NOffLA Speaks: Drinks Industry Review
The Drinks Industry Group Ireland (DIGI) has published the annual review for 2009. Not surprisingly, having previously declared 2008 as “the worst performance in decades for the overall drinks industry”, this title has now been passed to the year 2009.
The drinks industry has suffered as much as other industries and much more than some. Those in border areas experienced an horrific trading environment in 2009 as the sterling exchange rate, VAT and excise differentials all conspired to make the prospect of even surviving the year an outside bet.
The DIGI report confirms that average alcohol consumption has returned to 1995/6 levels. This economic statistic hides the reality of sleepless nights, job losses and business closures. The National Off-Licence Association typically comprises single-outlet family-owned businesses integrated in their communities. These entrepreneurs have found themselves the victims of Government inaction and mismanagement throughout 2009. Calls for longer-term strategic approaches by Government were ignored for the sake of short-term expediency. It is only now, as we look back at the performance of 2009, that we can really measure the impact of the Government’s failure to act in a timely manner.
The Government’s all-too-late decision to reduce excise duties in the 2010 budget is fully justified in the figures for 2009 with an overall decrease of 10% in alcohol excise receipts. By failing to address the huge difference in the cost of alcohol between Northern Ireland and the Republic, the state simply allowed these revenues to go elsewhere. In a 2010 budget submission, NOffLA Chairman, Jim McCabe made the case for tackling the high excise duties in a bid to “support economic recovery, restore economic confidence and sustain employment in the drinks industry and to reduce cross border tax revenue loss.” The DIGI report now illustrates the extent to which Jim McCabe’s proposals were some of the best advice this Government could have followed.
The report describes the prospects for the Irish drinks market in 2010 as “very weak”. It warns that “the consensus is for further declines in economic activity in 2010”, but holds out the beginning of a possible light at the end of the tunnel in reporting that “one private forecaster is expecting a slight increase”.
Detailing the influences on trading conditions for 2010, the DIGI report does not paint a pretty picture of the road to recovery. “The higher level of tax, increased mortgage rates and pay cuts and pay freezes will reduce discretionary income. The factors, in particular the tax gap, encouraging cross border shopping, have reduced, although there is still a tax based financial incentive to do so for spirits and wine. One would hope to see a stabilisation and possible reduction in the scale of cross border alcohol purchases”.
While the 2009 DIGI report presents a stark picture of the industry for 2009, the worst should be behind us and the road to recovery should start in 2010. For many, this year will be an exercise in “treading water”; for others it will be about survival. There is strength in numbers and support from the camaraderie of colleagues. Membership of the National Off-Licence Association can provide both – as well as preparation for the more favourable trading conditions that lie ahead.
NOffLA members are reminded that the association’s 17th Annual General Meeting will take place at the Red Cow Moran Hotel Business Centre on Wednesday 21 April at 7.30pm.
The future development of the association depends on the involvement of the council who will be elected at the AGM. It is from these members that the association’s executive is formed, who do much of the legwork of the association. In addition to shaping the organisation and having an impact on the future of this industry, participation on council has benefits too. As members gather to discuss and plan, they all gain from the exchange of ideas from members around the country. In sharing knowledge and experience, the trade improves and so too do the individuals involved. NOffLA is your association. It influences your future. Make your voice count – get involved!