SecProbe.io

CORRESP
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24 May 2005

Mr. Michael Moran

Ms. Nili Shah

Securities and Exchange Commission

Division of Corporation Finance

450 Fifth Street, N.W.

Washington, D.C.
20549

United States of America

Re:                             Allied
Domecq PLC – Response to SEC Comments on Form 20-F for the Year Ended 31 August 2004
(the “2004 20-F”)

Ladies
and Gentlemen:

On
behalf of Allied Domecq PLC (the “Registrant”), we hereby set forth the
following information in response to the comments contained in the Staff’s
letter dated 29 March 2005 (the “Staff Comments”).  Unless otherwise expressly stated, all pages references
herein refer to pages of the 2004 20-F.

REGISTRANT’S RESPONSE TO THE
STAFF COMMENTS

General

1.             Where
a comment below requests additional disclosures or other revisions to be made,
please include these disclosures and revisions in your future filings.  Where a comment relates to your accounting
under US GAAP, your revisions should also include additional disclosures in
your US GAAP reconciliation footnote, to the extent that your accounting under
UK GAAP differs from your accounting under US GAAP.

The
Registrant will make additional disclosures to address the Staff Comments in
future filings of its annual report on Form 20-F (“future
filings” or “Form 20-F”).  Therefore, the Registrant’s responses below
indicate when and in what sections of the Form 20-F such disclosures will
be made or amended, including any additional disclosures to be made in the US
GAAP reconciliation footnote.

Item 3.  Key Information, page 1

2.             We
note that you present trading profit before exceptional items, but not trading
profit.  Please do so for all five years
presented.  See Item 3.A. of Form 20-F.

In
future filings, the Registrant will present its trading profits for all five
years in “Item 3–Key Information” in the Form

20-F.

Item 5. Operating and Financial Review and Prospects, page 34

Overview, page 35

3.             Please
disclose the implications of general economic, demographic, geographic, and
industry conditions, such as recent health-food trends, on your results of
operations, liquidity and capital resources.
Disclose any known trends or uncertainties in the economy, industry,
demographics, and geography that are reasonably likely to have a material
effect on your financial

condition or results of operations.  Please refer to SEC Release No. 33-8350.

The
Registrant respectfully notes that it identified a number of these trends and
uncertainties within the 2004 20-F.  For
example, the Registrant believes that the following disclosures in the 2004 20-F
did address a number of these trends and uncertainties:

•                  Page 35
– the Registrant identified in the “Overview” the geographical implications on
results in North America and Spain.

•                  Page 38
– the Registrant identified the demographic dynamics impacting pensions and the
economic impact of foreign exchange fluctuations.

•                  Page 46
– the Registrant identified the economic conditions in Western Europe and
industry conditions within Mexico.

•                  Page 47
– the Registrant identified consumer trends in Korea.

In future
filings, the Registrant will disclose such information within “Item 5–Operating
and Financial Review and Prospects–Overview”.
In addition, the Registrant will expand its discussion of such items as
recommended in SEC Release No. 33-8350 to more fully discuss the
implications of general economic, demographic, geographic, and industry
conditions on its results of operations, liquidity, and capital reserves.  The Registrant will also discuss within the
Overview any known trends or uncertainties in the economy, industry,
demographics, and geography that are reasonably likely to have a material
effect on its financial condition or results of operation.

4.             Please
consider presenting material opportunities, challenges and risks on which you
are most focused for both the short and long term.  Further, please consider disclosing your
strategy and the actions you are taking to address these opportunities,
challenges and risks.  For example, you
may want to provide insight in your overview with respect to your focus on core
brands, your focus on the US and Asian markets, as disclosed on page 45,
and your focus on improving mix, as disclosed on page 53.  See SEC Release No. 33-8350.

As
requested, in future filings, the Registrant will present within “Item 5–Operating
and Financial Review and Prospects–Overview” the material opportunities,
challenges and risks on which it is most focused for both the short and long
term, including disclosing its strategies and actions taken to address these
opportunities, challenges and risks.
Although some of this information was previously disclosed in the
Registrant’s performance analysis, the Registrant will summarize the
information within “Item 5–Operating and Financial Review and
Prospects–Overview” and expand the disclosures, giving consideration to the
guidance in SEC Release No. 33-8350.

Results of Operations, page 39

5.             Throughout
your discussion, please more clearly explain why, on a constant currency basis,
trading profit increased by a greater percentage than revenues.  For example, on page 40, on a
consolidated basis, we note that net turnover on a constant basis increased 4%,
but that of page 41, adjusted trading profit on a constant currency basis
increased 11%.  Similarly, on page 44
and 49, we note that the percentage growth or decline in net turnover was
outpaced by the percentage growth or decline in your trading

profit measures.
In this regard, we would expect further discussion of the effect of
price, product mix, and changes in other operating costs on your results of
operations.

In
future filings, the Registrant will more clearly explain why, on a constant
currency basis in 2004, trading profit increased by a greater percentage than
turnover.  The Registrant will also
expand its disclosures with respect to the effect of price, product mix and
changes in other operating costs on the results of its operations in future
filings.  With respect to the example
raised by the Staff, the Registrant has provided below an explanation of why
trading profit increased by a greater percentage than turnover, on a constant
currency basis.

In the
Registrant’s Spirits & Wine business, which represents 91% of net
turnover, the constant currency increase in net turnover was 5%, against an
increase in adjusted trading profit of 9%.
Adjusted trading profit grew at a greater percentage than turnover
primarily due to a reduction of overheads and an increase in associate
income.  The reduction of overheads was
largely the result of a restructuring program that was aimed at reducing the
overlap between central, regional and market-focused functions.  Of the 5% increase in net turnover, 2% came
from volume, 2% came from product mix and a further 1% came from price.

In the
Registrant’s Quick Service Restaurants (“QSR”)
business, which represents 9% of net turnover, there was a decrease of 3% in
net turnover on a constant currency basis, against an increase of 21% in
adjusted trading profit on a constant currency basis.  Of the 21% increase in QSR’s adjusted trading
profit, 11% came from strong growth in same store sales and 4% came from new
stores opened as a result of associated costs increasing at a lower rate than
the turnover generated by new and existing stores.  The remaining 6% resulted from a reduction in
overheads associated with the reorganization of QSR at the end of 2003.

6.             It
is unclear how you calculate your gross profit and overheads lines on page 42.  Neither amount is reflected on your profit
and loss account.  Accordingly, please
disclose the following:

•     The information required by Item 10(e)(i) of
Regulation S-K with respect to your overheads.

•                  A
reconciliation of gross profit to the most directly comparable GAAP measure on
your profit and loss account or your reformatted condensed UK GAAP income
statement on page F-70.

•                  That
your gross margins may not be comparable to others since the classification of
distribution network-related costs and selling costs vary among entities.

•                  On
page F-70, the specific types of expenses that you include in the cost of
sales line item and the types of expenses that you include in the selling,
general and administrative expenses line item.

In
future filings, the Registrant will provide the information required by Item
10(e)(i) of Regulation S-K with respect to gross profits and overheads in
the Registrant’s discussion of non-GAAP financial measures within “Item 5-Operating
and Financial Review and Prospects”.  The
Registrant will reconcile gross profit to the most directly comparable UK GAAP
measure on the consolidated profit loss account statement, which is operating
profit from continuing activities.  The
Registrant will reconcile overheads to

operating costs – other.  The
Registrant’s description of gross profit as a non-GAAP measure will include a
statement that gross margins may not be comparable to others since the
classification of distribution network-related costs and selling costs varies
among entities.

The
Registrant will also expand the disclosure to the reformatted condensed UK GAAP
Income Statement in note 31 to its consolidated financial statements (Differences
between UK and US Generally Accepted Accounting Principles) to define what
specific types of expenses the Registrant includes in the cost of sales and
selling, general and administrative expenses line items.  In total, these amounts reconcile to total
operating costs under UK GAAP in note 5 to its consolidated financial
statements (Operating Costs to the Consolidated Financial Statements).  The expanded disclosure will state that cost
of sales includes expenses such as customs and excise duties, together with raw
materials and consumables.  Other
components of cost of sales include elements of staff costs (in relation to
direct labor and some indirect manufacturing labor) and depreciation elements
(in relation to fixed assets directly attributable to production).  Selling, general and administrative expenses
include other operating charges such as marketing costs, elements of staff
costs (non-production related), elements of depreciation (non-production related)
and payments to auditors.

7.             Please
disclose how you define the stores you include in your same store sales and
same store sales growth measures.

The
Registrant defines same store sales as sales from stores that have been open
and operating for at least two fiscal years and therefore the year-on-year
comparison is not distorted by openings and closings.  The Registrant will add this disclosure in
future filings to “Item 5-Operating and Financial Review and Prospects” in the “Segment
Comparative Performance” section for QSR.

8.             We
find your disclosures on taxation on page 51 confusing.  Please discuss the reasons for changes in the
amount of your taxation line as presented on your profit and loss account, as
well as your historical effective tax rate.
If you choose to include measures such as taxation excluding tax on
exceptional items but including tax on goodwill, please include the disclosures
required by Item 10(e)(i) of Regulation S-K.

The
Registrant respectfully notes to the Staff that the reasons for changes in the
amount of its taxation line, as presented in its profit and loss account and
its historical effective tax rate, are disclosed in note 8 to its consolidated financial
statements.  Excluding the tax effects of
both goodwill amortization and exceptional items, the Registrant’s effective
tax rate was 24% in each of 2004 and 2003.
The Registrant will clarify its explanation in future filings and,
should it continue to include measures such as “taxation excluding exceptional
items”, the Registrant will include the disclosures required by Item 10(e)(i) of
Regulation S-K.

Critical Accounting Policies, page 66

9.             Please
tell us why you do not believe the following are critical accounting policies:

•                  Accounting
for maturing inventory – the significance of your inventory on your balance
sheet and your disclosures on page 16 regarding the forecasting of future
consumption suggest that you are required to make assumptions about the net
realizable value of your inventory that are highly uncertain and that different
estimates that are reasonably

likely to occur
would have a material impact on your results of operation and financial
condition.

•                  Depreciation
of tangible assets – similarly, given the materiality of your tangible assets
and the judgment involved in estimating useful lives, we would expect this area
to be a critical accounting policy.

The
Registrant believes that its determination of the risk factors of its business,
as disclosed in Item 3 of the 2004 20-F, take into account future potential
risks.  The Registrant’s evaluation of
what constitutes its critical accounting policies, as disclosed in Item 5 of
the 2004 20-F, take into account the historical or current risk.  For example, the uncertainty of how its
business will be operating in the future creates a speculative risk that the
inventory levels currently held may either become obsolete or insufficient in
our future business, but there are no historical indicators that currently
there is a higher level of risk associated with the value of its inventory.

As a
result, the Registrant included a risk factor in the 2004 20-F with respect to
the potential future impact of an inventory loss, but it does not believe that
accounting for inventory is a critical accounting policy because accounting for
existing inventory does not involve either a high degree of judgment or
complexity.  The Registrant values its
inventory at the lesser of (a) cost and (b) net realizable
value.  Cost comprises purchase price or
direct production cost, together with duties and manufacturing overheads.  The cost of spirits and wine stocks is
determined by the weighted average cost method.
Given that profit margins in the spirits and wine industry tend to be
quite high there is only a small probability that net realizable value would
drop below cost.  Also, while there is a
risk (that the Registrant presents on page 16) that there is a judgmental
factor in forecasting future demand, this risk is slight because surplus
maturing inventory does not spoil or become obsolete.  As a result of this normal operating dynamic
within the industry, the Registrant has never incurred significant impairment
to its inventory.

While
the Registrant understands that there is a degree of judgment in estimating
useful lives, it does not believe that the depreciation of tangible fixed
assets is a critical accounting policy. Depreciation is provided to write off
the cost less the estimated residual values of assets by equal installments
over their estimated useful economic lives.
The Registrant has assessed the estimated useful economic life of
certain categories of assets on a consistent basis such that it is satisfied
that it has an objective basis by which to calculate the depreciation of
tangible assets, as follows:

•                  Land
(29% of the carrying value of tangible assets) – No depreciation, land is
deemed to have an indefinite life.

•                  Buildings
(32% of the carrying value of tangible assets) – Depreciated over the shorter
of 50 years or the length of the lease.
The majority of the Registrant’s buildings are freehold and from its
experience 50 years is a reasonable estimate and has not resulted in any
significant loss on disposal.

•                  Plant
and equipment (39% of the carrying value of tangible assets) – The majority are
depreciated over 4 to 20 years, with the except