On-trade still in heavy decline – DIGI
Mid-year figures from the Drinks Industry Group of Ireland (DIGI) indicate that the on-trade suffered a further 14.6 per cent decline in sales in the five months to the end of May this year compared with the same period in 2009.
DIGI Chairman Kieran Tobin indicated that the Government’s 20 per cent excise reduction last December stemmed cross-border alcohol purchasing and grew off-trade sales here by around 7.5 per cent in the first four months of 2010.
He stated that both the drinks industry and consumers had responded to the excise cut by reducing prices and shopping locally.
“In addition, the improved performance of spirits and wine – the two categories most affected by cross-border trade – is noteworthy,” he pointed out.
“This clearly points to shoppers opting to purchasing alcohol and other goods locally, thus providing a stimulus to the wider economy that was absent in 2009. This could not have been achieved without the full co-operation of the drinks industry.”
However he pointed out that pubs, bars and restaurants continue to struggle in the current extremely challenging weak economic environment.
“In the first five months of 2010 the value of pub sales declined by 14.6 per cent on top of an 8.8 per cent decline in 2009 and three per cent in 2008. Of particular concern is that the most recent pub sales data shows no sign of improvement. In May 2010 the value of pub sales was 15.9 per cent below May 2009.
“The clear evidence is that the excise reduction has had the desired effect on cross-border sales. Yet while the drinks market has grown and cross-border sales decreased, the overall situation remains extremely difficult for a key national industry that continues to support 80,000 jobs and provide almost €2 billion in VAT and excise revenue to the State.”
The drinks industry had responded to cross-border purchasing and reduction in the RoI market by reducing alcohol prices by 4.3 per cent. There is now ‘‘ferocious competition in the off-trade’’, he claimed, adding that he expected retailers in the North to attempt to combat the move and make a renewed push for business from the Republic which is also likely to be affected by the VAT increase to be introduced in the UK next January.
He added that the drinks industry would continue to work with the Government to identify further stimulus measures and supports to boost for the key, employment-intensive hospitality industry.
‘‘Bars, restaurants and hotels are under severe pressure," he stated, ‘‘Consumer confidence is on the floor.
‘‘There was a move away from the on-trade towards the off-trade as far back as 2001. It has to do with demographics and social habits, but the economic situation has accelerated that trend."
