2012 chiefs to halt £60m sponsor deal with drinks giant

Olympics chiefs look set to back away from a potential £60 million-plus sponsorship deal with alcoholic drinks giant Diageo amid concerns that it would provoke a backlash from health campaigners.

The firm - whose brands include Guinness, Johnnie Walker whisky, Smirnoff Ice and fruit schnapps Archers - have been in talks with 2012 organisers to become a commercial partner.

However, it is thought Games chiefs have been nervous about a high-profile association - however lucrative - particularly with some of Britain's leading alcopop brands aimed at young drinkers. They fear this would be at odds with Government claims that the London Olympics would deliver lasting benefits to the nation's youth.

The 2012 organising committee Locog is likely to opt to for a much lower-profile deal worth at least £20 million instead. Separate official 2012 beer and wine brands are likely to be signed up next year in the lower-tier categories which offer much more modest marketing rights than "tier-one" companies already signed up such as adidas, BA, BT, EDF Energy and Lloyds TSB. Such blue chip firms are entitled to use the London 2012 logo and Olympic rings in media campaigns and have first refusal on hospitality opportunities in the Olympic Park.

An industry source said: "Olympics people know they have to tread carefully in the alcohol sponsorship sector because of current climate."

Locog confirmed it has been in talks with Diageo but says it has not committed to a tier-one alcohol category. It is likely to build into any alcohol sponsorship deal a commitment from the firm to run a responsible drinking campaign.

Campaign groups and MPs have demanded that the ban on tobacco advertising in sport introduced in the 1990s be applied to alcohol. Their opposition to such deals has been stoked by a rise in alcohol-related health problems and social disorder.

Diageo said in a statement: "As the world's leading premium drinks business, sponsorship plays a significant role in our marketing activities. We look at opportunities all the time, many of which we don't pursue, so as a rule do not comment on speculation. We announce those deals we do sign at a time which is most advantageous for our brand."

A spokeswoman for Locog said: "We have never launched a tier one drinks category, and have never said we will. We are reviewing our strategy around any alcohol partners but have made no decisions."