ABFI addressed the Joint Oireachtas Committee on Agriculture, Food and the Marine recently on the potential impact of Brexit on the agri-food sector and it told the Committee that the Irish drinks industry currently operates on an integrated all-island basis with seamless cross-border supply chains.
It noted that €1.6 billion-worth of drinks products were exported from the island of Ireland in 2017, with €1.2 billion coming from the Republic of Ireland.
One third of this €364 million aggregate value of UK/Ireland trade (or €121 million) was the aggregate value of north-south trade.
Meanwhile, over 130 million glass bottles are imported into this State from the UK every year.
The UK remains the dominant market for Irish beer and cider exports with 71% of all beer exports and 85% of all cider exports going to the UK in 2017.
ABFI told the Committee that the Withdrawal Agreement, which will be voted on next week in the House of Commons, represents the best possible approach to Brexit for the drinks industry. This would avoid a ‘No Deal’ Brexit which would seriously damage the Irish and UK economies including the All-island drinks industry, with potential consequences including:
- Lack of continuity in legal protection for Irish cross-border GIs in the UK
- Immediate tariffs on cream, barley, malt, glass bottles, apples, finished cider and other supply chain inputs
- Regulatory and custom checks at the Irish border leading to additional delays and costs
- Requirement for up-front VAT payments on cross-border trade
- Excise Border Checks
- Regulatory divergence across a range of standards from labelling to bottle sizes
At the Committee hearing ABFI also called on the Irish Government to ensure that the new Future Growth loan scheme announced in Budget 2019, or a separate bespoke strand, is open to Irish distilleries and spirits producers. Under European Investment Bank rules they were excluded from previous loan schemes.
This scheme will be available to eligible Irish businesses to support strategic long-term investment in a post-Brexit environment.
ABFI pointed out too that continued access to EU-backed trade agreements will offer important competitive advantages to Irish drink categories. The recent EU agreement with Canada abolished outstanding tariffs on Irish cream liqueur and Irish gin. The EU is also currently negotiating or concluding free-trade agreements with Australia, New Zealand, Vietnam and the Mercosur bloc.
ABFI also pointed out to the Committee that while free trade is often primarily viewed as a matter of tariffs, the issue of technical barriers to trade is equally important.
Recently, the Irish Government itself sought to introduce what would be an effective barrier to trade by seeking to introduce country-only labels for Ireland under the recently-enacted Public Health (Alcohol) Act 2018. This measure will deter small beer, cider, wine and spirits producers from exporting to this country as these producers will now require new labels just for Ireland.
While the Act is now on the statute books, there remain many unanswered questions in relation to how it will be implemented and ABFI repeated its call to the Minister for Health to establish an implementation group, to include industry.
“Brexit comes with a number of potential risks and opportunities for the Irish drinks industry,” said ABFI Director Patricia Callan speaking at the Joint Oireachtas Committee, “All things considered, we believe that the adoption of the Withdrawal Agreement, which will be voted on next week, represents the surest way to avoid negative impacts such as regulatory divergence and additional costs.
“Despite the risks ahead, it’s important to note that the industry is confident that we will manage through Brexit and will do everything possible to limit the impact on our consumers.”
She added, “We’d like to commend the Government and State agencies for the proactive and comprehensive programme of information and supports being made available to companies to plan and prepare for the impact of Brexit and look forward to working with them further to prepare and plan.”