Liam Reid, the Drinks Industry Group of Ireland’s new Chair, should be used to political pressure. In the past he’s worked as a press adviser at the former Department of the Environment, Heritage and Local Government. Previously he was Environmental Correspondent and political reporter with the Irish Times.
Since joining Diageo Ireland he’s held the posts of Head of Government Relations as well as Head of Public Affairs and Corporate Communications.
So as he takes over the role formerly held by Rosemary Garth the DIGI would appear to be in good hands at this very precarious time for the industry.
“The drinks and hospitality industry is among the hardest-hit sectors of Covid-19 and it’s currently in crisis,” he agrees, “Having endured the longest lockdown in the EU, recovery for the sector will be a prolonged and difficult journey.
“The prospects for the sector are not overly promising right now and we need to ensure that sufficient meaningful supports are put in place to facilitate the recovery of the industry.”
These requirements for support result from a number of key challenges.
“Current Government policy is an outlier compared with other European countries in that we’re closing far more of our hospitality sector – and for far longer,” he says, “If we keep doing this and fail to explore other ways of living with Covid, it will cause long-term and irreparable damage to the sector. The Government needs to urgently look at what other European countries are doing.
“For businesses that are allowed to open the second challenge is that restaurants are operating at approximately 60% capacity, pubs serving food at 50% and hotels at 25%. These figures are unlikely to improve over Christmas and the Winter period. Tourism is non-existent and few social or cultural activities are permitted. What we need now is coordinated and strong support from Government to help the industry through this. It’s clear that the Government’s July stimulus package has not been effective and requires a much more focussed plan.”
Liam stated recently that, “If the 2008 crash showed us anything, it’s that what we lose now cannot be simply reconstructed next year.”
He added, “This is a highly precarious industry and every week of closure counts. The long-term risk is enormous and a specific package of support measures is urgently required.”
What else should we have learned from that crash?
“Two things,” he responds, “The first is that the hospitality sector helped lead this country out of the recession – one in seven jobs created during the recovery was in hospitality.
“The role of the hospitality sector is often under-appreciated, but apart from the almost 200,000 employed directly in the sector, there are thousands of additional jobs in services, in food production, in construction, logistics and other fields that rely directly on the sector. Some estimates put it as high as one in five jobs in Ireland being reliant on the experience economy.
“The second thing is that if the government fails to protect it, our sector will not be rebuilt overnight and it requires a huge amount of targeted support to get through the coming months.
“We don’t have much control over this virus, but we do have control over Ireland’s economic policy decisions and the policy instruments available to us to stimulate and support this industry, the rate of excise tax that we level on this industry being one.”
He can also elaborate on the kinds of support package he’d envisage for a pub trade in difficulty right now.
“The Government has, to date, failed to provide meaningful supports for the longer term to support the recovery of this industry,” he believes, “The industry was shut down for over six months while many businesses remain closed and others restricted further.
“Ireland’s drinks and hospitality industry has endured the longest lockdown in the EU – as I speak today in early October, wet pubs in Dublin are now in their seventh month of lockdown.
“The industry has invested in their businesses to meet the public health guidelines and to operate safely for customers – health and safety is the priority. Following a series of false starts and short notice closures, this industry is paying a huge price.
“We’re calling on the government to introduce a practical and long-term support package which will help hospitality businesses to not only open their doors but to keep them open.
“Businesses that open are also paying almost the highest levels of tax on the drinks they sell.
“It’s simply unsustainable in my view that the Government is pocketing around a third of the price of the average drink in excise and VAT receipts at a time when the majority of businesses are at least 50% down on their revenues.
“While temporary supports have already been introduced by the Government, none of them have been specifically designed to support the hospitality sector,” he says, “The industry requires longer term, targeted measures that will not only tide them over in the short term but will give them a chance of survival and recovery.”
To facilitate this the Government must look at the current constraints within the sector including the excessively high tax rates imposed on the industry.
“A 15% reduction in excise tax would not only benefit customer-facing businesses within the sector but would also support Ireland’s brewers, distillers and distributors as they face an uncertain and difficult period ahead,” he says.
He also believes that our having the second-highest excise tax in the EU immediately puts businesses within the drinks and hospitality sector on the backfoot when it comes to recovery.
“Currently, consumers in Ireland pay the second-highest excise on beer despite exporting Guinness to every continent on the planet. We also pay the third-highest on spirits irrespective of Ireland being the birthplace of whiskey. These punitive rates directly undermine a crucial employer, growing export business and tourism product.
“A reduction in excise tax would not only support pubs, restaurants, hotels, but all businesses which depend on this industry for revenue. This targeted support would therefore be a direct economic injection into an industry which has the proven capacity to create jobs.”
For the DIGI, recovery means longer term strategies that will ensure businesses and jobs are protected during the uncertain period ahead.
“For many businesses within the industry being permitted to reopen their doors after enduring the longest lockdown within the EU does not guarantee their future. While it is certainly the first step towards recovery, it’s not the solution,” he says, “Providing all necessary support to our membership, ensuring their voices are heard and their needs are met at a national level is our priority right now. We’re working to ensure that longer term, meaningful supports are provided from Government. ”
Specifically, with further lockdown measures and restrictions likely to be introduced and struggling businesses operating with significantly lower capacities and demand he feels that it’s imperative that the government provides financial support to those within the drinks and hospitality industry as soon as possible.
A recent report commissioned by the Drinks Industry Group of Ireland and carried out by DCU Business School economist Anthony Foley, Employment in the drinks and hospitality industry: the threat of Covid-19 to jobs and how to minimise it, suggests that as many as 63% of all Accommodation and Food Services jobs in Ireland, 114,000 in total (including jobs in pubs, restaurants and hotels), could be lost by year’s end without further supports. This includes 36,300 jobs among the 15-24 age group.
“There is much at stake,” he believes, “For many, a job in the drinks and hospitality industry is a rewarding lifelong career. For others, like students, farmers, carers and homemakers, it offers flexible part-time hours that work for them and their families. If these opportunities are taken away from these people because of the impending downturn, we’ll face years of mounting inequality between them and the high-tech professional.
“It’s important to recognise the severity of the number of jobs at stake in the drinks and hospitality sector,” he concludes.
The Government can consider itself as having been warned.