The effects of the Covid-19 pandemic on the drinks sector have been laid bare in an industry report, which shows spirits exports from the Republic declined by 16 per cent last year, while the closure of hospitality venues also had a negative impact on domestic sales.
The annual market report from Drinks Ireland|Spirits shows that the value of spirits exports fell last year to €990 million from €1.18 billion in 2019.
However, the report notes that the fall comes on the back of a number of years of strong growth, with the value of exports growing by 83.6 per cent between 2014 and 2019.
It says the decline last year was due in part to the collapse of global travel retail, which was the second largest market for Irish whiskey and fourth largest for Irish cream liqueur prior to Covid-19.
Recovery in this market “could be slow”, according to the report, and will “likely go hand in hand with international travel returning to a pre-pandemic level”.
The report details that the overall global sales volume of Ireland’s spirits declined slightly, from 20.4 million nine-litre cases in 2019 to 19.7 million last year.
The most popular markets for Irish spirits that are protected by EU rules last year were the United States, United Kingdom, Canada, Germany and Ireland respectively.
Domestic sales
Domestically, the report shows the closure of hospitality venues had a negative impact on the sector, particularly for brands that rely heavily on the on-trade. Overall, sales fell by 4.8 per cent, from 2.4 million nine-litre cases in 2019 to 2.3 million cases last year.
Some spirits categories benefited from the consumer shift to the off-trade in Ireland, according to the report, with Irish cream liqueur sales growing by 26.5 per cent.
Sales of vodka declined by 10.2 per cent last year, but it remained Ireland’s most popular spirit with a 31.6 per cent market share in the category. It was followed by Irish whiskey (26.3 per cent market share), gin/Irish gin (14 per cent), and rum (7.4 per cent).
Sales of gin in Ireland fell by 6.6 per cent between 2019 and 2020. The report says forecasts for the next five-year period suggest that the growth in gin and Irish gin has not ended and that the decline in 2020 will be seen as a “Covid-19 related blip”.
Ireland has the third highest level of excise on spirits in the EU, and Drinks Ireland|Spirits called for a reduction in Budget 2022 to help drive recovery.
Bryan Fallon, chairman of the industry group, said the report shows the spirits sector “did not escape unscathed from the Covid-19 pandemic”.
“Irish hospitality venues are a vital component to the continued growth and prosperity of Ireland’s spirits and craft spirits sector, allowing companies to engage with consumers, so their closure was very much felt,” he said.
“Despite this, the resilience shown by the spirits sector last year in the face of the loss of one of the main consumer channels was remarkable, with producers responding with an increased emphasis on the off-trade and a focus on ecommerce.
“Outside of Covid-19, a number of other challenges remain such as Ireland’s high level of tax on alcohol, which is unsustainable and uncompetitive.
“We are calling on the Government to reduce excise tax by 7.5 per cent in Budget 2022. An excise reduction would boost post-Covid tourism and secure sustainable, long-term growth for Ireland’s drinks and hospitality businesses in 2022 and beyond.
“While 2020 has shown that our sector is resilient and adaptable, this resilience and adaptability will be tested in the post-Covid world, and Government must support in our sectors recovery through an excise cut.”
