Thursday, 1 October 2020
Covid-19 continues to significantly impact Irish spirits sector, hitting sales, exports and production
“Hospitality sector is vital for consumers to explore products from new and emerging Irish spirits producers” - Pat Rigney, Chair of Drinks Ireland|Spirits and Managing Director and Founder of The Shed Distillery
New report from Drinks Ireland|Spirits shows that the spirits sector performed strongly in 2019 prior to Covid-19, with domestic sales and exports up
Ireland’s spirits producers have today said that the Covid-19 crisis has significantly impacted the sector, hitting production, exports, and sales. Spirits producers have been significantly impacted by the closure of the hospitality sector, saying that that these venues should be allowed to reopen or stay open in a controlled, safe and sustainable manner where possible.
Drinks Ireland|Spirits, the Ibec trade association that represents the spirits sector published its Irish Spirits Markets Report 2019 today, indicating that in the context of current challenges, 2019 will be seen as a “benchmark” year for the industry as it seeks to recover from the Covid-19 crisis in the years to come.
Today’s report shows that domestic sales were up in 2019 and that the value of spirits exports from the island of Ireland continued to increase, up by nearly 16% to €1.17 billion.
Global Irish whiskey sales grew by 10.9% last year, from 10.58 million to 11.93 million nine-litre cases. Meanwhile, Irish Cream liqueur sales increased by 3.9%, from 8.2 million to 8.52 million nine-litre cases.
Domestic sales grew by 0.7% from 2.4 million to 2.42 million nine-litre cases. This comes at a time when overall alcohol consumption in Ireland continues to decline. This growth, while slower than that in 2018 illustrates the continued popularity of high-quality spirits products, created by a dynamic and innovative Irish industry.
Ireland’s most popular spirits drink was vodka, driven in part by its use in cocktails, followed by Irish whiskey and gin. While growth of Irish whiskey and gin slowed in 2019 compared to 2018, both were still significant, with sales up by 1.5% and 4.6% respectively. Vodka sales grew by 0.6%.
It is fair to say that this growth seen by the sector in 2019 has been reversed as a result of Covid-19. According to Drinks Ireland|Spirits, a strong domestic Irish hospitality sector will be vital in allowing the sector to return, in the coming years, to the level of growth seen in 2019, saying that a safe a sustainable reopening is important.
It says that the on-trade, including pubs and restaurants, are vital for enabling new and emerging producers to gain traction in the domestic market. These venues give consumers the opportunity to try new or different Irish spirits, championed by staff in these establishments, who take pride in sharing their knowledge with domestic and international visitors alike.
In addition to Covid-19, the report points to challenges facing the sector as a result of the ongoing trade disputes between the US and the European Union, which resulted in tariffs of 25% being placed on Irish cream liqueur, on other Irish liqueurs and on Single Malt Irish whiskey from Northern Ireland. An earlier round of tariffs saw the EU apply 25% in tariffs to US Whiskey and Bourbon imports in retaliation for US tariffs on European steel and aluminium products. These are due to increase automatically to 50% in July 2021.
And like many other industries, the sector also faces many uncertainties as a result of Brexit, with a trade-deal still to be agreed.
In 2019, the USA and UK were the two biggest export markets for Ireland’s Geographic Indication (GI) protected spirits, which are Irish Whiskey, Irish Cream liqueur and Poitín, highlighting the significance of these challenges.
Last year, the third largest market for Irish GI protected spirits was Global Travel Retail, which again is under severe pressure as a result of the global collapse in international travel as a result of Covid-19.
The spirits sector is also calling for a reduction on excise in Budget 2021, as an additional measure to support recovery.
Pat Rigney, Chair of Drinks Ireland|Spirits and Managing Director and Founder of The Shed Distillery in Co. Leitrim, which makes Drumshanbo Gunpowder Irish Gin, said:
“In 2019, we see that Ireland had a dynamic spirits industry, with domestic sales and exports continuing to grow. This growth allowed the sector to support the domestic economy and jobs across Ireland, including in more rural locations where many of our distilleries are located. While the sector remains vibrant and innovative, it has been severely impacted by Covid-19. For example, the hospitality sector is vital for consumers to explore products from new and emerging Irish spirits producers. This is on top of other challenges associated with Brexit and the EU and US trade disputes. As an industry, 2019 will be a benchmark to which we will aim to return to in the coming years.”
Vincent McGovern, Head of Drinks Ireland|Spirits said:
“The Irish Government can support the indigenous spirits sector in a number of ways as it seeks to recover from Covid-19. Ireland's excise taxes are the second highest in Europe and will act as a barrier to recovery. As part of a broad package of measures the government should look to deliver a 15% reduction in excise tax on drinks products which would help the industry and minimise the risk of job losses. In addition, in the immediate term Government could also look to facilitate a safe and sustainable reopening of the hospitality sector. Venues, including pubs and restaurants, are regulated environments and should be allowed to reopen and remain open in line with other EU countries. They are hugely important for our spirits sector, including for new and emerging producers who need the opportunity to get their product in front of consumers. It’s #OpeningTime.”