THE Auld Alliance is alive and well with the co-operation between

Remy- Cointreau and Highland Distilleries showing all the signs of

developing into a fruitful trans-national trading agreement.

Remy joint managing director Marc Heriard Dubreuil said yesterday that

he expected Highland's Famous Grouse whisky to increase exports by more

than the 28% achieved last year which brought in #26m of sales.

The French cognac, champagne, liqueurs and wines group is handling an

ever increasing proportion of Highland's international business. As well

as the trading agreement Highland has an effective 30% stake in Remy

while the Herird-Dubreuil family has a 9% stake of the French company.

Last year was tough.Overall sales fell 9.9% to Ffr5832m and net

profits after tax from Ffr271m to Ffr202m (#23.5m).

The downturn was caused by worse than expected cognac sales to Japan

and champagne profits flattened by high grape prices. Heavy advertising

costs to resuscitate the market after retail prices had risen too high

were also a factor. Cointreau was affected by the devaluation of the

Italian and Spanish currencies.

Additionally, high French interest costs for the heavily borrowed

company were compounded by a general Ffr55m provision against any

uncertainties in the current year, although there is nothing specific in

mind -- French accounting is somewhat different to that in the UK!

Mr Dubreuil is ''very, very confident'' about current year prospects

based upon the surging sales of cognac to the Chinese whether they be in

mainland China, Taiwan, Hong Kong or Singapore. They took about 40% of

Remy's cognac sales last year and all high margin VSOP or better and

significantly outperforming the industry.

Likewise in champagne where again it is the quality leader with Krug.

Remy is not too concerned about the threat posed by the Australasian

fizzes, arguing that those who want a high quality drink will continue

to buy good champagne.

The dividend for last year will be held at Ffr4.4 (51p).