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Press Release 27.08.2020: Drinks industry calls for dedicated hospitality support package

Drinks industry calls for dedicated hospitality support package as Ireland’s pubs and bars endure longest lockdown in the EU

• Thirteen EU member states, including Germany and Italy, reopened their bars in May; nine, including France and Spain, reopened in June
• Drinks Industry Group of Ireland has called for a dedicated pub support package to be announced immediately and a 15% reduction in excise tax on alcohol to be provided in the Budget as Ireland’s excise is the second highest in the EU
• DIGI represents over 14,000 drinks and hospitality businesses while the industry exported €1.4 billion worth of products in 2018
• DIGI chair Rosemary Garth: “The drinks and hospitality industry needs support now, otherwise we risk permanently losing hundreds of businesses and thousands of jobs, just as we did in the 2008 recession.”

The Drinks Industry Group of Ireland (DIGI), the umbrella organisation that represents Ireland’s drinks and hospitality industry, including pubs, restaurants, hotels, off-licences, brewers, and distillers, has called for a dedicated and immediate hospitality support package and a reduction in excise tax in Budget 2021 as data shows Irish pubs and bars have endured the longest lockdown in the EU.

Ireland’s pubs and bars have been closed since March. While pubs that serve food were permitted to reopen at the end of June, these comprise just 40% of all pubs in the country. 60% of pubs in the country have remained closed for over five months now.

Thirteen EU member states, including Germany, Italy, and Austria, permitted their bars to reopen in May with social distancing restrictions in place. A further nine EU member states, including France, Spain, and the Netherlands, permitted reopening in June. Only Portugal reopened its bars later, in August.

Sweden did not impose a lockdown, while bars in Latvia have been allowed to stay open throughout the pandemic, provided they can maintain two metres of distance between patrons. In neighbouring Britain, pubs were allowed to reopen on 4 July.

Among EU member states, only Romania has kept its indoor bars shut, though owners have been allowed to serve patrons outdoors since June, provided they have an open-air terrace.

If Ireland’s pubs and bars are permitted to reopen on 13 September, they will have been closed for six months. However, there is growing fear among publicans that their businesses will remain closed until 2021.

Cashflow problems

A report published in July by DCU economist Professor Anthony Foley states that on-trade pub sales will decline by 50% or more for the second half of 2020, which, he states, is “our most optimistic market expectation”.

If publicans are permitted to reopen their businesses in September, they will still face immediate cashflow challenges, including making back the money invested in protective equipment and the overheads of maintaining the business while no money has come in since March. Almost half of publicans have taken on at least €16,000 in debt since the lockdown, while one in five have taken on more than €30,000.

In the short to medium term, ongoing social distancing restrictions, though a necessary precondition for reopening, will impact revenue take due to reduced capacity. Events, such as family celebrations, and club meetings, are currently not permitted.

Over the longer term, these issues will be further compounded by a global downturn in the tourism sector. Many pubs, particularly in rural parts of the country, depend on overseas visitors for revenue. Ireland’s 2020 tourism season has been non-existent, and it is likely to be significantly reduced in 2021 as recession hits earnings and virus fears persist.

Support is needed

Ireland’s drinks industry directly employs more than 90,000 people and indirectly, through supporting businesses, upwards of 175,000, the majority in rural Ireland. In 2018, the industry exported €1.4 billion worth of products. Previous industry research has shown that the pub is the number one attraction influencing overseas tourists’ decision to travel to Ireland.

Despite these clear contributions to the country’s economy and society, Ireland’s drinks and hospitality industry has received no industry-specific Government support, and there has been no indication that any will be immediately forthcoming.

DIGI, which represents over 14,000 drinks and hospitality businesses, has called for a dedicated and immediate support package for drinks and hospitality business owners and their staff and a 15% reduction in excise tax on alcohol in Budget 2021.

Ireland has the second highest overall excise tax on alcohol in the EU. Broken down by drinks category, Ireland has the highest excise tax on wine, the second highest on beer, and the third highest on spirits.

A reduction in excise tax, together with the package’s other measures, would allow drinks and hospitality businesses to recover from a six-month closure, recoup some money invested in protective equipment, and cover the losses of operating at reduced capacity for the foreseeable future.

An excise tax reduction would also help other drinks businesses, especially brewery and distillery start-ups, which have contributed to a boom in Irish manufacturing over the last decade.

Insight

Rosemary Garth, Chair of the Drinks Industry Group of Ireland and Director of Communications and Corporate Affairs at Irish Distillers, said:

“Irish pubs are generally small businesses with modest revenues. Ninety percent of pubs are located outside of Dublin, where they provide a place for their local communities to come together and socialise. They are key parts of our tourism product and our national culture.

“Irish pubs have endured the longest lockdown in the EU, losing half a year of business. The Government has so far failed to provide them with any kind of reassurance, certainty, or long-term support. For many publicans, the situation seems hopeless, and it is little surprise that in a recent industry survey as many as 63% said they had been under ‘extreme stress’. Many expect to be closed.

“Government support next year will be too late; the damage will have been done. The drinks and hospitality sector needs financial support now, and, in addition, this Budget should also provide an alcohol excise tax reduction. Without it, pubs will reopen with the second highest excise tax in the EU and we risk permanently losing hundreds of businesses and thousands of jobs, just as we did in the 2008 recession.”

ENDS