As pub sales decline 34% on pre-recession levels, drinks industry calls for status quo on excise
Mid-year market figures from the Drinks Industry Group of Ireland (DIGI) reveal that the on-trade is experiencing continued significant decline suffering an 8.2% volume decrease in the first seven months of 2012 in the midst of the weak economic environment.
As a result of these declines average sales volumes for the first seven months of 2012 in the employment-intensive on trade which supports over 54,000 jobs in pubs, bars, hotels, nightclubs, and restaurants throughout the country, were 34.2% below the pre-recession levels of 2007.
DIGI said that the weakness in the domestic economy and the continued pressure on discretionary income are clearly having a negative effect on the drinks sector with the pub trade suffering disproportionally.
In light of the EU/IMF/ECB memo proposing excise increases in the upcoming Budget, DIGI said that the drinks sector simply could not sustain any increase and called on the Government to take this into account when framing budgetary policy over the coming weeks and months.
The latest data, which was compiled by Anthony Foley of Dublin City University Business School on behalf of DIGI, from Revenue Commissioners and Central Statistics Office figures shows that the total consumption decline of 3.2% from January-July 2012 was attributable to decreases across all drinks categories including beer, wine, spirits and cider.
Retail sales data for the same period shows a very large decline in pub sales compared with 2011 (January-July):
- Bar sales volumes declined 8.2%
- Bar sales value declined 7.3%
This means that the July bar sales volume is 11.4% below July 2011. These figures contradict overall retail trends with latest month-on-month figures showing that bar sales fell 1.7% relative to June, despite an increase in overall retail sales (excluding the motor trade) of 1.1%.
Commenting on these results, the Secretary of DIGI and CEO of the Licensed Vintners Association (representing Dublin's publicans), Donall O'Keeffe, said 'The pub sector is in crisis. The losses that are being experienced year-on-year, month-on-month, simply cannot be sustained. In the short to medium turn there is absolutely no sign of market conditions improving for the on-trade. Rather the likelihood is that current trends will continue forcing many publicans out of business and thousands of subsequent job losses.'
The Chairman of DIGI, Kieran Tobin, added, 'While our drinks products continue to perform very well internationally, the domestic market on which our export success is founded, is in very significant decline.
'The Government is currently trying to boost the hospitality sector through initiatives such as The Gathering and last year's reduction in the lower rate of VAT for food and tourism related services. DIGI welcomes these measures and is committed to working with Government to identify further effective measures that will support the jobs and livelihoods in our sector and boost the wider economy.
'The Government should also recognize that despite the troika's proposal for an excise increase, this would further weaken the on-trade and independent off-trade in particular while also running contrary to efforts to boost tourism, consumer spending, and supporting jobs.'