Ireland’s drinks industry continues to prosper. It is one of the country’s most dynamic sectors, driven by innovation and growing demand in export markets.
It’s an industry that continues to make a vital contribution to the country’s economy, employing 90,000 people and exporting more than €1.25bn worth of produce.
Since 2001, the average per adult alcohol consumption in Ireland has declined by over 23%.
Despite a continued fall in consumption here, consumers are becoming more sophisticated in their tastes and are eager to try the plethora of new, quality products on the market.
After a strong 2018, we head into 2019 with many uncertainties for the industry.
At home, there are risks associated with Ireland’s disproportionately high excise rate, as well as the Public Health Alcohol Act.
Globally, Brexit will present challenges for the all-island drinks industry, particularly if Britain were to crash out with no deal.
Additionally, there is the looming threat of trade wars and tariffs.
In 2018, Irish gin producers took advantage of the global gin craze and exports soared, up 226% in the first eight months of 2018.
Demand for gin also continued to grow in Ireland and pink gin was the major breakthrough category in the domestic market.
Also on the spirits side, it was an exciting year for Irish cream liqueur.
After recovering from what producers dubbed “a lost decade”, 2018 saw further growth.
Preliminary export figures for 2018 suggest there was an export growth rate of approximately 8% for this year, driven by strong export growth to the US.
In 2018, Irish whiskey consolidated its position as the fastest growing premium spirit category in the world.
A number of Irish whiskey distilleries launched their own distilled product for the first time, increasing diversity and consumer choice.
There are now 21 operational whiskey distilleries in Ireland, up from just four at the start of the decade.
Poitín will benefit from a promotional push in 2019 while Irish whiskeys will likely go from strength to strength.
Looking ahead, we anticipate that growth in the Irish whiskey sector will continue to strengthen and more Irish whiskey distilleries will launch their own distilled product for the first time, this year.
While the growing demand for gin led to a prosperous 2018, this year will likely see the domestic market becoming saturated.
As such, there will be a greater need to support exports from the sector.
Separately, greater attention will be put on driving sales among other Irish spirits.
Two decades after poitín was legalised, sales remain quite low.
This year we will work with producers, Bord Bia and the Department of Agriculture to create an awareness campaign that will be rolled out to promote the product.
It is also anticipated that there will be increased scrutiny by consumers and the trade on the authenticity of Irish spirits in export markets.
Meanwhile, brewers are looking to lighter and zero-alcohol products.
Beer remains Ireland’s most popular alcoholic drink and brewers across the country continue to introduce exciting new products to the market.
Last year saw the emergence of lighter lager options to the market, hovering around 4% alcohol by volume, or ABV.
It is now anticipated that non-alcoholic beers will become increasingly popular. Ireland also remains a major exporter of beer.
Beer exports, by volume, rose only slightly, by 0.2% in 2017 and were valued at €273m.
That makes Ireland the eighth largest beer exporter in Europe.
The emergence of craft cider is also leading to more choice for consumers.
In recent years, cider drinkers have enjoyed unprecedented choice in pubs and on shelves due to the emergence of craft cider.
In 2016, cider consumption accounted for 7.5% of all alcohol consumed.
Cider’s share grew to 7.7% in 2017.
Of note also is the fact that there was a significant increase in apple cider vinegar sales in the on-trade sector in 2018.
Ireland’s love affair with wine continues.
Since 2000, the market share for wine has grown significantly.
In 2017, the wine industry saw a 0.47% increase in total consumption.
The sector employs over 1,100 people directly while supporting thousands of other jobs in Ireland’s pubs, restaurants, independent off-licences, supermarkets and in hotels that sell wine.
The big threat this year is a no-deal Brexit, which should be avoided to protect all-island drinks industry.
The drinks industry, like other sectors in the economy, is busy planning ahead for Brexit, which presents significant uncertainties.
The Irish drinks industry operates on an integrated all-island basis with seamless cross-border supply chains and three cross-border so-called Geographic Indications: Irish whiskey, Irish cream liqueur, as well as Poitín.
The aggregate value of trade in drinks products between the UK and Ireland in 2017 was €364m.
A third of the sales, or €121m, was the aggregate value of north-south trade.
While contingency plans are being put in place, a no-deal Brexit should be avoided at all costs to minimise risks to trade flows and consumer spending.
A no-deal would be seriously damaging, with potential consequences including immediate tariffs on cream, barley, malt, glass bottles, apples, finished cider and other supply chain inputs, as well as regulatory and customs checks at any new hard Irish border, leading to additional delays and costs.
The industry is also focusing on the implementation of the Public Health Alcohol Act.
While the Public Health Alcohol Act is now on the statute books, there are still many unanswered questions in relation to how it will be implemented.
This year we will be continuing our calls on the Minister for Health to establish an implementation group, to include the industry.
Ireland’s disproportionately-high excise rate negatively affects producers and punters.
The excise rate on alcohol is the second highest in the EU and is disproportionately high compared to other EU member states.
In addition to having the highest excise on wine, Irish consumers pay the second highest rate on beer and the third highest rate on spirits.
The industry this year will again be campaigning to reduce Ireland’s excise rate, which would help to drive innovation in the industry.
Then there is the threat of escalating trade wars and higher tariffs.
The prospect of additional trade wars and tariffs is of concern.
The US is a major market for Ireland’s drinks industry.
Currently, there is a 25% tariff placed on imported spirits to the EU, which is damaging for our global businesses.
It places us firmly in the firing line for retaliation from the US at any moment.
So, we have to ensure a prosperous future.
As we look ahead, we remain committed to taking on the various challenges and uncertainties faced by the industry head-on.
We look forward to working with our stakeholders and the wider business community to ensure there is a prosperous future for Ireland’s drinks industry, which remains one of the most exciting indigenous sectors.
Patricia Callan is director of the Alcohol Beverage Federation of Ireland