The smoking ban and changes to drinking habits have hit sales of Guinness in Ireland, according to drinks giant Diageo.
Diageo Ireland's half-year results reflect the continued decline of the beverage alcohol market - down a further 1 per cent - and the shift in alcohol sales from pubs, where Diageo has the majority of its business, to off licences and supermarkets.
Guinness volume sales declined 6 per cent while net sales (after deducting excise duties), benefiting from price increases, decreased 3 per cent.
Sales of Diageo's other leading brands in Ireland such as Baileys and Smirnoff vodka also slumped. Sales of Baileys were down 12 per cent in volume and Smirnoff sales fell by 4 per cent in the first six months of the year.
Both brands declined by 11 per cent in net sales terms adjusted for the Budget duty increase of over 40 per cent to spirits.
In Ireland, Diageo's total turnover remained flat at around €:1.4 billion after accounting for the strong euro but operating profit was down from €193 million to €185.5 million.
Diageo blamed a decline in consumer confidence and an acceleration in the shift from the pub to the off licence for the overall decline in alcohol consumption.
The shift towards the off trade is largely attributed to lifestyle and demographics changes, continued price competition in the off trade, and the initial impact on trade of the smoking ban introduced in March 2004, Diageo said.
The pub trade declined by 6 per cent and now represents 57 per cent of the market volume, while the off-licence trade grew by 7 per cent.
Diageo's share of the total market declined 1.5 percentage points, primarily driven by the shift to the off trade where Diageo's brands have lower share than in the on trade. Increased competition from imported beer, which has been discounted aggressively by off trade retailers, has also adversely impacted share.
Guinness's share of "long" alcoholic drinks (beer, cider and ready to drink) declined 1.5 percentage points in the year due to the continued switch from on to off trade and the hot weather in the first quarter of the financial year.
Volume in Diageo's lager brands - Budweiser, Carlsberg and Harp - was down 3 per cent again affected by the on trade to off trade switch. Smithwicks volume also declined.