The Bord Bia Export Performance and Prospects report 2020/2021 details key performance highlights of Ireland’s food and drink exports in 2020 as well as an analysis of prospects for the year ahead.
It points out that last year’s decline in alcohol exports was proportionately larger than that seen at the height of the global financial crisis in 2008.
However, despite the decline, the value of alcohol exports remains 12% higher than it was in a pre-Brexit 2016, underscoring the scale of the growth trajectory in this category in recent years.
The majority of alcohol’s export decline can be accounted for by declines in the value of whiskey exports (down 26% or €205m to €620m), cream liqueurs (down 14% or €53m to €311m) and beer (down 17% by €51m to €254m).
Alcohol exports to the US were worth €552 million last year. That’s growth of €144 million on the 2016 figure.
Irish alcohol exports to the UK declined 12% to €198 million but while the UK remains important to exporters, simultaneous heavy investment in market diversification has limited their dependence on the UK market. Only 15% of our alcohol exports are now destined for the UK.
But Bord Bia has warned that the extra costs and complexities in trading with a post-Brexit UK will cause challenges that shouldn’t be underestimated.
Overall alcohol exports to the EU27 totalled €330 million, down 16% on the 2019 figure.
“The worst hit were Germany, Latvia and the Czech Republic, where collectively more than €34.5m in exports were lost. A large proportion of the Latvian exports are onward shipped to Russia. More than €25.7m of these losses were in the Irish whiskey category, while the rest were due to a fall in exports of Irish cream liqueurs.”
On the other hand growth in exports was witnessed in the Netherlands and Sweden, which recorded increases of 5% and 7% respectively.
Bord Bia stresses that the Netherlands is used by many exporters as a hub and so the final destination for these values is difficult to determine.
“The growth in Sweden is reflective of the continuous growth in Irish whiskey to that market and is the result of the fact that Sweden did not implement a closure of the on-trade until November 11th.”
Alcohol exports to Asia were worth €28 million while India almost doubled its sales of Irish spirits last year albeit from a low base.
Whiskey & Spirits
57% of 2020’s whiskey exports were US-bound.
“Irish whiskey exports declined by around a quarter” states Bord Bia, “but this does not reflect sales on the ground which held up well, especially in the second half of the year.”
Global Travel Retail accounts for around 10% of Irish spirits sales. Not surprisingly, sales here dropped by around 90% in the nine months to December and recovery is likely to be slow.
Some €141 million-worth or 45% of cream liqueur exports were destined for the US. Uncertainty in relation to both US tariffs and a looming Brexit meant that both Irish whiskeys and cream liqueurs were subject to a degree of pre-stocking in 2019 so were already in many markets coming into 2020 reports Bord Bia.
The decline in beer exports reflected the closure of the on-trade in most key markets, states the report, with beer exports to the US down 42% reflecting the importance of the on-trade there (60% of total beer sales).
“In Europe exports were not as impacted by the on-trade closures and restrictions, declining by 20%,” states Bord Bia, “Exports to the UK overall were down by 7% and by 14% to Northern Ireland.
“In the craft beer sector, we have seen a decline this year after a strong start, but anticipate growth to resume slowly in 2021 and to continue over the medium to long term, driven by increased off-trade presence combined with the reopening of the on-trade.”
Recovery in alcohol exports will be slow and it will be 2022 before 2019 levels are seen, believes Bord Bia and Irish Food Board Chief Executive Tara McCarthy.
A reduced hospitality sector will continue to affect exports and the restoration of this market along with regaining consumer confidence will be key to this.
A reduced dependence on the on-trade is likely to be a lasting element and the trend of ‘premiumisation’ and ‘less-but-better’ is likely to persist into 2021 so provenance and back story remain important, she concluded.
Despite the downturn in global trade last year the overall value of exports of Irish food, drink and horticulture were valued at €13 billion, thus held to a marginal 2% decline (as against €13.2 billion in 2019) during this period of unprecedented change and challenge that saw the largest disruption to normal market operation globally since the end of World War II.
“The figures underline the dividend of a decade-long diversification strategy that has seen Ireland achieve a broad global base for its food and drink exports which now reach in excess of 180 countries,” states the report.