Off-licences blame tax hike for closures

Mon, Mar 4, 2013, 00:00

At least three independent wine off-licences have closed since the year began as a result of the €1 tax hike on bottles of wine, an organisation representing off-licences has said, warning that other such closures are in the pipeline.

The National Off-Licence Association said that the excise increase would continue to have drastic implications for the sector, and warned that it estimates that another 25-30 independent off-licences could close by the end of the year.

“The 2013 duty hike will have a detrimental impact on the independent off-licence sector,” association chairwomanEvelyn Jones said. “An increase in excise duty is a luxury that the independent specialist off-licence sector simply cannot afford.”

Below-cost selling

“Large multiple retailers, on the other hand, are more than capable of absorbing excise duty increases as they can engage in below-cost selling practices.

“Currently, retailers can and do sell alcohol at below-cost levels. The exchequer loses out significantly because of this practice. If this practice was banned, it would ensure that retailers cannot reclaim 23 per cent of the cost of the loss leader in their VAT return; saving the State an average of €21 million each year,” she said, adding that, since 2008, over 80 independent off-licences have gone out of business.

Analysis of the number of licences issued by the Revenue Commissioners shows that, while there was an upward trajectory in each of the main categories of off-licences (spirits, beer and cider, and wine) over the course of the past decade, the numbers dropped between 2011 and 2012 with 53 fewer spirits licences, 50 fewer beer and cider licences and 81 fewer wine off-licences issued.

It is not possible to capture a definitive number of off-licences from the Revenue data because many off-licences hold separate licences for spirits, wine and beer, and cider.

However, taking wine off licences in isolation gives the best picture of the overall number of off-licences, capturing as it does mixed-licence establishments, standalone wine-only off-licences, and smaller convenience stores and petrol stations selling alcoholic products including wine.

The spike in the number of wine off-licences becomes apparent around the turn of the millennium.

Liquor Act 2000

In the five years between the beginning of 1996 and the end of 2000 there were, on average, 523 wine off-licences issued yearly. That figure more than doubled in 2001 when 1,284 wine off-licences were issued.

This was partly due to changes brought about in the Liquor Act 2000 which led to a sharp increase in off-licences as business-owners acquired off-licences by buying a pub licence and converting it to an off-licence.

The number peaked in 2008 when 3,718 wine off-licences were issued, falling by 394 to 3,324 such licences issued last year.