Exports of Irish alcoholic drinks fell by 19% in 2020 due to the impact of the Covid-19 pandemic and US tariffs, according to a new report.
Dublin-based agency Bord Bia’s Export Performance and Prospects 2020/21 report found that Irish alcohol exports reached €1.3 billion (US$1.6bn) last year. The decline was due to US tariffs and Brexit stockpiling, and the closure of the on-trade globally due to the pandemic.
Whiskey exports were down by 26% in 2020, while Irish cream liqueurs exports fell by 14%. The report noted that exports of whiskey were worth €620 million (US$754m), with 57% of that (€356m/US$433m) destined for the US. Cream liqueur exports were valued at €311m (US$378m) in 2020, with 45% (€141m/US$171m) destined for the US.
The report said that the drop in exports does not reflect a decline in sales as a significant volume of Irish spirits reached the US at the beginning of 2020.
Trade group Drinks Ireland said the pandemic also ‘significantly’ affected production and domestic sales in 2020.
However, the Bord Bia report noted that the value of alcohol exports last year remained 12% higher than they were before Brexit in 2016.
The report noted that Irish alcohol exports to the UK market declined by 12% to €198m (US$241m). Overall alcohol exports to 27 EU markets from Ireland dropped 16% to €330m (US$401m).
Patricia Callan, director of Drinks Ireland, said: “Ireland’s drinks industry is dynamic, innovative, and has performed strongly in domestic and export markets in recent years.
“While 2021 will continue to be challenging for the sector, as it seeks to recover from the impact of the pandemic and navigates the challenges of Brexit, US tariffs and a range of other issues, it is resilient, and we are confident that it can regain some growth.
“We saw that despite exports declining last year, for example, they remained at pre-2016 levels. Recovery is dependent on a number of factors and supports from government, including the full sustained reopening of the hospitality sector, a rebound in international tourism for visitor centres, and supports for Irish drinks exports.”
Drinks Ireland has released its outlook for 2021 following the release of the Bord Bia report.
The trade association said 2019 remains a ‘benchmark’ year for the drinks sector to return to growth. Furthermore, recovery in the domestic market needs the full hospitality sector to be reopened, with the requirement of a revised plan to living with the pandemic and a fast rollout of the vaccine programme.
Drinks Ireland also said brands need support from the government this year to help them recover and regain market position and share. This could be boosted by funding for brand ambassador roles in markets across the world.
The trade group also said the closure of bars led to a drop in alcohol consumption in 2020, with revenue clearance data showing that it fell by 4.5% between January and September 2020, compared to the same period in 2019. Drinks Ireland expects this ‘long-term trend’ to continue as consumers choose quality over quantity.
In addition, Drinks Ireland said visitor attractions are dependent on the domestic market In the short term. The industry must innovate to attract new consumers and switch to smaller, tailored high-end experiences for small groups.
Drinks Ireland said there is a growing demand for high-quality spirits like Irish gin and whiskey, with domestic sales of spirits growing by 0.7% from 2.4m to 2.42m nine-litre cases between 2018 and 2019. The trade group also noted that hard seltzers will grow significantly with new brands set to enter the market in 2021.
The Irish whiskey industry will also drive further rural development and inner-city regeneration, Drinks Ireland said, with many Irish whiskey distilleries in local towns moving into unoccupied industrial premises.
Drinks Ireland also cited the growth of e-commerce, which will offer producers to chance to enter new markets and reach different consumers.
When it comes to challenges, Drinks Ireland said the new Brexit agreement has resulted in ‘increased costs and compliance burdens’.
However, the Bord Bia report said alcohol has been one of the most successfully diversified categories. It has one of the lowest dependency rates on the UK of any major food and drink category, with only 15% of exports destined for the market. Furthermore, the spirits sector has also been hit by the ongoing trade disputes between the US and the EU, which led to the US imposing a 25% tariff on single malt Irish whiskey.
Via The Spirits Business