CANTRELL & Cochrane group, owned jointly by Allied Domecq and Guinness, is finding an acquisition "elusive", but chief executive Mr Tony O'Brien expects a £50 million purchase in the current year.

Speaking after C&C announced a 10 per cent increase in profits to £43.1 million, Mr O'Brien said that C&C had got into talks on a number of acquisitions in Europe but that "price expectations were unreal or sellers were willing to wait for brighter times ahead".

With £39 million in cash and cash flow of £32 million, Mr O'Brien said that C&C could contemplate a £100 million acquisition, but added that C&C was more likely "to spend in the order of £50 million. The search for acquisitions has now turned to eastern Europe and according to Mr O Brien: "There are lots of privatisations and good deals can be done and there is usually a willing seller."

Given the Allied Domecq and Guinness presence in the spirits business, any acquisition by C&C is likely to be in the liqueurs and aperitifs business, where C&C has already made two big acquisitions in Italy.

In the current year, Mr O'Brien said he expected growth in Ireland and Britain, with C&C benefiting from expected benign election year budgets in both countries which would boost consumer expenditure. ,European markets were suffering, from the remedial actions being taken to ensure that countries qualify for EMU.

While the year to August 1996 was one of solid growth for C&C, Mr O'Brien said that the group had to cope with a number of negative factors, notably the dollar and lira exchange rates which hit profits by around £2 million.

In addition, C&C's branded non drinks suffered from aggressive pricing by supermarket own label products. "The consumer is usually willing to pay a premium over lesser brands but will trade down if that premium gets too rich."

C&C also suffered from the poor summer compared to the heatwave which boosted 1995 profits while the group also suffered from the Drumcree stand off in July August when trade in Northern Ireland suffered. "Drumcree cost us dearly," said Mr O'Brien.

C&C's turnover was up 14 per cent to £342 million, with alcoholic drinks accounting for 68 per cent of sales and non alcoholic 32 per cent. Geographically, just over half of total sales were in the Republic, about a quarter in Britain and Northern Ireland with the balance, split between Italy, the US and the rest of the world.

The Bulmers cider brand recorded 20 per cent growth in the year, mainly through the pub trade while Ritz and Stag also responded well to "a big advertising campaign. C&C has, however, lost its franchise for Miller beer. "We spent a lot of effort building up Miller from zero to a huge success," said Mr O'Brien, who added that the franchise had now passed to the Scottish & Newcastle subsidiary, Beamish & Crawford.

C&C's Woody's alcopop drink was "an outstanding success but the soft drinks market suffered from price competition from own brands. However, Club Orange, Cidona and Pepsi Cola all strengthened their market positions. Ballygowan consolidated its position in the mineral water market.

Tullamore Dew - acquired from Irish Distillers two years ago - was very successful and benefited from the boom in Irish pubs around the world while Irish Mist and Carolans also did well, said Mr O'Brien.

Overall, C&C spent £35 million on marketing its brands while £18 million was spent on plant modernisation and rationalisation. This still left C&C with cash on deposit of £39 million.