Retail News May Interview

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Facing Up To Reality Kathryn D’Arcy, Director of the Alcohol Beverage Federation of Ireland, talks us through Ireland’s declining alcohol consumption, its prohibitively high excise duties and the contribution the drinks industry makes to Ireland Inc. KATHRYN D’Arcy, Director of the Alcohol Beverage Federation of Ireland (ABFI), has been outspoken in her criticism of Government’s handling of Ireland’s problem with alcohol misuse, which seems to consist of a series of massive excise hikes and not much in the way of education. Alcohol consumption, in general, is falling fast in Ireland.

“We are very close to European norms now,” D’Arcy reveals. “We saw a significant fall of 7% in the last year,

so alcohol consumption and drinking patterns are definitely changing.”

She acknowledges, however, that as a society we still have an issue with alcohol misuse in Ireland: “We can’t ignore the fact that there is a minority of people who misuse alcohol, whether that’s through binge drinking, harmful drinking or teenagers drinking.”

However, recent reports from Unicef and the Department of Health & Children have revealed that teen drinking is falling in Ireland, unlike

many of our EU neighbours. “That’s not to say that it’s not at a very high base still,” D’Arcy admits, “so there is work to do there.”

A New Way Forward The way that the state has tended to tackle the problem has been to punitively punish those who consume alcohol through excise increases.

Ireland has the highest excise duty in Europe on wine and the third highest on beer and spirits.

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Excise hikes have had a profound impact on our hospitality industry, particularly the world renowned Irish pub.

“If excise was the solution to the misuse of alcohol, we would have solved the problem a long time ago,” she says. “We are increasing excise at extraordinary levels – in the last two Budgets, it has grown by 40% on spirits and beer and even more on wine – and yet we still have people who misuse alcohol. The time has come when we must say to ourselves that excise increases aren’t the solution to this; there must be other ways to address this.

“It comes back to having a deeper understanding as to the consequences of harmful drinking, the way that parents talk to their children, the way that children interact with their peers: all of these things will have an impact on how someone drinks. We would argue that there needs to be a big emphasis on ensuring that people don’t drink until they reach the legal age of 18. Drinking any younger than that can have a disastrous impact on their level of drinking as they get older and also on their development.”

Playing devil’s advocate; would somebody from the Department of Health argue that excise increases are working because overall levels of alcohol consumption have fallen?

“Excise has increased significantly, particularly in the last two years, but we are not seeing a fall in alcohol misuse,” she stresses. “The Department

of Health would agree that there are still significant levels of harmful drinking in this country; we are still too high up the league table of binge drinkers in Europe; and excise isn’t going to deal with that. It’s merely going to affect the person who drinks within recommended limits. If you are a problem drinker, you will spend money to get whatever alcohol you want.”

Unforeseen Consequences Any excise increases affect not only consumers of alcohol, but can also have consequences for employment levels and on the amount of agri-food inputs purchased by the drinks industry, factors which don’t always seem to be considered when new legislation is being put forward.

“The drinks industry employs over 94,000 people and we buy over €1.1 billion of inputs, including agricultural inputs, each year,” D’Arcy explains.

“The one area that is really booming for Ireland at the moment is tourism and hospitality, and the drinks sector is an integral part of that. Tourists, time and again, talk about their time in Irish pubs as their favourite experience and we’re very proud of the Irish pub, and rightly so. Yet increases in excise have a disproportionate effect on the hospitality and pub sector and on independent off licences, compared to

the larger, non-independent off trade groups who can absorb increases and not pass them on.”

A Far-Sighted View In the UK, the recent Budget saw the Government row back on excise duties, in order to support both the Scotch Whisky category and their thriving beer industry. It seems a remarkably far-sighted approach and one which ABFI would love to see replicated here.

“That is a very positive move and a recognition of the importance of the drinks sector,” the ABFI Director stresses. “While still acknowledging the very serious impact that alcohol misuse has, it recognises that increasing excise wasn’t going to have a positive outcome with regard to dealing with alcohol misuse, which is exactly what we would argue.

“Reducing excise in Ireland would certainly have a positive impact on the tourism, hospitality and pub sector and would ensure that we would be competitive as a destination, and that our pubs and restaurants could give a top quality and value offering to customers.”

D’Arcy feels that if the difference in excise duty between Ireland and Northern Ireland continues, we might have a return to southern shoppers crossing the border in big numbers.

“You might not see the big queues

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The Retail News Interview as a measure to curb binge drinking by stopping supermarkets using alcohol as a loss-leader in-store.

“There is an issue with regard to deep discounting of alcohol in Ireland, primarily in the off trade,” D’Arcy admits. “We are very proud of the excellent international brands that we produce in Ireland, and those that we import and sell here, so we are concerned with deep discounting of our products. The Government want to do something about it and they need to address it. A lot of this came about following the removal of the Groceries Order and its ban on below-cost selling, but we will wait to see what legislation the Irish Government might bring forward before we would make a comment on that.”

Ireland is still too high up the league table of binge drinkers in Europe.

of cars going over the border like we saw in the past, but you can be sure the border counties are suffering, particularly the pubs and off licences, and that’s not what we want to see. We want a strong, thriving economy and want every part of Ireland to be open for tourism. If we can’t attract people to the border counties, that is a problem and one the Department of Finance needs to be aware of.”

Whole of Society Approach ABFI have called for a “whole of society approach” to tackling alcohol misuse.

What does that involve?

“It means everybody working together,” she says simply. “The Government has an alcohol strategy in place since October. It is within the Government’s remit and their right to implement that strategy, but to do so without talking to the alcohol industry doesn’t make sense to me. We are implementing changes to labelling and advertising, and to bring in something like that without consultation as to what the impact will be, without taking account of the contribution of the alcohol sector in Ireland in terms of jobs or the level of new start-ups in craft brewing and craft distilling, does not make sense.”

She is calling for a consultation process involving all stake-holders in the chain, from Government departments to our education system, parent councils, student representative bodies and industry.

“As the Government brings in its policy, we could all sit down to figure

out what we need to do to bring about a fundamental, generational shift in alcohol misuse, like the way we did with drink driving,” she avows.

New Legislation D’Arcy has no problem with the forthcoming information labelling on alcoholic products, such as recommending that women don’t drink while pregnant or showing the amount of units of alcohol in that product.

“That is information that people need in terms of making a responsible choice when it comes to alcohol consumption,” she reveals. “Consumers need the information to make healthy choices. It is incumbent on us all to provide that information, whether that is through the Drink Aware website, which we are proud to fund, or whether it is via Government and industry agreeing on labelling rules for a product.”

One new labelling regulation being discussed at EU level is the possibility of including mandatory calorie information on alcoholic drinks. D’Arcy gives this a cautious welcome, once it is done carefully.

She is less convinced by the potential introduction of a minimum unit price for alcohol, which is currently being discussed in Scotland

Halcyon Days Taxation and regulation issues aside, however, these are halcyon days for Ireland’s indigenous drinks industry, particularly in terms of Irish whiskey and craft beer.

“We are going from four whiskey distilleries on the island to more than 16. It is a very exciting time. Irish whiskey is the fastest growing spirit in the world. It spells quality, tradition and heritage. We are very proud of that tradition and it spells a very positive future for the sector,” she reveals.

When it comes to craft beers, there are now approximagely 50 craft brewers on the island, D’Arcy notes.

“There are a lot of really great craft beers, as you can see by the number of pubs taking them on. People are really enjoying them and talking about beer, maybe in the way they used to talk about wine.”

So, while consumption levels are falling, it is not all bad news for the Irish drinks industry, the ABFI Director surmises.

“For the drinks companies, it’s far better for us to have a sustainable drinks industry than one dependent on a vibrant, crazy Friday and Saturday night,” she concludes. “For some of us, that will mean a fall in sales. But if that means having a sustainable market where people drink responsibly and not in a harmful fashion, far better for us, than a country which is known for its binge drinking.”

About ABFI THE Alcohol Beverage Federation of Ireland, part of IBEC, was established in late 2007 to collectively tackle issues affecting the entire alcoholic drinks industry, including taxation, cost competitiveness, the environmental impact of the drinks industry and the implications of alcohol misuse.