Supply chain issues negatively impact production for 90% of Irish Whiskey producers

92% of Irish whiskey producers have said that supply chain delays negatively impacted their recent production output and will likely impact future production output and the launch of new products.

That’s according to a survey of Irish Whiskey Association members published as part of the Association’s Irish Whiskey Global international trade report 2022. While Irish whiskey exports are set to grow strongly again this year the results of this survey suggest the industry is facing increasing cost pressures, with SMEs facing serious challenges.

The report calls for sustainability and supply chains to be put at the heart of future international trade policy.

The survey, focussing specifically on supply chain issues, found that:

• two-thirds of respondents strongly agree that increased delays in the delivery of materials had resulted in delays to the launch of new products
• 78% of producers have switched suppliers to secure a more sustainable or resilient supply chain
• increases in malt prices, energy and general business costs and delays in international shipping are among the most serious supply chain concerns identified by industry.

As well as the survey of the Irish Whiskey Association’s 48 members, other key findings from the International Trade Report include:

• a record 14 million cases of Irish whiskey were sold around the world in 2021, 21% up on 2020
• Russia and Ukraine cumulatively accounted for 7% of all Irish whiskey sales in 2021, leaving a likely negative impact on global sales in 2022
• India, Nigeria and China have been identified as emerging markets to watch for future export growth.

“2021 was a year of rebound for Irish whiskey with a record 14 million cases sold around the world and this year looks set to be another outstanding year for export growth,” said IWA Director William Lavelle, “Overall, Irish whiskey exports will grow again strongly in 2022, facilitated by supportive international trade policy.

“However, Irish whiskey is facing many serious international trade and supply chain challenges and the fact is that not all brands will grow this year. It is notable that the reported supply chain difficulties are being experienced equally by both large and small producers and it’s likely that the serious impacts will be felt hardest by SME producers.

“International trade and supply chain challenges increasingly have the potential to impact on trade, both at industry and individual business level. It’s vital that international trade policy keeps up, not just in reacting to threats but also proactively assessing and planning for the future.”

Key priorities for the Irish whiskey industry

According to the IWA more trade with positive partners and putting sustainability and supply chains at the heart of future international trade policy will ensure the continued growth of the Irish whiskey industry.

“Expanding free trade is even more important given the highly globalised exposure of our shared economy across the island of Ireland,” believes William Lavelle who continued, “The growth in exports of Irish Whiskey, including market access and diversification, has been greatly supported by free trade and further growth is possible. We’re calling for a number of actions to expand free trade agreements. These include reducing tariffs on Irish whiskey in Australia, India, Kenya and Thailand, amongst others.”

The report outlines principles to guide sustainable international trade as well as setting out actions and recommendations on building capacity at industry and government level to respond to supply chain challenges.

The Irish Whiskey International Trade report was launched via two events: in the European Parliament in Brussels and the House of Commons in London.

Officially launching the report in Brussels, MEP Colm Markey said, “Overall, our export sector is performing strongly despite ongoing global challenges. In 2021, we recorded our best-ever trade performance, while figures for this year are very encouraging. Recent CSO stats show overall exports of goods from Ireland rose to almost €20 billion in August, an increase of over €4bn on July 2021.

“This positive outlook is reflected in the Irish Whiskey Global international trade report 2022 which shows the sector on track for an outstanding year for export growth. However, we cannot become complacent and I note the concerns raised in the survey of Irish Whiskey Association members. SMEs are facing serious challenges due to soaring energy costs and supply chain disruption. In the short term the Government is responding through measures announced in Budget 2023 and work is continuing at EU level to find a solution to the energy crisis. However, in the long-term, it’s clear we need to learn lessons from recent global turmoil and better plan for the future.”