Marketing

‘Significant challenges’ for thriving industry

Ireland’s drinks industry is experiencing a period of growth and innovation but faces significant challenges ahead, according to Patricia Callan, Director of Alcohol Beverage Federation of Ireland.

She was speaking at the MacGill Summer School recently on a panel discussion entitled ‘Beyond Brexit: Ireland in Europe – The Future’ with EU Commissioner for Agriculture & Rural Affairs Phil Hogan and Pat Cox, former President of the European Parliament.

 

Brexit

According to ABFI, the drinks industry exports to 135 markets and last year this was worth €1.5 billion, up 8% on 2016. The industry is also a major purchaser of Irish agricultural raw materials. Additionally, there were 2.6 million visitors to Irish breweries and distilleries last year.

“With new players entering the market and exports continuing to grow, Ireland’s drinks industry is an important sector that contributes significantly to the economy,” said Patricia Callan, speaking at the event, “We’re an industry that sells globally while creating jobs and attracting tourists locally.”

However, with Brexit, over-zealous regulation, excessive taxation and protectionist policies, Ireland’s drinks industry faces a ‘perfect storm’ that could impact this growth.

“Ireland’s drinks industry operates on an integrated all-island basis with seamless cross-border supply chains. The avoidance of a hard border or indeed a cliff-edge no-deal withdrawal by the UK is a key concern,” stated Patricia Callan who outlined how Ireland’s drinks industry is exposed to a number of risks associated with Brexit.

“It is vital that we avoid tariffs, particularly on packaging and glass and regulatory checks and delays at the border.

“The Chequers Agreement gave us hope,” she said but added that the recent amendments in the Commons diminished that hope.

“In addition, Irish whiskey, Irish cream liqueur and poitín are protected at an EU level in a similar manner to Champagne in France or Parma ham in Italy with a Geographical Indication which means they must be produced on the island of Ireland in accordance with certain production practices and standards.

“As this protection covers the ‘island of Ireland’, currently these products can be made in both Northern Ireland and the Republic of Ireland. After Brexit, the GIs on these three Irish spirits will be the only ones to span territory both in the EU and outside the EU and it’s vital that they’re protected in future UK trade agreements.”

 

US trade policy

President Trump’s protectionist policies are also of concern to the industry.

“US whiskeys have been hit with a 25% tariff by the EU in response to President Trump’s protectionist policies. Fears of further retaliation are very real, particularly for the Irish whiskey industry which is heavily reliant on the US market. Now is the time when de-escalation is needed. The EU’s lofty and still-valid ambitions for global free trade must not be abandoned in a tit-for-tat trade war. The costs to Europe and Ireland would be much too high.”

And she also warned that the labelling proposals in the Alcohol Bill are a major concern.

“We are calling on the Government to remove the requirement for cancer warnings on alcohol products as it is a disproportionate measure that represents a barrier to trade in the EU amidst Brexit uncertainty.

“These country-only labels will undermine the EU single market for goods and act as barriers to trade both in and out of Ireland. They will bring reputational damage to Ireland’s food and drinks industry more broadly and you can be sure that if we start with alcohol then more categories will follow. We will likely see warnings that red meat is associated with an increased risk of colorectal cancer and that processed meat is associated with an increased risk of colorectal and stomach cancers.”

Finally she warned about over-taxation in Ireland.

“We’re seeing that over-regulation in Ireland is joined by over-taxation. Ireland’s alcohol excise tax is the second-highest in the European Union. We’ve the highest tax on wine, the second-highest on beer and the third-highest on spirits.

“Our high excise tax unfairly penalises Irish businesses and Irish consumers, puts jobs in rural Ireland at risk, negatively impacts Ireland’s attractiveness and competitiveness as a tourist destination and exposes Ireland to more Brexit risk.”

 

 

 

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