Irish Wine Association launches annual report and calls on government to reverse excise increase

Monday, 19 August 2013

    • Large excise increase of 41% introduced at the end of 2012 is challenging Ireland’s competitiveness as a tourism destination
    • Ireland has the highest levels of excise in the EU for wine with approximately 50% of the cost of an average bottle of wine going to the Exchequer
    • Wine consumption per capita in Ireland is among the lowest in Europe

The Irish Wine Association (IWA) has today called on the Government to reverse the disproportionate excise duty increase that was introduced on the wine industry last year. Speaking on the publication of its annual industry review, the Chairman of the IWA, Michael Foley said that the excise increase of 41% is damaging this important sector, which contributed €231 million in excise and €251 million in VAT to the Government in 2012.

Mr Foley said that excise contributions from the wine industry are equivalent to 27% of the total alcohol excise collected, highlighting the important contribution of the sector to the Irish economy.
While acknowledging the importance of the industry, Mr Foley said that the large excise increase introduced by the Government at the end of 2012 was significantly higher than the increases imposed on any other alcohol beverage category. The reversal of this unfair increase and the protection of the sector are crucial for many small family-run businesses and for the Irish hospitality sector, which employs 10% of the entire national workforce.

Mr Foley commented, “Our annual industry review outlines the unprecedented challenges that the wine industry has faced in recent years. Ireland has the highest levels of excise in the EU and as a result is one of the most expensive countries to purchase wine. This clearly increases the risk of expediting cross-border shopping, which has a huge impact on the overall Irish retail sector. In basic terms, if we look at a standard €8 bottle of wine, a massive 53% of this price is attributable to tax (excise & VAT).

“Despite the many challenges that the sector has faced, it continues to grow in importance for the Irish economy. In terms of tourism, we all know that wine is a key source of profitability for restaurants. At present one restaurant per day is closing in Ireland, while 80% operate at a loss. This is clearly a vulnerable sector and if the Government continues to impose huge increases in wine excise, it cannot expect the Irish wine sector to remain capable of supporting the 1,711 restaurants with wine licences and 413 other with full licences.

“The wine industry was shaken by an unfair excise increase in 2008/9 and faced the phenomenon of cross border shopping which emerged in the wake of the recession. Throughout 2010 and 2011, the industry began to witness a recovery in the volume of wine sold. However, the large increase in excise introduced at the end of 2012, makes it nearly impossible for the sector to effectively contribute to the recovery of the Irish economy, which will most likely remain weak in 2014,” concluded Mr Foley.

Excise Duty:

Highlights of the report are:
    • Approximately 50% of the cost of an average bottle of wine goes to the Exchequer
    • Wine had a 26.1% share of the alcoholic beverage market in 2012, compared to a 13.2% share in 2000.
    • The Irish public continues to be one of the lowest consumers of wine in Europe at 17 litres per capita, compared with Denmark’s 30 litres.
    • 81% of wine sold was purchased in off-licenses.
    • Red wine remains the most popular with Irish consumers.
    • The percentage of women choosing wine is higher than that of men, however a larger proportion of men are drinking wine amongst 18-24 year olds.
    • Australian and Chilean wines remain the most popular choice among consumers.

The Irish Wine Association is a category association under the umbrella of the Alcohol Beverage Federation of Ireland (ABFI). As the voice of Irish wine importers and distributors, the IWA supports the interests of the wine sector in Ireland. It seeks to promote the development of evidence-based policy positions, while highlighting the economic significance of the wine industry.