Spirits sector performed strongly in 2019
A strong domestic hospitality sector will be vital in allowing the sector to return in coming years to the level of growth seen in 2019.
Irish whiskey sales volumes grew 10.9% worldwide, from 10.58 million nine-litre cases to 11.93 million cases. Meanwhile, Irish Cream Liqueur sales increased by 3.9%, from 8.2 million to 8.52 million nine-litre cases according to Drinks Ireland|Spirits, the Ibec trade association representing the spirits sector, which publishes its Irish Spirits Market report 2019 today.
But the Covid-19 crisis has significantly impacted Ireland’s spirits sector, hitting production, exports and sales according to Ireland’s spirits producers and in the context of current challenges 2019 will be seen as a “benchmark” year for the industry as it seeks to recover from the Covid-19 crisis in years to come
Today’s report shows that domestic sales grew just 0.7% from 2.4 million to 2.42 million cases as overall alcohol consumption in Ireland continues to decline. But this growth, while slower than that the hefty 6.6% increase in 2018, illustrates the continued popularity of high-quality spirits products created by a dynamic and innovative Irish industry, states Drinks Ireland|Spirits.
Ireland’s most popular spirit was vodka, driven in part by its use in cocktails, followed by Irish whiskey and gin. While growth of Irish whiskey and gin slowed in 2019 compared to 2018, both were still significant, with sales up by 1.5% and 4.6% respectively, states the report. Vodka sales grew by 0.6%.
However it’s fair to say that 2019’s growth has been reversed as a result of Covid-19.
Drinks Ireland|Spirits reports that, “Spirits producers have been significantly impacted by the closure of the hospitality sector, saying that that these venues should be allowed to reopen or stay open in a controlled, safe and sustainable manner where possible”.
A strong domestic hospitality sector will be vital in allowing this sector to return in coming years to the level of growth seen in 2019 according to Drinks Ireland|Spirits, adding that a safe and sustainable reopening is important.
It says that the on-trade, including pubs and restaurants, are vital for enabling new and emerging producers to gain traction in the domestic market.
“These venues give consumers the opportunity to try new or different Irish spirits, championed by staff in these establishments, who take pride in sharing their knowledge with domestic and international visitors alike.”
Other challenges
Apart from Covid-19, the spirits report points to challenges facing the sector as a result of the ongoing trade disputes between the US and the EU. These have resulted in tariffs of 25% being placed on Irish cream liqueur and other Irish liqueurs as well as on Single Malt Irish whiskey from Northern Ireland. An earlier round of tariffs saw the EU apply a 25% surcharge on US Whiskey and Bourbon imports in retaliation for US tariffs on European steel and aluminium products. These are due to increase automatically to 50% next July.
And like many other industries, the spirits sector faces many uncertainties as a result of Brexit with a trade deal still to be agreed.
In 2019, the US and UK were the two biggest export markets for Ireland’s Geographic Indication-protected spirits: Irish Whiskey, Irish Cream liqueur and Poitín.
Last year, the third-largest market for Irish GI-protected spirits was Global Travel Retail, now under severe pressure as a result of the global collapse in international travel.
The spirits sector too has called for a reduction on excise in Budget 2021 as an additional measure to support recovery.
“In 2019, we see that Ireland had a dynamic spirits industry with domestic sales and exports continuing to grow,” pointed out Drinks Ireland|Spirits’ Chair and Managing Director/Founder of The Shed Distillery (producer of Drumshanbo Gunpowder Irish Gin) Pat Rigney, “This growth allowed the sector to support the domestic economy and jobs across Ireland including in more rural locations where many of our distilleries are located. While the sector remains vibrant and innovative, it has been severely impacted by Covid-19.
“For example the hospitality sector is vital for consumers to explore products from new and emerging Irish spirits producers. This is on top of other challenges associated with Brexit and the EU and US trade disputes. As an industry 2019 will be a benchmark to which we will aim to return to in the coming years.”
Author of the report and Head of Drinks Ireland|Spirits Vincent McGovern, added, “The Irish Government can support the indigenous spirits sector in a number of ways as it seeks to recover from Covid-19. Ireland’s excise taxes are the second-highest in Europe and will act as a barrier to recovery.
“As part of a broad package of measures the government should look to deliver a 15% reduction in excise tax on drinks products which would help the industry and minimise the risk of job losses.
“In addition, in the immediate term Government could also look to facilitate a safe and sustainable reopening of the hospitality sector. Venues, including pubs and restaurants, are regulated environments and should be allowed to reopen and remain open in line with other EU countries. They are hugely important for our spirits sector, including for new and emerging producers who need the opportunity to get their product in front of consumers. It’s #OpeningTime.”
