Lower taxes can uncork drink sector potential
Very few people in Ireland, least of all those of us working in the Irish drinks industry, would have voted for Britain to leave the EU.
However, in accepting the reality of Brexit many of our colleagues, just as in other sectors of the Irish economy, breathed a sigh of relief at the end of 2019 when an immediate hard Brexit was avoided. That is not to say that 2020 will be without its challenges.
As a sector that exports over €1.4bn in premium products every year, to over 140 markets, we will be hoping the year that lies ahead brings clarity on our future trading relationship with Britain.
Trade, and free access to world markets, is vital to the continued success of our industry and the protection of jobs in breweries, distilleries and drinks distributors around Ireland.
It is not just Brexit where nervousness and uncertainty abounds for our exporters.
In October, 15 international beverage alcohol associations called for an immediate end to tariffs on distilled spirits and wines as our industry became collateral damage in trade disputes that have nothing to do with the beverage alcohol sector. These tariffs are applicable to Irish cream liqueur and cordials, as well as single malt Irish whiskey from the North.
The new round of tariffs on drinks has further damaged a transatlantic industry that has already been negatively impacted by the EU’s retaliatory tariffs on US Whiskey. 2020 must be the year where the EU and the US work together to end this pointless trade war. We cannot risk another year of investment-damaging uncertainty.
The drinks industry is resilient, however, and we continue to expand into new markets and expand those we currently trade with.
We welcomed the new EU-China agreement on protection of geographical indications for Irish Whiskey – the fastest growing premium spirits category in the world- in 2019 and efforts to continue this growth will redouble.
So, too, will efforts to build on the exports of beer, cider and other spirits categories.
All of this export activity, of course, relies on a solid home market and the adoption of the correct policies by the Government. With an election due sooner rather than later in the coming year, the next Government, regardless of its composition, must ensure it fosters an environment that not only avoids further unnecessary or counter-productive regulation but actively helps drinks businesses to thrive.
Ireland’s new wave of microbreweries and distilleries are creating jobs, attracting tourists and exporting high quality products around the world. Politicians must protect their cost competitiveness by avoiding unnecessary taxation and regulation and ensuring that they reach their full potential.
This is not just an issue for our sector- the cost of doing business in Ireland is high for everyone. We must avoid the mistake of the Celtic Tiger that saw our competitiveness fall, resulting in the need for a sharp correction once the economy began to disimprove.
Many of our drinks businesses are, of course, contained in the country’s network of brewery and distillery visitor centres. Almost 2.8 million people visited these in 2018, contributing to balanced regional development and to strengthening Ireland’s appeal as a global tourism destination.
The Government should avoid introducing Minimum Unit Pricing ahead of the North. While the drinks industry is in favour of tackling the sale of cheap alcohol to reduce alcohol misuse, we believe the introduction of MUP should only be done in conjunction with the North.
This would avoid an even more dramatic price differential on alcohol products sold either side of the border.
A thriving drinks industry in 2020, supported by Government, could be good news for the consumer. Unfortunately, at present Ireland has the second highest excise tax on alcohol in the EU.
This is punitive for moderate drinkers, as well as producers and retailers.
It also increases costs for restaurants and hotels, especially outside the cities, many of whom are suffering due to the downturn in visitor numbers from the UK.
The next Government should look to bring excise into line with the majority of EU economies and give consumers and producers a break. We would all drink to that in the New Year.
