Thursday 18 January 2018

Ongoing battle to keep spirits up in the Irish pub trade

"The Economics of the Irish Pub"
John Mulligan

John Mulligan

The pub been a staple of Ireland's social fabric for generations, but over the past decade its death has been frequently heralded.

There are numerous reasons for the apparent demise of pubs in both rural and urban areas: emigration; competition from supermarkets; high excise duties; and the economic downturn.

The Irish pub seemed, quite suddenly, to become somewhat of an endangered species. Between 2007 and 2013 it's been estimated by drinks industry group Digi that about 1,000 pubs in Ireland permanently closed their doors.

Over 2,000 are reckoned to have closed in the last decade.

In cities, pubs bought during the boom at eye-watering prices were finding the going tough as the economic crisis gripped.

But, at least in major urban centres, there have been signs of improvement over the past couple of years. For many rural areas, it's a different story, but publicans there remain hopeful.

Last week, the Vintners' Federation of Ireland (VFI) held its annual shindig, in Killarney.

It was attended by over 400 publicans, with the VFI representing more than 4,000 publicans outside Dublin.

They called for lower excise duties to ensure they're competitively priced.

But pubs and some other sectors, such as hotels, barbers and hairdressers, are already beneficiaries of a 9pc VAT rate introduced by the Government in 2011 to help those businesses.

Finance Minister Michael Noonan has warned that the rate is being kept under close review to ensure that the savings are being passed on to customers.

The VFI was also keen last week to stress the economic impact of Ireland's pubs. It said that of the 92,000 jobs supported by the drinks industry, the employment level in the on-licence trade is 52,000. The annual wage bill for those 52,000 workers is about €1.2bn.

The organisation also pointed out that pubs remain an important tourist attraction.

The VFI said that 80pc of tourists use pubs for entertainment and/or food, while tourists account for 23pc of total custom in pubs here.

But for rural pubs especially, the future is challenging. Changing demographics have adversely impacted their potential customer base and will continue to do so.

Urban pubs also have to deal with the arrival of competition such as UK pub group JD Wetherspooon, which plans to have between 30 and 50 pubs in Ireland within the next few years.

The chain, the seventh largest in the UK, has significant buying power which gives it strong competitive edge.

But with those pubs it's planning to open spread out between Dublin, Cork and other areas (it is currently in talks about a site in Carlow), the overall impact will not be felt by most pub operators.

Still, the pub sector remains difficult.

Adapting to change is essential and that will be a continual process to ensure the glass remains at least half full.

Irish Independent

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