What’s going on with the Alcohol Bill?
Considering its catastrophic effects on retailing, manufacturing and exporting if unadulterated, the industry at large doesn’t seem to realise just what’s about to befall it if the Public Health (Alcohol) Bill now before the Dáil is made law.
And sitting in an IBEC meeting room, ABFI Director Patricia Callan wouldn’t disagree with my assessment.
“But we’ve 47 members in ABFI who’re manufacturers and distributors and they’re fully aware of it,” she asserts, “We’ve been encouraging them to meet with their local TDs to raise awareness about the impact the Bill will have on their business. “
However two of the Amendments introduced at Christmas put the onus for compliance squarely on the retailer and not the manufacturer, she points out.
“The reason the manufacturer was not made responsible was because it would be breaking EU law, but retailers and Irish importers were made liable, so now people are beginning to ask what is going on.”
What is going on – particularly around labelling which has been high on ABFI’s consciousness spectrum since Christmas?
“The campaigning we’ve done means that the manufacturers went to their global organisations and global members,” she says, “The wine industry got particularly active and have been communicating with their supply chains and are now questioning the labelling Amendment.
“There’s definitely been more global attention since the cancer warning on the label requirement arrived with one-third of the label being required for health warnings.
“It’s essential to understand that this requirement applies to the entire surface area of both front and back labels.”
The original Bill was notified to the Member States and 10 EU Members sent detailed opinions of which five issued comments including the Commission, she explains.
“The government still have to deal with all of this notwithstanding the new stuff in relation to the Amendments, so I don’t believe that it’s possible to put this into law at present.”
The three new Amendments from December were notified to the Commission in January. Arising from this it got two detailed opinions back from Italy and Portugal and eight comments (including one from the Commission itself).
So now it seems the government must respond to the 10 original countries and the two subsequent countries before the Bill could be countenanced for enactment.
Again here, the World Trade Organisation was notified of the original Bill, but not of the Amendments, she points out, so it has similarly requested that the Irish government officially notify it of these Amendments. That’s another challenge the government has to overcome to get this Bill through.
In addition, ABFI understands that the Irish Government has yet to send an explanation to Brussels’ DG Santé as to why the health argument trumps the fact that we’d be breaching international trade rules.
“It would have to be able to argue that Ireland had a disproportionate health problem that could not be solved by any other means,” she explains.
“As outlined, the proposals also threaten food labelling regulations and as it has yet to respond to the EU and the Member States, if it forged ahead and brought this into law it would risk infringement proceedings being brought against it by the EU.”
Patricia also observes, “It’s such a complex bill that while most of our elected officials are aware of MUP and structural separation, they don’t realise the implications of the labelling and advertising Amendments and it seems to be the same in the Seanad.”
Ireland’s high alcohol prices
Some people argue against increasing price as a means of cutting consumption based on Ireland’s already high alcohol prices. If price had worked then we’d be one of the EU’s lowest alcohol consumers and Spain would be one of its highest.
Patricia agrees, pointing out, “ Ireland has the highest prices for alcohol in the EU, according to Eurostat. This is due, in large part, to excise increases in alcohol.
“These increases are not simply taxes on alcohol – excise is a tax on jobs, on consumers and on tourism.
“As Ireland already has the second-highest excise tax on alcohol overall across the EU, we believe that the tax system is not the best way to address alcohol misuse,” she says, “Additionally, given Ireland’s high alcohol prices, it’s worth considering whether alcohol misuse would already be much lower if price impacted alcohol misuse in a considerable way.”
A question of classification?
Fundamentally alcohol is a foodstuff, so is governed by EU Regulation 11/69.
“What we noticed was that the departments across the Member States responsible for the Economy, Business and Agriculture were against some of the proposals in the Bill but this time there appeared to be a consolidated move across the individual Departments of Health to block their country making detailed opinions.
“The Health lobby tries to compare alcohol to tobacco where the rest of the EU uses the term ‘foodstuffs’,” explains Patricia, “So the way it’s being framed is different and it’s key that cigarettes are a homogenous product whereas the alcohol industry is a thriving sector creating a variety of products of premium quality which hugely impacts our exports.”
The industry utilises 20% of the national grain crop and this can only increase, she adds, “Indeed the Minister for Agriculture recently referred to us as ‘the shining light’”.
The labelling Amendment
Nobody knows how the labelling scheme would work in practice. The EU objected when South Korea tried to introduce a cancer label on alcohol products.
“These sorts of measures in a global world simply don’t wash,” she believes.
Economic consultants DKM costed out changing a label at around €14,000 and changing a suite of labels at €50,000, so costs would be hugely increased.
With wine imports, in reality the only way labelling could work is the vineyard itself doing it.
And labelling requires a segregated section in the carrier and segregated warehousing – that’s additional expense and so some people will simply not send their product to Ireland.
“Even the more expensive brands won’t risk it reputationally” she points out, “as what happens in Ireland can be tweeted all around the world.”
Despite the adverse implications for everyone involved, she’s mystified that NOffLA and the on-trade still seem to support this bill but now, with the possible requirement of having to put cancer warnings up on walls in pubs and possibly even on countermounts, the on-trade is changing its mind.
“I think all our work means that more and more of them realise that this is going to become an issue.”
Balancing the Bill
She finds politicians quite amazing at being able to segregate booming alcohol exports from the actual impact on such business that this bill will have thanks to the Department of Health.
“Many feel that they can’t get involved” she tells me, “but they have to look at this holistically.
“In our Regulatory Impact Analysis, what do we get from doing this and what do we lose?” she asks, “If the impact on business is detrimental many might decide not to enter the industry at all.
As for tourism, some 1.7 million visited the Guinness Storehouse and 823,000 visited distilleries here last year.
“We’re part of Fáilte Ireland’s tourism strategy now. If you take it that a lot of our companies are purely directed to exports, then having a cancer warning label on products at home (and at the airport, by the way) where other countries have none means that if I was an exporter I’d not want people visiting Ireland as it would kill tourism incentives to purchase the product,” she believes.
Apart from that…
Of course there are other matters taking up Patricia’s time and these include the potential for a US-EU trade war currently on a 30-day postponement.
“I’d fear the retaliatory measures,” she says, “In Ireland we have a 100-to-one trade surplus and 50% of our Irish whiskey and liqueur exports go to the US, so we’re in that firing line. If sanctions were to happen, it would have a serious impact.”
And we haven’t even started on Brexit…..