Wednesday, 2 January 2019
ABFI releases overview of drinks industry performance in 2018:
∑ Irish whiskey sector went from strength to strength in 2018 with 21 distilleries now in operation
∑ Lighter beer options growing in popularity in domestic market while beer exports remain strong
∑ Brexit is major risk to Ireland’s all-island drinks industry in 2019
Ireland’s drinks industry is one of the nation’s most dynamic and innovative sectors, with growing demand in export markets, according to Alcohol Beverage Federation of Ireland (ABFI), which has released an overview of the industry for 2018.
Spirits high for Ireland’s thriving spirits industry
In 2018, gin continued to make a splash in the domestic and export markets. Meanwhile, the Irish whiskey industry continued to grow, maintaining its position as the fastest growing premium spirits category in the world.
- ∑ The value of exports of Irish gin from the Republic of Ireland was up 213% to €4.2 million in first nine months of 2018
∑ Irish consumers purchased over half a million bottles of pink gin during 2018, making pink gin the breakthrough success story of the year in the domestic market
∑ There are now over 20 gin producers and over 50 gin brands in Ireland, with 12 new brands introduced in 2018
∑ Irish cream liqueur also enjoyed a strong 2018, after recovering from a ‘lost decade’ in 2017. Preliminary interim export statistics for 2018 suggest there was an export growth rate of approximately 8% for this year, driven by strong export growth to the US. Additionally, interim retail statistics for 2018 suggest continued sustained growth of approximately 7% in the Irish off-trade for Irish cream liqueur
∑ There are now 21 operational whiskey distilleries in Ireland, up from just four at the start of the decade
Beer remains Ireland’s favourite tipple, with a 45% market share of all alcohol consumed in 2017. The last few years have been marked by the craft beer revolution. This has invigorated the beer sector, which continues to introduce a plethora of new products to the market.
- ∑ 2018 saw the emergence of lighter lager options, hovering around 4% ABV
∑ This year it is anticipated that low and non-alcoholic beers will become increasingly popular
∑ Ireland also remains a major exporter of beer. Beer exports, by volume, rose marginally by 0.2% in 2017 and were valued at €273 million making Ireland the 8th largest beer exporter in Europe
Like the beer sector, consumers are benefiting from a craft revolution in the cider sector. This has resulted in unprecedented choice in pubs and on shelves.
- ∑ In 2016 cider consumption accounted for 7.5% of all alcohol consumed. This grew to 7.7% by 2017
Increase in rosť consumption in Ireland while the country’s love affair with wine continues
Since 2000, the popularity of wine has grown significantly as Ireland’s love affair with wine continues.
- ∑ The market share for wine increased marginally from 27.6% in 2016 to 27.7% in 2017
∑ The sector continues to employ over 1,100 people directly while supporting thousands of other jobs in Ireland’s pubs, restaurants, independent off licences, supermarkets and hotels that sell wine
∑ White wine remains Ireland’s most popular wine, with a 50% share in the wine market. Red wine has a 45% market share, while between 2016 and 2017, rosť consumption increased from 3% to 5%
Despite positive growth, 2019 poses significant risks, according to ABFI.
Excise and Public Health Alcohol Act pose risks in home market
There are a number of homegrown risks that the industry faces in 2019, namely Ireland’s disproportionately high excise rates, as well as the Public Health (Alcohol) Act.
- ∑ While the Public Health Alcohol Act is now on the statute books, there remains many unanswered questions in relation to how it will be implemented. In 2019 ABFI will be continuing its calls on the Minister for Health to establish an implementation group, to include the industry
∑ Ireland’s excise on alcohol is the second highest in the EU. In addition to having the highest excise on wine, Irish consumers pay the second highest rate on beer, and the third highest rate on spirits. In order to support innovation and growth in the industry, ABFI will be calling on the Government to reduce this in 2019
Unsurprisingly Brexit will be a major threat to Ireland’s business community, including the all-island drinks industry, with the UK set to leave the EU in March. Additionally, the prospect of additional trade wars and tariffs are of concern.
- ∑ The aggregate value of trade in drinks products between the UK and Ireland in 2017 was €364m, one third of which, or €121 million, was the aggregate value of north-south trade. While contingency plans are being put in place, a no-deal Brexit should be avoided at all costs to minimise risks to trade flows and consumer spending
∑ A no-deal Brexit would be seriously damaging to the all-island drinks industry, with potential consequences including immediate tariffs on cream, barley, malt, glass bottles, apples, finished cider and other supply chain inputs and regulatory and custom checks at the Irish border, leading to additional delays and costs
∑ Looking also at trade wars and tariffs, the US is a major market for Ireland’s drinks industry. Currently there is a 25% tariff in place on imported spirits to the EU which is damaging for our global businesses and places us firmly in the firing line for retaliation from the US at any moment
Patricia Callan, Director of ABFI said:
“In 2018 Ireland’s drinks industry continued to make a vital contribution to the country’s economy, employing 90,000 people and exporting more than €1.25 billion worth of produce. It is one of Ireland’s most dynamic sectors, as it continues to introduce exciting products and break into new export markets.
“Meanwhile alcohol consumption continues to fall. Since 2001 the average per adult alcohol consumption has declined by 23.3% in Ireland.
“This year will be a challenging one for the sector with a number of homegrown and international risks ahead. We remain committed to supporting Ireland’s economy and will take on these various challenges and uncertainties head on.”