According to Performance of the On-Trade Sector 2010 by DCU economist Tony Foley, in the first quarter of 2011 bar sales declined by 7.4 per cent compared with the first quarter of 2010.
The DIGI has stated that pubs, bars, restaurants, hotels and nightclubs cannot sustain losses on this scale and that hundreds and thousands of jobs, businesses, and livelihoods are in jeopardy in all parts of the employment-intensive on-trade throughout Ireland.
DIGI Secretary and Chief Executive of the Licensed Vintners Association, Donall O’Keeffe, commented, “While we fully recognise the difficulties in the overall economy and that many sectors have endured major losses, the on-trade has suffered an overall decline of 25 per cent in the past three years. As a result, total employment in the sector now stands at 50,000 people, having fallen by 7,000 in the last 12 months. With prospects for the on-licensed drinks market for the remainder of the year extremely weak, the trend of closures and redundancies will continue unless action is taken.”
However DIGI has welcomed the recent Jobs Initiative announced by the Government and specifically the very significant reduction in the lower rate of VAT benefiting the wider hospitality and tourism sectors.
“DIGI welcomes the new Government’s focus on employment preservation and generation,” commented DIGI Chairman Kieran Tobin, “While the drinks industry supports approximately 78,000 jobs and generates €2 billion in tax and over €1 billion in export revenue for the State, pubs, bars, restaurants, hotels and nightclubs throughout the country are experiencing major losses and many businesses and livelihoods are at risk.
“Therefore, pro-consumer stimulus measures such as the December 2009 excise cut (supported by the decision to maintain that rate) and the announcement of the significant reduction in the lower rate of VAT for tourism-related service industries from 1st July will help our sector.
“DIGI has also identified a series of other straightforward measures to support the wider industry that will boost morale and help to build confidence among consumers, the hospitality trade and the tourism sector and we will continue to discuss these with the Government in the coming months.”
Before the recent Jobs Initiative announcement, Donall O’Keeffe had advocated that Government:
- Maintain excise rates at their current levels
- Begin the process of reducing VAT on all beverages sold in the on-trade to the new lower rate of 12 per cent
- Reduce commercial rates and other local authority charges by 20 per cent and a new system of determining rateable valuations
- Abolish the charging of VAT on excise
- Ban below-cost selling of alcohol
- Abolish the Joint Labour Committee system for setting wages
- Reduce the cost of Special Exemption Orders to €200 per SEO.
“The Government’s role in boosting confidence and facilitating consumer spending is absolutely critical,” he’d said.
“Tourism in particular has been identified as key to economic recovery. The drinks industry plays a major role in our tourism infrastructure through visitor centres, pubs, bars and restaurants in providing places for visitors to eat, drink and enjoy a uniquely Irish experience. These measures would also help promote the image of Ireland as an affordable destination for tourists.”
While broadly welcoming the announcement from Minister Michael Noonan, the FVI’s AGM in Cavan also called for the reduction in VAT to be extended to alcohol sales where the alcohol is served just like food, as opposed to the retail sale of alcohol in the off-trade.
“The main thrust of the jobs initiative centres on tourism,” stated VFI Chief Executive Padraig Cribben, “The Irish pub has been lauded by publications like Lonely Planet and by independent organisations like Fáilte Ireland as being a key element of the Irish tourism industry and to be excluded in such a public way from this initiative seems quite short-sighted if we are looking to provide value to visitors.
“Our sector has been on its knees and this was borne out over the last few days by independent research conducted ahead of our AGM.
“The harsh reality of those figures is 7,000 new additions to the live register as confirmed by the recent DIGI findings.
“We will be looking for a meeting with the Minister over the coming weeks.
“There’s little point encouraging people to come here and then not helping pubs reduce drink prices the same way the Government has done for restaurants and hotels.”