Drinks industry slump deepening

 

The depression in the drinks industry is deepening, with 70 per cent of licensed premises reporting a decline in sales over the past five years, according to a new report.

Employment has decreased, sales revenues have fallen, and labour costs have increased in pubs, restaurants, hotels, and nightclubs, the survey of the sector by the Drinks Industry Group of Ireland (Digi) finds.

Speaking at the launch of the report in Dublin city centre this morning, Digi chairman Kieran Tobin said that the decline in the on-trade in Ireland began in the early years of this decade, but had accelerated sharply over the last 18 months.

Mr Tobin said that the economic downturn and lifestyle changes were combining with high alcohol taxes and a major increase in cross-border trade to put the wider drinks industry under immense pressure, but particularly pubs, bars, restaurants, and nightclubs where closures and redundancies were now commonplace.

The report, compiled by DCU economist Mr Anthony Foley, is Digi’s sixth Survey of licensed premises and covers the period 2004-2009.

Mr Tobin called on the Government to reduce levels of excise duty on alcohol by 20 per cent in order to sustain an industry that continued to provide thousands of jobs and billions of Euro in revenue to the State.

“The survey details trends in the on-trade from the height of the boom to the present day, when the entire drinks industry is in virtual freefall. In 2004 we began to see a slowdown in sales and revenue in pubs, hotels, nightclubs, and restaurants, but the scale of the decline has accelerated sharply in the last 18 months.”

Almost 750 premises were covered by the survey, which found that the majority of licensed premises have relatively low annual sales revenues. Almost half have annual sales revenues below €200,000, while 27 per cent of pubs outside Dublin have annual sales revenues of less than €60,000.

Some 47 per cent of premises surveyed reported a decrease in their staff levels over the five year period. This figure rises to 65 per cent for pubs and bars in Dublin.

Mr Tobin said the survey required careful and considered examination by the drinks industry and Government. “The reasons for the declines in sales and revenue in the on-trade are clear: lifestyle changes and a shift to the consumption of alcohol at home have had an impact on licensed premises, but cannot on their own account for the losses which the sector is suffering.”

“A reduction in disposable income caused by the economic downturn combined with the availability of cheaper alcohol products for purchase in Northern Ireland, are clearly major contributory factors to the patterns recorded in the survey.”