The close institutional and commercial ties that the drinks industry has cultivated with Northern Irish producers of raw materials and finished drinks products are under threat in a no-deal Brexit situation points out market research provider Euromonitor International in its report on the Irish spirits market, published recently.
The report looks at the prospects for the spirits industry here in light of the possible introduction of tariffs in the wake of Brexit.
“In recent years a number of cross-border initiatives were put in place, such as government loans for start-ups, to help the sector to continue to grow,” states the report, “Under a no-deal Brexit and the reintroduction of a hard border, these cross-border initiatives could be threatened which would then adversely impact manufacturers.
“Many of the raw materials used in the production of spirits – particularly whiskey – are produced in both jurisdictions on the island and a hard border would mean the reintroduction of tariffs on raw materials and impose significant input costs such as adding an estimated €100 levy per truck crossing the border in either direction.
“With thousands of trucks transporting raw materials for spirits and the final products back and forward between the two jurisdictions every time, this would amount to significantly increased costs.
“The UK is also Ireland’s second-largest importer of its EU-protected Geographic Indication products – whiskey, cream and poitín and Ireland also imported and consumed 30 million litres of UK whiskey in 2018 alone.
“The US remains the largest target audience for Irish spirits exports and the looming threat of reverse tariffs for Irish exports is a huge concern for the industry.
“Should international trade difficulties from a hard Brexit and reverse US tariffs adversely impact exports, the domestic consumption of spirits could be significantly impacted as manufacturers would seek to reduce losses internationally through downsizing brand variants and increase unit costs to consumers.”
Alongside this, the significant reduction in overall alcohol consumption by Irish consumers themselves has been accompanied by significant public health awareness campaigns and a number of legislative measures to curb excessive consumption believes Euromonitor which reckons that overall consumption of alcohol will continue to decline in volume here.
“However, thanks in part to the generally favourable economic conditions where disposable income, leisure spending and tourism inflows are all increasing, value sales are not set to suffer as Irish consumers will choose to favour quality over quantity, particularly where spirits are concerned,” it adds.