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Drinks Industry Continues To Grow But Faces 'Significant Challenges'

Published on Jul 24 2018 9:47 AM in Drinks tagged: Featured Post / Alcohol Beverage Federation of Ireland / ABFI / Patricia Callan

Drinks Industry Continues To Grow But Faces 'Significant Challenges'

Ireland’s drinks industry is experiencing a period of growth and innovation, but faces significant challenges ahead, according to Patricia Callan, director of the Alcohol Beverage Federation of Ireland. Callan was speaking at the MacGill Summer School on Monday July 23 on a panel discussion entitled ‘Beyond Brexit: Ireland in Europe – The Future’ with Phil Hogan, EU commissioner for Agriculture & Rural Affairs and Pat Cox, former president of the European Parliament.

According to the ABFI, the drinks industry exports products to 135 markets. Last year, exports were worth €1.5 billion, up 8%. 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.

Speaking at the event, Callan said, “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. We are an industry that sells globally, while creating jobs and attracting tourists locally.”

Brexit

However, with Brexit, over-zealous regulation, excessive taxation and protectionist policies Ireland’s drinks industry faces a ‘perfect storm’ that could impact this growth.
At the event, Callan outlined how Ireland’s drinks industry is exposed to a number risks associated with Brexit.

She explained, “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. 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, but unfortunately last week’s 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 (GI), 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 are protected in future UK trade agreements.”

Other Issues

President Trump’s protectionist policies are also of concern for the industry, according to Callan, who stated,  “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.”

Callan also warned that the labelling proposals in the Public Health (Alcohol) Bill are a major concern for the drinks industry.

She asserted, “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, Callan warned about over-taxation in Ireland, saying, “We are 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 have 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.”

© 2018 Hospitality Ireland – your source for the latest industry news. Article by Dave Simpson. Click subscribe to sign up for the Hospitality Ireland print edition.

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