The weak economy here and the increase in cross-border sales combined to make 2008 the worst-performing year of the last 25 for the Irish drinks industry.
So stated the Chairman of the Drinks Industry Group of Ireland (DIGI) Kieran Tobin speaking in Dublin recently at the publication of DIGI’s Drinks Market Performance 2008 report compiled by DCU Economist Anthony Foley.
At the launch Anthony Foley explained that average consumption is now back to 1997/98 levels.
"All four alcohol drinks categories suffered volume declines: cider was down 11 per cent, spirits 7.7 per cent, beer 5 per cent and wine 4.1 per cent. As a result, the value of the alcohol market overall fell by 2.5 per cent to €6.9 billion in 2008," he said.
Kieran Tobin added that if current trends continue 2009 will be even worse with 10 per cent of off-licence sales migrating to Northern Ireland with the loss to the State of over €100 million in tax revenues and a threat to 10 per cent of the people employed across all sectors of the drinks industry in this country.
"The clear conclusion from this report is that all sectors of our industry – manufacturers, distributors and retailers both in the on- and off-trade – are under immense pressure and we call on the Government not to add to this burden by considering any increases in alcohol taxes.
"With little sign of an upturn in the national economic situation, the prospects for the next 12 months are even worse."
The present cross-border situation encourages Southern shoppers to purchase their alcohol in Northern Ireland where the €uro/Sterling exchange rate and the excise and VAT differentials lead to significant savings (for example a saving of €10 on a bottle of whiskey).
"Ultimately, the State will lose further revenue to the benefit of the British Exchequer," he said, "Jobs will be lost, particularly in the employment-intensive on-trade sector that provides jobs in all parts of the country and where we have already seen closures of 1,500 pubs in the last six years. Jobs in the off-trade in the border region especially will be under severe pressure."
Kieran Tobin concluded, "On the basis of these figures up to 9,000 jobs will be lost in all sectors of the drinks industry in 2009. This will come on top of those losses that have already been sustained in the past year meaning that the numbers employed in the sector will have fallen from 100,000 to approximately 80,000 in just over two years.
"The Government must take heed of the implications of this report and not increase the burden on a key industry that provides significant employment revenue to the State and much-needed exports for the country."
Tony Foley pointed out that the pub trade accounts for 90 per cent of jobs in the sector and would be responsible for the bulk of job losses.