Falling demand for carbonated drinks in pubs and bars has hit profits at IMI, the British engineering company that is the world's leading supplier of beverage dispensing equipment.

IMI announced sales for its drinks division of £340m, down 3.7% on 1999, with operating profit at £33m down 4.6% on

1999.

Martin Lamb, IMI's chief executive, said: "Our major soft drinks customers have needed to re-evaluate their long-term product strategies. There is mounting evidence of fundamental shifts in consumer taste, leading to a slowdown in carbonated beverages, for so many years the mainstay of volume growth."

Lamb said that health drinks, mineral waters, fruit-based products and iced tea/coffee products "are fast becoming the standard bearers for growth, with local brands geared to local cultural needs increasingly being an important factor. We are well positioned for this shift in emphasis."

The IMI Cornelius beverage dispensing equipment division has manufacturing and sales offices in more than 30 countries, and employs 3,000 people worldwide.