Marketing

2019 to be ‘benchmark’ for drinks industry

Drinks Ireland has released its industry outlook for 2021 in response to the recent publication of Bord Bia's Export Performance and Prospects report 2020/2021 report.
Diversification - Just 15% of Ireland's alcohol exports are destined for the UK market.

Diversification – Just 15% of Ireland’s alcohol exports are destined for the UK market.

According to Drinks Ireland, drinks producers will be focused on driving recovery this year.

Drinks Ireland’s outlook for the sector emphasised that 2019 will be the ‘benchmark’ for the drinks industry which, prior to Covid-19, was experiencing strong growth and which it will be seeking to regain.

Alcohol exports witnessed €140 million-worth of growth in value in the four years since 2016 and 58% of that growth was to the EU27, 41% to North America.

Despite exports being hit last year, they remained strong and Drinks Ireland said that supporting brands to recover and regain market position and share should be a key priority for Government this year. Funding ‘boots on the ground’ through brand ambassador placements in markets around the world has long been the key to Irish food and drinks export success and will now be more vital than ever, it stated.

 

Domestic consumption

The closure of the hospitality sector resulted in a decline in alcohol consumption last year with Revenue clearance data showing that it fell by 4.5% between January and September 2020 compared to the same period in 2019.

While the sector aims to recover from the impact of Covid-19 this year, it anticipates that the long-term trend of consumption declining and consumers choosing “quality over quantity” will continue. Central Statistics Office SO and Revenue data indicate that since 2001 average per adult consumption of alcohol has fallen by 23.2% in Ireland.

Irish drinks visitor attractions in this state are highly dependent on international visitors who form nine in every 10 visitors. Drinks-based visitor attractions, similar to the rest of the domestic tourism sector, will therefore be dependent in the short-term on the maximisation of domestic tourism. It will innovate to attract new types of visitors and will move to add value by offering smaller group, more bespoke, higher-end experiences. As international travel opens up to a greater extent this year, the industry will look to increase footfall from visitors from abroad, states Drinks Ireland.

 

Role of innovation

As the sector works to regain growth at home and in export markets, it will continue to focus on meeting the needs of the changing drinks consumer through innovation.

Some of these are outlined below:

  • In the beer sector, Low and Non-Alcoholic options are becoming more popular and Non-Alcoholic beer now accounts for 1% of Ireland’s beer market
  • There is growing demand for high-quality spirits products like Irish gin and Irish whiskey, with domestic sales of spirits growing by 0.7%, from 2.4 million to 2.42 million nine-litre cases, between 2018 and 2019
  • Hard seltzers will grow significantly from being a new market entrant last year, with many new brands set to land on the shelves in 202
  • The Irish cider industry has innovated significantly in recent years, which has reinvigorated the market and resulted in more choice than ever for Irish cider consumers
  • In terms of wine, sales of rosé grew in 2019 and the Summer favourite now accounts for just under 6% of all wine consumed here, up from 3% in 2019.

Sustainability

Irish drinks producers will continue to push forward the sustainability agenda this year as many companies have ambitious targets for 2021 and beyond. For example, in recent years Irish brewers have started to repurpose grain for beer into livestock feed, have achieved zero waste to landfill at production sites and offices and are using more recyclable material for packaging.

Many of Ireland’s whiskey distilleries in provincial towns have moved into vacant industrial premises, replacing the enterprises that had previously operated there. This trend looks set to continue, with more developments planned. Similarly, in less rural settings the development of distilleries in Dublin has played a pivotal role in kick-starting the urban regeneration of areas in the city.

 

e-Commerce set to grow as a route to market

2020 saw substantial growth in drinks sales online both in Ireland and globally. The rise of e-commerce offers opportunities for Irish producers to break into new markets and reach new consumer segments. This will only grow in 2021. Last year saw widespread innovation in online marketing and consumer engagement, with increasing numbers of online tasting events, a trend that’s here to stay.

 

Other 2021 challenges

Beyond Covid-19, producers face a number of challenges. While the industry welcomed a Brexit deal being reached, there are increased costs and compliance burdens associated with it. Bord Bia’s report notes, however, that alcohol has been one of the most successfully diversified categories and has one of the lowest dependency rates on the UK market of any major food and drink category with just 15% of its exports destined for that market.

In the meantime, the spirits sector has also been impacted by the ongoing trade disputes between the US and the European Union.

 

 

Sign up for Drinks Industry Ireland

Get a free weekly update on Drinks Industry trade news, direct to your inbox. Sign up now, it's Free