Sales of alcoholic spirits are set to drop from €1.7 billion to €1.4 billion because of tax increases introduced in last year's budget, according to new research published in Retail Intelligence.

The figures are for the Republic and Northern Ireland.

The research, produced by the British agency Mintel, claims on-trade sales will decline by 30 per cent in 2002/03, while off-trade sales will drop by a more modest 8 per cent.

According to Retail Intelligence: "It's all very worrying for the Irish spirits market and the whiskey industry is believed to have been particularly affected.

"Vodka has overtaken whiskey as the spirit with the highest market penetration. There are an estimated 1.1 million consumers drinking vodka on the island of Ireland on a regular basis.

"Despite sales of €1.7 billion in 2002, the effect of the tax increase - in combination with the strength of the euro against the pound - have resulted in an expected all-Ireland market value of €1.4 billion."