Drinks' Trade Recession Deepens

Worrying about the recession may be driving some Irish consumers to 'the drink' but new figures just released show those most likely to be at their 'wit's end' are marketing executives in the booze trade.

As drinkers continue to flood north to take advantage of lower prices in the off-licence trade, Ireland's alcohol industry has recorded its worst performance in 25 years as recession continued to bite.

Prospects could be even worse in the current year, an industry group has said.

The volume of alcohol consumption fell by 5.9% last year compared with an increase of 2.5% in 2007, the Drinks Industry Group of Ireland (DIGI) said in a report.

"With little sign of an upturn in the national economic situation, the prospects for the next 12 months are even worse," DIGI Chairman Kieran Tobin said.

C&C, which sells Bulmers cider in Ireland and Magners in Britain, said this month it was writing down assets worth €141 million to streamline its business as a deep recession added to years of declining sales.

The drinks' sector has also been hit by a weak Sterling against the Euro which has led to shoppers flocking across the border to Northern Ireland to take advantage of cheaper prices.

An Irish Government-commissioned study published last week estimated Ireland lost between €58 million and €90 million in value-added tax and excise revenues in 2008 due to cross-border shopping, with a potential revenue loss to the exchequer of €72 million to €112 million this year.

Things are now so bad that the Dáil Government will present an emergency budget in April, its second since October, in a bid to cut a ballooning budget deficit due to deteriorating public finances.

Economists expect a hike in taxes on alcohol in a bid to raise revenue, but DIGI warned it would compound the pressures faced by the sector.

"Any such increase will simply encourage more and more southern shoppers to purchase their alcohol in Northern Ireland where the euro/sterling exchange rate and the excise and VAT differentials lead to significant savings," Mr Tobin said.

The DIGI report said the value of the alcohol market fell by 2.5 points in 2008 to €6.9 billion with all four alcohol categories of cider, beer, spirits and wine recording volume declines.

"On the basis of these figures, up to 9,000 jobs will be lost in all sectors of the drinks industry in 2009," Tobin said.

See: Cross Border Shopping Fears Hit Southern Exchequer

(BMcC/JM)