Mr. Donall O'Keeffe:

I thank the Chairman for giving me the opportunity to address the joint committee. We are here on behalf of the Drinks Industry Group of Ireland, although many members will know us from our day jobs as the heads of the Licensed Vintners Association and the Vintners Federation of Ireland, respectively. We are here to inform members about the contribution the drinks and hospitality industries make to Ireland's tourism economy and to highlight areas in which policy can help to improve this contribution.

I wish to address the issue of alcohol misuse. I reiterate to members that the industry is mindful of the issues surrounding the misuse of alcohol. We want to work with the Government to address them, not least because they are causing significant damage to the reputation of an industry which supports 92,000 jobs throughout the country. That is why earlier this year we joined restaurants, hotels and independent off-licences, as well as drinks suppliers throughout the country, and collectively pledged to work with the Government on the implementation of meaningful policy measures to combat alcohol misuse by addressing the sale of cheap alcohol; introducing a statutory ban on price-based advertising; and introducing statutory codes to regulate the merchandising of alcohol. We are concerned that the Government and State agencies have taken a very broad brush approach to what is undoubtedly a complicated issue and have been overly slow in implementing policies identified as being necessary.

At present this approach is hamstringing the small businesses that we represent, but we will discuss more of that later.

I refer to the positive role the industry plays in supporting Ireland’s tourism offer. As we head into the Christmas season, it seems appropriate to talk about the positive contribution the drinks sector makes to the tourism industry in this country. Thousands of emigrants will be returning to Ireland over the coming weeks to spend time with friends and family, and the place that most of them will choose to meet is in their local pub. However, the role of the sector is much broader than that. The tax take from tourism in 2013 was €1.4 billion and domestic and overseas tourism expenditure was €4.7 billion, excluding carrier receipts. The 9% VAT introduced by this Government was undoubtedly an important policy instrument that drove this growth and the Government is to be commended for that.

Why do tourists come to Ireland? What is the draw? According to Fáilte Ireland’s own research the No. 1 reason that tourists cite for coming to Ireland is to visit an Irish pub. At 80% it is the most important pull factor identified in influencing people’s decision to come to Ireland. Fáilte Ireland also conducts exit polls, asking departing tourists what they enjoyed about their holiday and why they would return. These figures are even more impressive. Listening to music in an Irish pub comes out first on the list, at 83%, while having a Guinness in a pub came third, at 79%.

As well as being a key draw, the industry also plays a vitally important role in the provision of infrastructure. In an era when State cutbacks are threatening the viability of essential pieces of infrastructure such as local post offices and tourist offices, local pubs act as a vital amenity for tourists. In the 8,314 pubs, hotels and restaurants around the country tourists can avail of toilet facilities, get a hot meal or simply take a quick break from their sight-seeing. It is these interactions with locals and domestic tourists that create the unique experiences that tourists value and, importantly, why they return and tell others about their positive experience.

The industry is also responsible for providing quality tourist attractions. The Guinness Storehouse was the biggest fee-charging tourism attraction in the country last year. It achieved a record number of visitors of 1.157 million in 2013. The Old Jameson Distillery was also in the top 20 of fee-charging attractions, with 267,800 visitors, over 90% of whom were from overseas. The Cork Whiskey Way, the Irish Whiskey Trail and the Irish Whiskey Museum all launched recently as the international interest in Irish whiskey is exploding. These innovative tourist experiences, and the new distilleries and visitor experiences launching around the country, are meeting a growing demand and interest in this quality indigenous product. There is huge potential for growing and developing these even further, in partnership with local pubs and with assistance and support from Government agencies.

The drinks industry has been an important source of funding for the many events and festivals that attract international and domestic tourists to locations around Ireland throughout the year. In fact, a report from the Association of Irish Festival Events found that, on average, 39% of the total revenue for local events around Ireland comes from commercial funding. The sector contributing the most to this funding comprised pubs, restaurants and hotels, at 27%. The second largest sector comprised breweries and distilleries at 21%, meaning that the drinks industry is responsible for nearly half of the funding that local events around Ireland rely on every year.

There are many other areas of potential growth and development in our sectors. The Web Summit, which includes a pub summit as one of its headline networking events, has made Dublin a must-visit destination in the international tech calendar. The proliferation of craft food producers, the positive working relationship between communities and local suppliers, the increase in the number of impressive gastro-pubs and the ever-improving food offers in our traditional pubs mean that our food offered is becoming of an increasingly high standard. The growth in micro-breweries and mini-distilleries in many pubs is providing a unique experience for domestic and overseas tourists.

These initiatives need support and recognition from the Government and its agencies. As the members of this committee are all too aware, the rural pub in Ireland is under severe pressure and members might be interested in taking a look at the map that has been provided in the appendix to see how pubs have fared over many years of recession. Supporting the rural pub has to be a focus for Government, as it is essentially supporting our tourism offer. This is compounded by another key concern for the tourism sector, namely, that of the increasing concentration of tourism activity in urban centres around Ireland. The drinks and hospitality sectors have a huge role to play in this regard.

How could it be better? Despite the immense contribution that the drinks sector makes to our tourist experience in Ireland, there is a concern among businesses in the sector that they are being ignored by State agencies. The author of this year’s Ireland Inspires promotional video has openly acknowledged that a deliberate decision was taken to remove all references to the drinks sector from the video. This seems to fly in the face of the agency’s own research, which we have just mentioned, which demonstrates the positive association that international visitors have with the on-trade experience in Ireland. Opportunities for the drinks sector to work with the tourism industry need to be encouraged, not undermined.

The 9% VAT rate proved that Government policy can contribute to competitiveness in the hospitality sector. The fact that excise was not increased in the last budget was widely welcomed by the industry and has provided a significant boost to sentiment in the industry and with our customers. However, in the past few years the price of alcohol has been almost exclusively driven by Government. Members will see from appendix 3 that 80% of the increase in the price of alcohol since 2011 has been directly attributable to VAT and excise increases. We ask the members on this committee to push for a reversal of the budget 2014 excise increase, which came on top of the punitive tax increases in the two previous budgets.

Increasing tax on alcohol does not address misuse of the product; it simply harms our tourism offering by making key indigenous products more expensive. Fáilte Ireland research, to which we referred, cites the price of alcohol, which is the highest in Europe, as one of the main contributors as to why tourists would not visit Ireland again. Other countries, such as Spain and Portugal, have taken a strategic policy decision not to tax their indigenously produced alcohol products to support their tourism offering. However, excise on a pint of stout in Ireland is 11 times more than excise on the same pint in Spain and six times more than in Portugal. Irish businesses in the tourist space are at a hefty disadvantage compared to their counterparts in these markets, which are key competitors for international tourists.

Within the wider economy, the Government rightly uses tax policy to drive competitiveness. This should also apply within the drinks industry. While licensing law is the remit of the Department of Justice and Equality, we would like to highlight the importance of being allowed to trade on Good Friday from a tourism perspective. This anomaly to licensing law should be removed immediately.

As members of the committee can no doubt appreciate, the drinks sector in Ireland continues to make a significant contribution to the tourism industry in this country. In order to further this contribution we ask this committee to use its significant influence to ensure that the sector is adequately represented by State agencies when they are spending taxpayers’ money and that it gives serious consideration to ways in which Government policy might support competitiveness in the sector.

We would also ask members of the committee to support the establishment of a task force on the future of the pub, something we have discussed with members on an individual basis. We ask for support for the reversal of the excise increase in the 2014 budget and the retention of the 9% VAT rate. Government tax policy should support competitiveness within the drinks industry. We would like to able to trade as normal on Good Friday, a particularly important tourism weekend.

The 2014 Government draft tourism policy includes very ambitious growth targets for tourism to increase the take to €5 billion in real terms, compared to the level of €3.3 billion in 2013. Hospitality and drinks industry support will contribute to the realisation of those ambitious tourism growth targets but we need to be included and supported, not kept out in the cold. I thank the committee.