Call to hold on excise increase as on-trade declines another 8%

On-trade sales continued to decline in the first seven months of 2012 with a further 8.2 per cent decline in volume sales and a 7.3 per cent decline in sales value according to mid-year market figures from the Drinks Industry Group of Ireland.

As a result of these declines average sales volumes for the first seven months of 2012 in the employment-intensive on-trade – which supports over 54,000 jobs in pubs, bars, hotels, nightclubs, and restaurants throughout the country – were 34.2 per cent below pre-recession levels of 2007.

The weakness in the domestic economy and the continued pressure on discretionary income are clearly having a negative effect on the drinks sector with the pub trade suffering disproportionally, claimed DIGI.

In light of the EU/IMF/ECB memo proposing excise increases in the upcoming Budget, DIGI said that the drinks sector simply could not sustain any increase and called on the Government to take this into account when framing budgetary policy over the coming weeks and months.

The latest data, compiled by Anthony Foley of Dublin City University Business School on behalf of DIGI, from Revenue Commissioners and CSO figures show that the total consumption decline of 3.2 per cent from January-July 2012 was attributable to decreases across all drinks categories including beer, wine, spirits and cider.

Retail sales data for the same period show a very large decline in pub sales compared with 2011 (January-July).

July bar sales volumes were 11.4 per cent below those of July 2011, states DIGI which adds, “These figures contradict overall retail trends with latest month-on-month figures showing that bar sales fell 1.7 per cent relative to June despite an increase in overall retail sales (excluding the motor trade) of 1.1 per cent”.

DIGI Secretary & LVA Chief Executive Donall O’Keeffe, commented, “The pub sector is in crisis. The losses that are being experienced year-on-year, month-on-month, simply cannot be sustained. In the short-to-medium term there is absolutely no sign of market conditions improving for the on-trade. Rather the likelihood is that current trends will continue forcing many publicans out of business and thousands of subsequent job losses”.

DIGI Chairman Kieran Tobin, added, “While our drinks products continue to perform very well internationally, the domestic market on which our export success is founded is in very significant decline.

“The Government is currently trying to boost the hospitality sector through initiatives such as The Gathering and last year’s reduction in the lower rate of VAT for food and tourism related services. DIGI welcomes these measures and is committed to working with Government to identify further effective measures that will support the jobs and livelihoods in our sector and boost the wider economy.

“The Government should also recognise that despite the troika’s proposal for an excise increase, this would further weaken the on-trade and independent off-trade in particular while also running contrary to efforts to boost tourism, consumer spending, and supporting jobs.”

VFI President Gerry Rafter believes that these figures show that the pub industry “is in a serious predicament at the moment”.
He told Drinks Industry Ireland, “We don’t want the Government in the forthcoming Budget to do anything to make it any worse. We’re 34 per cent down from the 2007 figs and eight per cent down from this time last year.

“We’re hoping the Government would see that we’re at the end of the line when it comes to the wage packet in the pocket as there’s so many things to be paid for before we have any disposable income and with the Budget coming up it’s going to get even worse.”

He also pointed out that, “The fear of what’s coming up is even worse, so people are very slow to spend it on that basis.  There are a lot of areas with waste out there in the public sector and much of this is to do with practices but it’s also to do with some in the Government getting a huge wage and huge bonuses – and that’s the waste which we’d prefer to see the Government tackle rather than deplete the amount of spending power in people’s pockets.


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