
Such a deal would be good for both Bacardi and B-F, and there is an increasingly large number of second-tier companies who might be willing to join them - such as, say, Campari, William Grants or Kyndal.
Partnership rather than acquisition?
So what about a possible takeover of Bacardi or B-F by Allied or Pernod? Well, both are possibilities - Allied in particular could do with a strong rum brand after losing out to Diageo over Captain Morgan - but neither would be easy, given the shareholder control of both companies.
Another option is of course a link up between the number two and three players themselves, and such a move would in turn open up the market for the other players, as numerous brands would have to be sold to win regulatory approval.
One thing is certain - the age of consolidation and change in the global spirits market is far from over, and Diageo's position as the world's number one is unlikely to be challenged for some time yet.