Ireland's Spirits Sector Showed 'Resilience' Last Year, Says Drinks Ireland|Spirits
Ireland's spirits sector showed "resilience" last year, despite the impact of the COVID-19 pandemic, according to a new report from Drinks Ireland|Spirits.
Drinks Ireland|Spirits stated, "Despite sales and exports declining last year due to COVID-19, Ireland's spirits sector showed its 'resilience', according to the annual market report from Drinks Ireland|Spirits, which says that the sector is now setting its sights on recovery.
"The report shows that spirits exports from the Republic of Ireland declined by 15.97% last year, from €1.18 billion in 2019, to €990 million in 2020. However, this comes on the back of a number of years of strong growth, with the value of exports growing by 83.6% between 2014 and 2019, prior to COVID-19.
"The decline last year was due in part to the collapse of Global Travel Retail (GTR). Prior to COVID-19, it was the second largest market for Irish whiskey and fourth largest for Irish Cream liqueur. Recovery in this market could be slow, according to the report, and will likely go hand in hand with international travel returning to a pre-pandemic level.
"The report details that the overall global sales volume of Ireland's spirits that are protected by EU Geographical Indications (Irish Whiskey, Irish Cream and Poitín) declined slightly, from 20.41 million 9-litre cases in 2019 to 19.67 million 9-litre cases in 2020. The most popular markets for these GI spirits last year were the United States, United Kingdom, Canada, Germany, and Ireland respectively.
"Domestically, the report shows the closure of hospitality venues had a negative impact on the sector, particularly for brands that rely heavily on the on-trade. Overall, sales fell by 4.8%, from 2.42 million 9-litre cases in 2019 to 2.3 9-litre million cases in 2020.
"Some spirits categories benefited from the consumer shift to the off-trade in Ireland, according to the report, with Irish Cream Liqueur sales growing by 26.5%.
"Many of us will have seen the multitude of new 'ready to drink' (RTD) products hit the shelves over the course of 2020. These include spirits based RTDs and hard seltzers. As a category hard seltzers did not exist in Ireland in 2019, but in 2020 nearly 90 thousand cases of various brands were sold.
"While sales of vodka declined by 10.2% last year, it remained Ireland’s most popular spirits drink, with a 31.6% market share in the category. This was followed by Irish whiskey (26.3% market share), gin/Irish gin (14.04%), and rum (7.4%).
"While sales of gin in Ireland fell by 6.6% between 2019 and 2020, it has seen remarkable growth in recent years, with gin sales up by 184% between 2014 and 2019. Forecasts for the next five-year period suggest that the growth in gin and Irish gin has not ended and that the decline in 2020 will be seen as a COVID-19 related blip.
"Ireland has the third highest level of excise on spirits in the EU, and Drinks Ireland|Spirits is calling for a reduction in the upcoming Budget to help drive recovery.
"COVID-19 also negatively hit Irish distilleries that host visitor experiences, and the return of inbound tourism will be critical in driving recovery here."
Drinks Ireland|Spirits Chair Statement
Bryan Fallon, Managing Director of Heaven Hill Ireland, brand owner of Carolan's Irish Cream Liqueur and Irish Mist Honey Liqueur, and Chair of Drinks Ireland|Spirits, stated, "The report shows that the spirits sector did not escape unscathed from the COVID-19 pandemic. Irish hospitality venues are a vital component to the continued growth and prosperity of Ireland’s spirits and craft spirits sector, allowing companies to engage with consumers, so their closure was very much felt.
"Despite this, the resilience shown by the spirits sector last year in the face of the loss of one of the main consumer channels was remarkable, with producers responding with an increased emphasis on the off-trade and a focus on e-commerce.
"Outside of COVID-19, a number of other challenges remain such as Ireland’s high level of tax on alcohol, which is unsustainable and uncompetitive. We are calling on the government to reduce excise tax by 7.5% in Budget 2022. An excise reduction would boost post-COVID tourism and secure sustainable, long-term growth for Ireland's drinks and hospitality businesses in 2022 and beyond.
"While 2020 has shown that our sector is resilient and adaptable, this resilience and adaptability will be tested in the post-COVID world, and government must support in our sectors recovery through an excise cut."
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