Mr. Kieran Tobin:

I thank the Chairman and the members of the joint committee for the opportunity to address the committee on the topic of the drinks industry report. I am the chairman of the Drinks Industry Group of Ireland, Mr. Peter O'Brien is the corporate relations director for Diageo and Mr. Anthony Foley is the author of the report.

Membership of the Drinks Industry Group of Ireland spans manufacturers such as Diageo, C&C, Irish Distillers Pernod Ricard, and Heineken; distributors and importers; and the retail sectors of the industry, both the on-trade, such as pubs, restaurants, hotels, and nightclubs, and the independent off-licence sector. Mr. Donall O'Keeffe, our secretary and the chief executive of the Licensed Vintners Association, is in the Visitors Gallery.

Together, our members support over 62,000 jobs dispersed through every town and village in the country. These jobs range from the barman in the local pub to the factory worker on a bottling line to the tourist centre guide to the marketing manager for many of our major international brands. We also make a major contribution to the overall economy.

This is made not only through employment but also through the €3 billion turnover and €1 billion in exports generated by the drinks sector. Almost €2 billion in taxation revenue from VAT and excise is provided to the Exchequer through the sale of our products in Ireland.

Like many sectors of the economy, ours is facing significant challenges. For example, our most recent mid-year drinks market figures show that sales volumes in the key on-trade sector have declined by 34% since 2007. As a result, employment levels in our pubs have plummeted, with 7,000 full-time job equivalents lost in recent years. Contrary to popular belief, the overall market for alcohol and per capita consumption have declined over the past decade. Average adult consumption levels of alcohol have reduced by almost 20% in the ten years to mid-2012.

While prospects for the domestic drinks market in the short term are gloomy, Irish drinks exports have proven to be a consistent success story over recent times. To quantify the extent of this success and to identify the markets where our products are thriving and the policy decisions that are required to build on this, DIGI commissioned the beverage exports report from Mr. Anthony Foley, who has previously authored a number of studies for us. In essence, the report shows that Ireland significantly over-performs in terms of beverage exports. Our brands of whiskey, beer, cider and cream liqueur are known and respected the world over, are available in more than 100 markets and are among some of Ireland's most celebrated and internationally recognised brands. I include brands such as Guinness, Jameson, Baileys, Tullamore Dew and Magners.

The Irish share of world alcohol exports is 2.4%, compared with 0.8% for overall merchandise exports. With regard to our international position, Ireland is ranked 11th in order of size of alcohol exports, compared with 33rd for overall merchandise exports. For a small country such as Ireland to be in the top 12 global drinks exporters is something of which we should be very proud. The value of our exports increased each year from 2000 to 2003, when it reached €1 billion for the first time. This peaked in 2007, when in excess of €1.3 billion worth of products were exported. While there has been some decline in recent years due to the international recession, growth has resumed and the future remains very positive, given the wider success of Irish food and drink products in key global markets.

The report shows that the United Kingdom and North America continue to be the main markets for Irish beverages, but it also demonstrates the very significant potential for additional sales to China, India and other major emerging markets. For that reason, the drinks industry continues to work very closely with the Department of Foreign Affairs and Trade and the Department of Jobs, Enterprise and Innovation in particular to identify new markets for our products and ease certain tariffs and restrictions that are in place and which are barriers to growth. For example, the industry is involved in an ongoing dialogue with the Department of Jobs, Enterprise and Innovation and the Irish permanent representation to the European Union in Brussels regarding the treatment of alcohol under negotiations for the EU-India free trade agreement. Currently, high tariffs are in place for imported spirits to India, a major emerging market. There will be significant potential for Irish whiskey and cream liqueurs in India when these prohibitive tariffs are reduced. I appeal to committee members to support all such efforts in this regard.

There is a very strong economic payback at home for our success abroad. Increased manufacturing and sales of our global brands sustain local jobs. The agricultural sector benefits significantly from purchases of raw materials, such as barley, milk and cream. Local suppliers of glass, packaging, design and marketing services are major beneficiaries. The impact of beverage exports on the domestic economy far outweighs that of other products manufactured in Ireland for international markets due to the high level of locally sourced inputs. The figure for the beverage industry is 60%, compared with 15% or 18% in pharmaceuticals.

Our exports also provide international profile for Ireland and contribute to our reputation for hospitality and conviviality. Large-scale facilities, such as the Guinness Storehouse or the Old Jameson Distillery, and the small rural pub at the country crossroads are unique parts of the visitor's experience of Ireland. At a time when we are attempting to boost tourism into Ireland and the wider hospitality sector through initiatives such as The Gathering, it is important to remember that major tourism guides frequently state that a night in an Irish pub, enjoying some of our world renowned products, remains a key positive experience for visitors.

This demonstrates the important link between export success, tourism and a vibrant hospitality sector, of which the drinks market is a major part. As I mentioned, this domestic market has suffered significantly in recent times. Latest CSO data, for example, show us that bar sales volumes to July this year were 8.2% below 2011. Such losses cannot be sustained indefinitely and we need to find ways to encourage consumer confidence to boost spending in the hospitality sector. In this regard we believe the measures proposed in the EU-IMF-ECB memo to increase excise, if implemented, would likely lead to higher prices. This would further deter customers from our pubs with a knock-on effect on local jobs, businesses and the wider economy. At the same time it would contradict laudable initiatives such as The Gatheringand the reduced lower rate of VAT on food services and other tourism products. Ireland has some of the highest alcohol taxes in Europe and the Government must take this into account when framing budgetary policy.

I hope the report and statement show the importance of the drinks sector to the economy, the success of our products abroad, our important contribution to tourism and the manner in which all of these are connected. My colleagues and I are grateful for the opportunity to address the members and look forward to answering any questions they may have.