A report published by the Drinks Industry Group of Ireland has warned that more jobs were under threat in a sector where 15,000 workers have already been made redundant in the past 18 months. Total employment in the industry now stands at 80,000.
The study also shows that overall drinks sales fell by almost 9% last year as a result of falling consumption associated with the weak economy and the ongoing problem of consumers travelling to the North to buy alcohol.
DIGI secretary Donall O’Keeffe, who is also chief executive of the Licensed Vintners Association, predicted that up to 350 pubs out of an estimated 8,500 licensed premises across the Republic will go out of business each year between 2010 and 2012.
“Some 1,500 pubs have closed their doors over the past five years. That averages at about one per day and it looks set to continue,” said Mr O’Keeffe.
Although official figures show that alcohol prices in pubs and off-licences rose by over 2% last year, DIGI rejected criticism that publicans and off-licence owners could lower prices.
DIGI said drink prices had risen at a slower rate than overall inflation since 2005, while there has been no increase in the price of alcohol by the trade since September 2008.
Pub prices also fell by 2.7% in January as a result of excise and VAT reductions.
The DIGI study – Drinks Market Performance 2009 – was prepared by Dublin City University economist Anthony Foley who said the reduction in consumption and sales across all drinks categories was profound.
Mr Foley said off-licences now accounted for over 50% of the drinks market, while the pubs’ share of the sector was likely to continue to decline. However, Mr Foley said many small off-licence owners were also struggling to survive in the face of strong competition from supermarket groups.
The DCU lecturer estimated that alcohol consumption will fall by a further 5% in 2010 with a consequent effect on jobs and employment, especially in the pub sector.
Mr Foley said increased taxes, mortgage rates, combined with pay cuts and pay freezes, meant most people would have less discretionary income, while there was also a fall-off in tourist numbers. He also acknowledged lifestyle changes in alcohol consumption patterns which may be linked to the “drink aware” campaign promoted by the drinks industry.
DIGI chairman Kieran Tobin said it was difficult to be optimistic about the short-term future of the industry as 2009 was already “the worst year for the industry in living memory”.
Sales fell by 8.9% last year following a 5.9% reduction in 2008.
Mr Tobin said there was a substantial decline in consumption, even allowing for the impact of a large increase in cross-border sales.
It is estimated that average alcohol consumption is now back at levels last seen in 1995. According to DIGI, alcohol consumption fell by over 9% last year, while sales of soft drinks and bottle water also fell sharply. Volumes of bar sales alone decreased by 11.1% and off-sales 6%.
“Without a shadow of a doubt, the drinks sector is no longer ‘an old reliable’,” said Mr Tobin, However, he praised the Government for its decision to cut excise by 20% in the recent budget, which he claimed was a crucial first step to reduce the problem of cross-border sales of alcohol.
Mr Tobin said it was vital the Government introduced no further taxes, regulations or legislation which would impact negatively on the struggling sector. He said Ireland continued to have some of the highest taxes on alcohol within the EU.
DIGI said one of the few positive notes was the strong export performance of leading brands with total sales of around €1 billion last year.