Alcohol sales in pubs has continued to decline while increases in related taxes have catapulted the wider drinks industry into further “chaos”, research published today has shown.
The Drinks Industry Group of Ireland (Digi) has warned that the current picture means the trend of job losses – 6,000 in Irish pubs since 2009 – will continue.
Its annual ‘Drinks Market Performance Report’ shows that the volume of pub sales has dropped by nearly one third in the past five years while consumptions levels have fallen by 0.5 per cent last year and by almost 20 per cent since 2001.
Digi points to a hike in alcohol product taxation of up to 41 per cent as being a major contributor, fortified by a shift in consumer habits.
Almost 60 per cent of alcohol sold in Ireland last year was done so in the off-licence trade, although the independent operators in this sector have also suffered a further decline in business.
“The figures in this report are stark; the Irish pub and independent off-licence sectors are in crisis and that crisis is being exacerbated by the huge tax hikes the sector has had to shoulder in the last 18 months,” said Digi chairman Peter O’Brien.
And things do not appear to be improving according to report author Anthony Foley of DCU’s Business School who says bar sales in January of this year dipped nearly 7 per cent on 2012.
“The overall market will be hit by the very large increases in excise levels in Budget 2013 and will decline slightly due to reduced average consumption and loss of consumers through emigration,” he said.
Digi has warned that apart from the obvious rolling impact on jobs, the decline in the industry is a threat to the tourism sector which relies on the ‘traditional pub’ and to local communities.
The report points to VAT increase from 21 per cent to 23 per cent in January 2012 and large excise increases in Budget 2013 resulting in beer excise increasing by 22 per cent, spirits by 18 per cent and wine by 41 per cent.
Digi warns that “the huge wine excise has had a particularly negative impact on the already hard pressed restaurant sector, and has counteracted any benefit from the introduction of a lower tourism VAT rate”.
Consumption too has taken its toll, it says, with average per adult rates decreasing by 0.5 per cent in the past year and by 19 per cent in since 2001.
