Government “publicly indifferent” to hospitality sector’s success
The research, conducted with over 500 Drinks Industry Group of Ireland members in addition to research conducted by Amárach Research among 1,000 Irish consumers, forms part of DIGI’s new report entitled Building a Sustainable Drinks and Hospitality Sector: The Role of Government Policy and authored by DCU economist Anthony Foley.
The report finds that more than half of Irish pubs (57%) and 44% of restaurants rely heavily on the UK as their most important tourism market compared to only 18% of pubs and 17% of restaurants who put the US as their number one tourism market.
CSO figures issued this week highlight pre-Brexit uncertainty as already having a negative impact on tourism from Great Britain. In May 2019, the total number of trips to Ireland by overseas residents decreased by 0.4% to 1,021,700.
More worryingly, however, trips by residents of Great Britain decreased by 4.4%.
Tourism Ireland figures reveal that between January and March this year tourism revenue fell from €795 million to €763 million, a decrease of 4% when compared to the same period last year.
Domestically, the research shows that drinks and hospitality businesses, like pubs, remain a focal point of Irish culture, tourism and society.
The benefits of the drinks and hospitality sector are clear-cut with the report indicating that nearly a third (32%) of Irish consumers visit a restaurant at least once a week and nearly a quarter (23%) a pub.
72% of people who go to a pub say they go to meet friends, while 63% of publicans say their business helps elderly people living in isolation to socialise.
Despite these important social and cultural roles, drinks and hospitality business owners feel pressured with 71% of publicans saying that Ireland’s high alcohol excise tax has negatively impacted their business in the last 12 months. 10% of rural publicans say they’ll let staff go this year due to rising business costs, with over a third (37%) of off-licences believing they’ll close within the next 10 years.
Government taxes putting pressure on success
These high Government levies are compounding such issues claims the DIGI which wants the Government to reduce excise tax over the next two years.
Recent data from eurostat show that Ireland is the second most expensive EU country for buying alcohol at 77% above the EU average, behind only Finland at 82%.
Irish businesses and consumers pay the highest excise tax on wine, the second-highest on beer, and the third-highest on spirits even though Ireland produces some of the world’s most famous drinks products.
These are worrying trends that need to be monitored and reversed, states the report which cites the reliance of the drinks and hospitality industry on strong tourism and equally, the importance of this industry in developing Ireland’s tourism product.
Protect jobs by reducing excise tax
The wider hospitality sector employs 175,000 people, nearly 8% of all Irish workers. The drinks industry alone directly and indirectly employs 90,000.
Together, the drinks and hospitality sector generate €1.4 billion in exports as the number of alcohol manufacturing licences increased from 32 in 2009 to 137 in 2017. In 2013, there were just four working distilleries; in 2019 that number is 25, with 17 Irish whiskey distillery visitor centres in all four corners of the country.
The more that business owners are forced to spend on levies like excise tax, the less that’s available to invest back into their business to develop tourism offerings, improve existing products and create new ones, or hire staff, states DIGI which, ahead of Budget 2020, is calling on the Government to reduce Ireland’s prohibitive and high excise tax.
“The drinks and hospitality industry is one of Ireland’s most important sectors in terms of tourism,” said Rosemary Garth, DIGI Chair and Director of Communications and Corporate Affairs at Irish Distillers, “This industry delivers over €6 billion in tourism spend but with Brexit uncertainty and our lack of competitiveness in Europe, this industry is facing into some very challenging times.
“Economically, socially and culturally, Ireland is undoubtedly a changed country but some things will remain permanent, important fixtures of Irishness and that includes enjoying a pint at a pub, a glass of wine at a restaurant or a cocktail in a hotel bar with friends, family and colleagues. Our research demonstrates this.
“However, the Government is publicly indifferent to the success of Ireland’s drinks and hospitality sector and is more than happy to burden it with a punishing excise tax rate and high VAT.
“We want the Irish Government to learn from its EU counterparts,” she continued, “Many European governments, particularly those in countries with a long history of alcohol production, like France, Italy and Germany, have nurtured a positive relationship with their drinks and hospitality businesses. In France, excise tax on a glass of wine is just one cent and the Germans charge only five cents on a pint of lager.
“To protect jobs and create new business opportunities, especially in rural Ireland, we’re calling on the Government to take steps towards forming a new relationship with the drinks and hospitality sector and reduce excise tax on alcohol by 15% over the next two years.”