Wednesday 17 July 2019

Why alcohol clampdown is brewing up a storm

Despite good intentions, efforts to curb Ireland's alcohol consumption have stoked fears over the future of the drinks industry, writes Ailish O'Hora

‘If it’s a little bit more expensive, you will consume a little less. It’s a little bit like the approach we took with tobacco’. Stock photo
‘If it’s a little bit more expensive, you will consume a little less. It’s a little bit like the approach we took with tobacco’. Stock photo
Metalman Brewery’s Gráinne Walsh has raised concerns over the potential costs involved
The Shed Distillery’s Pat Rigney has called for a ‘proportionate and sensible’ Public Health (Alcohol) Act

Ailish O'Hora

Gráinne Walsh left a comfortable job in the IT sector back in 2011 when Ireland was in the throes of recession to establish the Metalman Brewery in Waterford. And what may have seemed like a mad career move for many, for her simply felt like following a dream.

"I really wanted to try something different and the beer industry was something that interested me. She and her husband Tim Barber, who left a similar job in IT to join her to run Metalman, had always been interested in the beer business. "We decided to go for it," said Walsh.

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Now the company employs six people and, as well as focusing on the home market, is exporting to France and looking to move into the Russian market from next September. "We self-funded the business and it's part of an exciting, growing industry," Walsh added.

There are now 70 breweries and 25 distilleries in Ireland, as well as numerous cider makers, and many of them are located in rural parts of the country, creating much-needed, post-recession jobs. Most have been established in the past five years.

It is part of an international trend in the drinks market, with a growing taste among consumers for artisanal, high-quality and, in many cases, home-grown products.

For example, in the US five years ago, there were about 500 distilleries, and that number has grown to more than 2,000 today.

On paper, the growth of the Irish drinks industry sounds like it has all the elements of a positive growth story - new ideas and innovation in addition to much-needed job creation and development outside the capital.

There are around 300,000 people employed in the wider hospitality sector, while 90,000 are working in manufacturing, pubs, off-trade and distribution.

Yet the Irish drinks industry is facing a number of significant headwinds, including potential new tariffs depending on the Brexit outcome, international trade wars, the effects of the recent VAT hike for the hospitality sector, competition from strong international brands, insurance hikes and the fallout from the Public Health (Alcohol) Act which was enacted by the Dáil last year.

One element of the Act is expected to be fast-tracked, primarily a clampdown on cheap alcohol sales in off- licences and supermarkets, in a bid to reduce consumption levels, especially among drinkers at risk of harm and young people. The minimum unit pricing (MUP) moves come on the heels of news from Scotland that alcohol sales have fallen to their lowest levels in 25 years following the introduction of price controls.

There has been a 3pc fall in the consumption of alcohol since the introduction of a 50p-a-unit minimum price in May, with the move being described as a promising start in tackling Scotland's difficult relationship with alcohol.

The Irish MUP scheme should have a similar effect, according to Eunan McKinney, head of communications and advocacy at Alcohol Action Ireland, although it is just one element of a multi-faceted Act.

"It's very early days from Scotland but there has been a 3pc reduction in consumption in the eight months. In the Irish case, based on the modelling conducted on MUP, we could hope to achieve an 8pc reduction over a period of time. That's a real tangible thing for us," he said.

The warnings on the impact of heavy drinking on health are stark, but there is unanimity that the issue needs to be addressed.

"We hear that Irish people drink moderately, but the 2017 Healthy Ireland Survey found that nearly four out of 10 of us binge-drink regularly," Health Minister Simon Harris said recently.

"The more we drink, the higher our risk of developing life-changing illnesses, such as alcoholic liver diseases or alcohol-related cancers. We can no longer ignore the evidence or the risks."

The HSE guidelines suggest that men should consume no more than 17 standard drinks a week, which equates to around eight and a half pints of beer or 17 small glasses of wine.

It is suggested that women should consume no more than 11 standard drinks per week.

The HSE suggests the drinks should be spaced out over the week, with two to three alcohol-free days.

A recent Alcohol Ireland survey found that an Irish male could consume 17 standard drinks for as little as €8.49, while an Irish woman could consume 11 standard drinks for €5.49.

McKinney added: "If you can reduce the levels of consumption, you reduce the level of harm. There's a principle of elasticity in this in that if it's a little bit more expensive, you will buy a little less and consume a little less. It's a little bit like the approach we took with tobacco with the smoking ban.

"The purpose of the new rules is to remove strong low-priced alcohol from sale and to reduce consumption levels, particularly among drinkers at risk of harm and young people."

While the arguments around health risks and excessive drinking are strong, lobbying by the drinks industry is equally robust.

The drinks industry generally welcomes the overall benefits of the Act but there are elements of it that have proved less palatable.

"There are numerous aspects to the Act and we will support the overarching issues like tackling under-age drinking, but there are other issues like restrictions on outdoor advertising, changes in terms of advertising content and the ability to tell a story in an advert that will impact the industry," said Patricia Callan, director of the Alcohol Beverage Federation of Ireland.

Then there is the issue of cost, impact on jobs and competition implications, she added.

"We have a thriving sector, we have a good story to tell, but people are concerned about reputational damage in international markets with a cancer warning, for example, and you can't put a price on that.

"It does affect investment. Building a brand is very important and a lot of the advertising restrictions will make it more difficult to launch new products. You have to think about the commercial realities and if this is evidence-based policymaking."

Concerns about potential job losses in the industry were also raised by Walsh and drinks industry veteran Pat Rigney, who has spent decades in the Irish drinks market developing and creating brands.

He heads up the Shed Distillery in Drumshanbo where its flagship product, Gunpowder Gin, is made, and he also co-runs a distribution firm, Dalcassian. Combined, they employ over 60 people, with 32 of the jobs in Leitrim.

"I can understand what they are trying to achieve with MUP and on balance, it's probably a good thing. From our point of view, as a premium product, it won't really affect us," he said.

"As long as the Act is proportionate and sensible, I certainly would support it and I believe most people in the industry would too, but I can only speak for myself. Anything to do with labelling should be proportionate and not represent a barrier to free trade. I think anything that would put Ireland at a disadvantage would be bad for the industry.

"When you start a new business, distillery or brewery, you need to build your brand from scratch and a strong home market is very important to successfully market the brand in other countries. So new distilleries and breweries coming to market could be put at a disadvantage, potentially putting job creation at risk and, in many cases, in rural Ireland."

Waterford-based Walsh agreed: "Craft brewers in general welcome the overall wins of the Act to try and reduce the misuse of alcohol and the problem of excessive alcohol intake, but a lot of us are concerned that the implementation and the practicalities proposed by the Act don't necessarily correspond with this aim. As a craft producer, we are trying to deliver a quality artisan product to our customers, who are interested in the craft beer process and the story, more so than the alcohol content, as our customers typically have a moderate and measured appreciation of locally produced beer.

"Segregation of alcohol in small retail stores will make it much more difficult for us to reach our consumers, as shelf space will be limited, and will inevitably go to the players with the deepest pockets, who will influence which products are stocked on those shelves.

"With regard to the labelling proposal, needing to maintain two sets of labelling - one for the domestic market and one for the rest of the EU - is a huge concern for us, on a practical operational level. There are costs associated with it that may not make sense for a company of our size as we try to grow, which could potentially put jobs at risk."

According to Alcohol Action's McKinney, the industry is in no way interested in selling less and he understands that.

"There's always going to be a contradiction in that but there are also public health concerns. I don't buy the argument about the impact on employment in the sector. The Act is largely focusing on the on-trade. The provisions for labelling only apply to products sold within the State," he added.

However, even if the MUP aspect of the Act is implemented first, there are many more hoops to be jumped through before the legislation is enacted, including the potential for objections at EU level.

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