Off-trade winds blowing businesses away
Independent off-licences say rising taxes and undercutting from retail giants have forced the sector to its knees
Finian Sweeney in Sweeney’s off-licence in Phibsborough, Dublin. Photograph: Bryan O’Brien
The lowest hanging fruit appears to be the grape, and it was once again targeted by Michael Noonan when he announced a 50 cent increase in excise duty on a bottle of wine in this week’s budget.
In just 10 months the Minister for Finance has increased the duty on wine by €1.50 and today more than half of the cost of a €10 bottle is eaten up by taxes.
This, according to the trade, is pushing independent wine merchants to the brink and making wine increasingly the preserve of the wealthy.
“There is no doubt about it that with this week’s increases wine is becoming a very elitist product,” says Finian Sweeney, who owns two off-licences in north Dublin. “With the duty changes it has become almost impossible to sell wines with any character at all for less than €13.”
It is not just retailers who will be hit by the increase. The higher duty will add at least €2.50 to the cost of a bottle of average wine in restaurants, offsetting many of the gains delivered by the retention of the 9 per cent VAT rate for the hospitality sector.
“All told, 51 per cent of the price of a €10 bottle is now going in tax, so the producer, wholesaler and retailer have to divide up what is left.”
The increase was condemned by the chairwoman of the National Off-Licence Association, Evelyn Jones, as an “extremely irresponsible” move which would put independent off-licences under severe pressure and lead to another increase in illicit alcohol trading.
“This has led to a situation where only industrially produced wine can be found at the lower price points. The quality of the product is being reduced because of extremely high taxes that are completely out of sync with our European neighbours,” she argues.
Tax is not the only thing preoccupying wine sellers’ minds. It is not even the most serious challenge facing them.
The Groceries Order which prevented the large supermarkets from selling goods at below invoice price to stop small shops going to the wall was introduced in 1987 but lifted 18 years later as concern mounted that it was contributing to sky-rocketing prices across what was known then as the “rip-off Republic”.
Before the euro changeover in 2002 a can of Budweiser in an off-licence cost about £1.55 (€1.97). Yesterday in Tesco eight cans cost just €12 – or €1.50 each.
Alcopops have fallen even more sharply.
When launched, bottles of these high-sugar, high-alcohol drinks, indisputably targeted at younger drinkers, sold for about €3 a pop. Bottles in Dublin now cost less than €1.50, while bottles of cheap vodka now routinely sell for €10.
Prices have fallen because five retailers – Tesco, Dunnes Stores, Centra, Spar and Costcutter, which control 95 per cent of all carry-out trade between them – are using the lure of cheap alcohol to bring people through their doors.
The impact on independent off-licences has been devastating, with some reporting a drop in sales of more than 40 per cent when the law changed.
Over the last eight months 11 off-licences haves shut in Dublin, Meath and Kildare, while five more will be gone by the end of the year, according to National Off-Licence Association. A total of 3,000 jobs have been lost in the trade since 2008.
“The sector is on its knees and within a few years will have died out completely,” Jones has warned.