Mr. Padraig Cribben:

I am joined today by my colleagues, Mr. Donall O’Keeffe, CEO of the Licensed Vintners' Association; Adrian Cummins, CEO of the Restaurants Association of Ireland; and John Nealon, chairman of the Licensed Vintners' Association, a publican in Skerries and a member of the thriving small and medium enterprise, SME, sector. We are here as representatives of the 92,000 people throughout Ireland who depend on the drinks industry for their livelihoods. This industry generates a significant return for the Exchequer both through excise duty and value added tax, VAT. We have been hit in recent times by two very significant budget increases in excise duty, which has had a large impact on jobs in the sector, on tourism and on the consumer.

The issue that we want to address is the effect of excise as a policy option on the drinks industry. It is fair to say that there are issues around the misuse of alcohol by a certain section of society. We in the drinks industry do not want to see our product misused. To that end, we signed a pledge earlier this year asking the Government to do three things: to address the issues of cheap alcohol; segregation and availability of alcohol; and price-based advertising. The Government will have our full support in addressing those issues. One of the proposals put forward to solve all those ills is to increase price. Alcohol costs are 78% higher in this country than the European average, so clearly pricing is not addressing the problem. The main reason prices here are higher is that we are in the top three in Europe in terms of excise duty on alcohol.

We in Ireland are ahead by a mile. The excise duty on a pint of beer is 55 cent whereas in Spain and Portugal, the countries with which we compete for tourists, the corresponding duty is between 5 cent and 8 cent. The excise duty on a bottle of wine in Ireland is €3.19, but there is no excise on wine in Spain and Portugal.

We represent small businesses, some of which are very small, that create jobs. In parts of the country these businesses are very important and some 92,000 jobs are dependent on the industry. The value of inputs in these businesses is €1.1 billion as they buy products from farmers, be it milk and cream, malting barley, apples and so on.

From the narrow perspective of the pubs I represent, excise increases are not something that these businesses can absorb but must pass them on to the public. These pubs do not have a raft of other products that can absorb some of the increase, whereas those in the supermarket trade have between 4,000 or 5,000 other items on which they can spread the increase by putting 2 cent on the price of the nappies or 1 cent on the biscuits. They can do this to absorb the excise increases. That drives a further wedge in price between what is called the on-trade and the off-trade.

Eight or nine years ago, some 60% of the alcohol consumed in the country was consumed in the pub and 40% was sold outside of the pub. The situation has now been reversed and the rate of change is growing at an alarming rate. Alcohol is being sold below cost and is highly marketed in supermarkets. This is portrayed as consumer friendly but is the opposite. Leaving aside the effect that cheap alcohol has on the consumer, the consumer is paying more for stables because the prices of stable products have been increased to pay for the fact that the supermarkets are losing money on alcohol.

My colleague Mr. Adrian Cummins from the Restaurants Association of Ireland will give the viewpoint of the restaurant association.