The majority of these jobs would be in Ireland’s rural economy according to a new report on the drinks sector by Economist Ciaran Fitzgerald entitled Sustainable Growth of the Drinks Industry, commissioned by the Alcohol Beverage Federation of Ireland and to be launched today.
However the imposition of high taxes, regulatory costs and other barriers will place Irish-based businesses at a disadvantage to other jurisdictions and fundamentally undermine the export-led economic growth of the sector, states the author, adding that the industry’s potential for expansion is being compromised by the ’double regulation’ of the industry which is undermining competitiveness and is at odds with the government’s own expansion plans for the sector.
In its Foodwise 2025 strategic plan for the drinks industry the government requires private sector investment of at least €1.15 billion.
Today’s ABFI report points out that the drinks industry is clearly a major driver of economic activity across the economy of Ireland at a macro and rural level. As a result it has been identified by government as a key growth sector with the potential to grow exports.
Meeting the Government’s Foodwise 2025 targets would see the drinks industry grow exports by at least €700 million, creating an additional 7,210 jobs in the Irish economy. However meeting the industry ambition of growing the Irish whiskey sector to 30 million cases would see Irish drink exports exceed €2.2 billion. This would generate additional direct and indirect employment of 13,390 jobs in the Irish economy, particularly in rural areas, states the report.
In contrast to the sector’s substantive contribution to the Irish economy, its route to market costs in the domestic market through imposed taxes and increased compliance/regulatory costs are undermining the sector’s capability to maintain its economic impact.
The report points to our excise and VAT taxes on alcohol which are the second-highest in the EU and run at four times the average rate of tax on alcohol across the European Union. This results in alcohol prices here which are consistently in excess of 60% higher than average EU prices as measured by Eurostat.
Furthermore, industry commitment to responsible consumption regulation costs €30-40 million/year beyond normal compliance costs.
“Layering of regulatory costs on top of compliance costs acts as a poor signal to multinational and domestic investors in the alcohol sector,” points out Ciaran Fitzgerald, “Given the significant efforts made by the sector to collaborate with government in restricting access to alcohol by minors and promoting responsible consumption, the imposition of additional regulatory and compliance costs is completely at odds with the Governments stated principals of better regulation.”
He emphasises, “There’s a disconnect between the targeting of the sector for growth and expansion as per the government’s recent Foodwise 2025 strategic plan and the government’s policies on price, taxation and regulatory costs. This inconsistency will ultimately act as a barrier to local and inward investment.
“The imposition of high taxes and regulatory costs is not economically sustainable and will only serve to undermine the economic contribution of the sector and curb its growth.”
Ross MacMathuana, Director, Alcohol Beverage Federation of Ireland, adds, “Ireland’s drinks industry includes iconic brands such as Guinness, Jameson and the brewing of Heineken. It’s a very significant employer both directly and indirectly through its support of the Irish tourism, farmers and the rural pub”.
This report highlights that significant export growth opportunities exist within the industry.
“If we’re to realise these ambitions, we need to have a more consistent policy framework in place informed by evidence-based regulation,” concludes Ross MacMathuana who hopes that the report will encourage a more informed discussion on the drinks sector, its contribution to society and its regulation in this country.
Ciaran Fitzgerald will present highlights from the report at an event this evening in National Library of Ireland Hall, Kildare Street at 6pm.