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Irish drinks firms spend E2.8bn a year

Monday, February 18 10:51:39

A new report from the Drinks Industry Group of Ireland (DIGI) has found that the Irish industry is responsible for total purchases of over E2.8 billion each year.

Industry purchases include: ingredients used in processing such as apples, barley and milk; non-industrial services such as IT and marketing; industrial services; and labour costs and wages.

The report, Purchases of Inputs by the Drinks Industry by Anthony Foley of Dublin City University Business School on behalf of DIGI, shows that in addition to the direct economic benefits of 64,000 jobs, over E1 billion in exports, E1.8 billion tax revenue in VAT and excise and almost E7 billion in personal expenditure (including VAT), the drinks industry is a very substantial purchaser of inputs.

Wage, salaries and personnel costs are one of the highest inputs and total E1 billion per annum, with retail, wholesale and on/off-trade sectors paying E690 million in personnel costs each year and the manufacturing sector paying a further E311 million.

Purchasing of Irish materials and services for use in drink manufacturing in Ireland is worth E800 million to the domestic economy. Of the total purchases by manufacturers - E1.558 billion which excludes goods bought for resale - a high proportion of those materials and services are domestically sourced, at 62pc and 42pc respectively. The latter figure includes the 50k tonnes of apples, 200k tonnes of barley, 300 million litres of milk purchased from Irish farmers by the Irish drinks industry each year. The sector is responsible for a far greater proportion of domestic purchasing than the chemical and technology sectors.

While personnel costs are the highest input purchased by the retail, wholesale and on/off sectors, at E690 million per annum; this is closely followed by the amount spent on materials and services other than food and drink at E583 million. The amount spent on food purchasing is valued at E243 million. The total value of retail sales is E7 billion.

The drinks industry spent E147 million on capital assets and investment purchases in 2010 and estimate a further E450 million will be invested over the next few years.

"The drinks industry, both manufacturing and retail, plays a very substantial role in the procurement of inputs as is apparent from this report. Previous DIGI reports have identified the direct economic benefits which derive from the drinks industry in terms of employment, output, exports and tax revenue and the positive impact which the sector has on tourism. An industry also contributes to the economy through its procurement from other suppliers," the author of the report, Anthony Foley, said.

"As identified in this report, mainly through the use of official CSO data and identified assumptions where data is insufficient, the drinks industry is a major purchaser of goods and services. This is true of both the manufacturing and retail sectors of the industry. The analysis shows that the manufacturing sector in the drinks industry pays E217 million in wages and salaries, buys E901 million annually in materials, buys E33 million in industrial services and E587 million in other services and will invest over E450 million over the next few years."