The swing by consumers toward home consumption has resulted in off-licence sales accounting for almost 60% of the market.
This growing trend saw pub sales drop by 7.2% during 2011. The overall volume of drink sold in pubs and other licensed premises also fell by 5.5%.
A report by the Drinks Industry Group of Ireland (DIGI) highlights how bars, pubs, hotels, and restaurants are continuing to suffer a sharp decline in business largely at the expense of sales in the off-licence trade, which grew 5% last year.
The report claims early sales figures for the first quarter of 2012 are disappointing and down almost 10% on 2010 figures.
Despite the decline of the traditional Irish pub, the overall alcohol market in Ireland increased by almost 0.2% in 2011. However, average consumption figures decreased to 11.7 litres of alcohol per person — a level last recorded in the mid-1990s — due to higher population numbers.
The DIGI review conducted by Dublin City University economist Anthony Foley claims the drop in bar sales has resulted in 5,000 jobs in the sector being lost over the past two years.
It also warns that the prospects for the drinks industry remain weak due to the low levels of economic growth and a fall in consumer expenditure.
The report said the larger decline in sales over volume in the pub sector was due to a decrease in bar prices, particularly food.
DIGI chairman Kieran Tobin said the bar trade was now operating at only 70% of its 2007 levels, which had marked a peak of the market. “The situation remains fragile with pubs, bars, nightclubs, hotels, restaurants, and independent off-licences continuing to close as a result of consumers not spending,”he said.
He warned the situation could lead to further losses among the 62,000 people still employed in the drinks industry.
DIGI also called on the Government to maintain initiatives such as the Vat reduction on tourism-related products and services introduced last year.
The DIGI report noted that consumption of beer and cider both dropped in 2011, while spirits and wine increased.
In volume terms, beer decreased by almost 2% last year, although it still account for almost 47% of all alcoholic drinks consumed.
Wine consumption increased by just over 2% to claim 26.5% of the overall market. Consumption of spirits rose by 3.2%, accounting for 19% of all alcoholic drinks.
Overall drink prices fell by 0.8% in 2011, although the competitive off-licence sector recorded average price decreases of 2%.