Mr. Ciaran Fitzgerald:

My name is Ciaran Fitzgerald. I have 30 years' experience in the agrifood business and I was commissioned by the alcohol beverage federation to look at the impact of Brexit on the industry. I produced a report which has been shared with this committee. I am joined today by Mr. Ross Mac Mathúna, director of ABFI, who will answer questions.

The following is our view and what comes out of an analysis of Brexit.

When we look at all the elements of our trade with the UK, especially for food and drink products, what we have is a cumulative €12 billion trade. That is made up of €4.5 billion worth of product that goes from Ireland to the UK in the food and drink sector and €3.5 billion worth of imports. There is also a significant cross-border trade and tourism contribution. If €7 billion was spent last year by tourists in Ireland, 40% of those tourists came from the sterling area. Therefore, it is clear that trade relations and currency exchange rates between the UK and ourselves have a dramatic impact. Since the Brexit vote in June, all of those impacts have been against Irish business on the export and import sides in terms of cost comparisons.

The drinks industry produces, brews, distils and distributes products throughout Ireland. The concerns with Brexit relate to competitiveness and ongoing access. As mentioned previously, there is extensive access to the UK market. The reality is that all Irish products going to Europe go through the UK market. That is an ongoing issue.

One of the major challenges facing the sector has been illustrated by the short-term impact of sterling. I am referring to cost competitiveness. In that context, we believe there needs to be a major focus on the cost of doing business in Ireland, including the way we tax business, the way we tax consumption and elements of regulation that are currently being looked at. In that context, two key issues jump out for the drinks sector. One is excise duty. At the moment, Ireland has the highest priced alcohol in the European Union. We have the second or third highest rate of excise. We know from 2008 and 2009, when sterling weakened significantly, that we can get significant cross-border trade. This draws more than simply alcohol consumption out of our market. It draws considerable consumption throughout the grocery sector and takes out badly needed income. Therefore, we need to be pragmatic and competitive with regard to our excise tax. We need to look at a situation whereby that is not sustainable. A tax that is so high that it is ignored is not worth being a tax.

The second element of these costs is the cost of doing business here, especially the cost of regulation as it comes from the proposed public health (alcohol) Bill. Many of the measures in that Bill will ultimately put up costs in Ireland without having in any way established on an evidential basis that they will have an impact on the consumption or abuse of alcohol. We need to be pragmatic at a time when we are trying to support jobs throughout the economy, especially jobs in the rural economy. We need to ensure that we are not committing own goals in respect of aspects that would put up costs.

In addition to the remarks on excise, I wish to point out that, as part of the public health (alcohol) Bill, the proposals on minimum unit pricing would further put up alcohol prices here. I realise it has been clearly stated that these will only be introduced here if they are introduced across the Border. Again, with the restrictions on advertising and some of the other aspects of the proposed Bill, what we are getting is a situation whereby the cost of either continuing to do business by companies in the South or the cost of new entrants to the business here will become very high for small companies seeking to get involved in the business.

In recent years, there has been an increased interest in growing the drinks sector in Ireland. We are fortunate that the large companies in the sector have invested significantly. A total of €400 million has been invested in the brewing and distilling sector in the past five years. That began even before the economic recovery. Those investments have deep rural roots in Ireland not only in terms of the pubs and tourism they support, but in terms of the ingredients bought in the economy.

There is a renewed view that whiskey distilling and micro-brewing have become growth areas. We have plans to increase the numbers of whiskey distilleries to approximately 20 in the coming five years. As well as increasing business operations in the community, these enterprises have an ongoing tourism impact. We know that 650,000 whiskey tourists visited Ireland last year. That number will grow to 1.5 million by 2024.

I will conclude by echoing elements of what has been said previously. There are clear issues around the support of industry that need to be looked at in the context of state aid. The philosophy and ideology behind state aid rules is that the Single Market is operating. The exit of the UK is a fracture of the Single Market. To apply constraints on state aid rules when the market is fractured simply does not make sense. Unfortunately, we have seen a sluggish rate of recovery by Europe from the recent 2008 and 2009 recession because of a fixation on an ideology around the restriction of state aid support. It only leads to recession and austerity. It is important that the background to these controls is examined and that a case is made to recognise the reality. It is important to deliver on the fact that whatever about the motives and origin of the decision of the UK to leave the European Union, Irish taxpayers and consumers should not become worse off because the United Kingdom decided to leave the European Union. In that context and in order to strengthen our case that state aid should be examined, we really should look at the prices, costs, taxes and regulations that are within our control. That means looking clinically at excise and the public health (alcohol) Bill.