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Covid-19 significantly impacting Irish spirits sector

Written by Business World, on 1st Oct 2020. Posted in Agriculture

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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 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 publishes 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.

Commenting on the report, Chair of Drinks Ireland|Spirits Pat Rigney, said: "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."

The report shows that domestic sales and exports 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. 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. 

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%.

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, sustainable reopening is important. 

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 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.

Head of Drinks Ireland|Spirits, Vincent McGovern, said that the Government can support the domestic spirits sector in a number of ways. He elaborated: “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.”

Mr McGovern added that the Government could also look to facilitate a safe and sustainable reopening of the hospitality sector as soon as possible, stressing how important they were for the spirits sector.

Source: www.businessworld.ie

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