Has the VAT rate cut had the desired result
Fionnuala Carolan, editor of Drinks Industry Ireland magazine.
The long-awaited VAT rate of 9%, down from 13.5%, finally came into being this month and for many, it was a much-needed measure and even a lifeline for some. There are businesses that have been clinging on for the past few months with the knowledge that this was coming, swallowing the extra costs for that time because they felt that if the business made it until July, there would finally be relief and maybe even a bit of profit. Of course there are some businesses that are doing well so it won’t make much of a difference and then others that don’t benefit at all because they don’t serve food. These are the businesses that are in most need of support.
We carried out a survey over the past month (results on page 8) to gauge the reactions and one of the interesting takeaways for me was that costs will not come down for customers as a result of the VAT change because the extra money that is gained has to be used to shore up the inflated wages bill, pension auto enrolment and energy costs, all new costs to these businesses in the past 12/18 months.
Our pub profile interview this month is with Cathal Sheridan of Sheridans, Milltown, Co Galway (page 14). He is the president-elect of the VFI and a fifth generation publican. He said that he used to be able to sell a Sunday roast dinner for €9.95 and enjoy a profit from that. Now it costs twice that and there is little profit being made. He has had to diversify into events and even a golf simulaltor to keep his business profitable but realises that not everyone can afford to do this.
An interesting point he makes about the decline of the traditional pub, is that the pub would have always been the social hub of a community but this is not now guaranteed. The older men who used to sit at the bar a few nights a week are dying off and not being replaced and those that drink the most buy their drinks from supermarkets and drink at home. Sheridan laments the loss of social interaction and people looking out for one another. Covid created unintended social consequences and new habits for people that have not been reversed and it’s the small rural pubs that have felt this most keenly. The overall feeling from our survey was that without addressing these cumulative cost pressures, VAT relief alone will not be enough to secure the future of many pubs.
Elsewhere, our cover story this month is an interview with Shane Long of Changing Times Brewery. He details the company’s recent move into the UK market. It’s great to see an Irish owned and run business doing so well, a testament to the hard graft of the people involved.
Finally, I hope this prolonged spell of good weather is helping boost your business and keeping the pubs around the country buzzing.
If you have any news or views on the industry that you would like to share or highlight, please get in touch at Fionnualacarolan@mediateam.ie.
Fionnuala Carolan
Editor
