Ms Patricia Callan:

I thank the Chairman, Deputies and Senators for the opportunity to contribute to the discussion today on the diversification of the tillage sector. The Alcohol Beverage Federation of Ireland, ABFI, is an umbrella organisation encompassing our category associations such as the Irish Whiskey Association, the Irish Spirits Association, of which William Lavelle, who is here with me today, is the head, the Irish Brewers Association, the Irish Cider Association and the Irish Wine Association.

Obviously, the reason we in the drinks sector have been invited here today is that we are viewed as a growing sector. In terms of our economic exports, the growth has been phenomenal. Bord Bia states that last year we increased exports by 4% to €1.4 billion. According to the CSO data already available for this year, we have seen an increase of 18.5% in exports of Irish whiskey, which is now the fastest-growing spirits category in the world. We are therefore very much of the perspective that this is a very big cake.

Irish whiskey comprises only 5% of the overall whiskey market and there is plenty of opportunity for growth into the future, given the right conditions. We are committed to working with the Minister and the Department of Agriculture, Food and the Marine on Food Wise 2025. In this regard we have agreed to try to increase exports by 85% but we think we will actually almost double that within the timeframe if, again, conditions are right.

Regarding the economic benefits, an unusual aspect of our sector is that we are dotted right around the island of Ireland. As far as new production is concerned, four years ago we had four distilleries but now we have 18 in operation and 16 more in planning, and they are right around the island of Ireland. ABFI as an organisation is all-island because our geographical indicators which protect Irish whiskey, Irish cream and Irish poteen are all-island, so we operate on that basis.

As for our strategy regarding delivery on our vision for Irish whiskey, we estimate that we will bring 1,500 new jobs into the sector. This story also benefits Irish farmers when it comes to both the breweries and the distilleries. There is a huge demand for Irish agricultural suppliers to source malted barley and unmalted grains, as well as fresh Irish cream, used in Irish cream liqueurs, and apples, which are used in cider. We purchase 60% of our raw materials in Ireland and create a major multiplier effect as a result, much more than, for example, the multinational sector. It is estimated that for every job created in the drinks manufacturing sector, four additional jobs are created.

Specifically regarding tillage, the drinks industry purchases about 10% of Ireland's annual harvest and the vast majority of Irish brewers and distillers are committed to purchasing their barley and malt locally. At present, we purchase more than 200,000 tonnes of barley every year. The current growth is leading to an increase in demand for both unmalted grain and malted barley, and more of this demand will be met from domestic sources. I will give the committee just three examples from three of our largest drink producers. Diageo uses more than 130,000 tonnes of barley each year at St. James's Gate, and 300 tonnes every day just to brew Guinness. Diageo buys approximately 13% of Ireland's total annual domestic production of barley. Heineken Ireland sources all of its malted barley from 750 Irish farmers. Irish Distillers seeks to purchase all its malted and unmalted barley from Ireland, much of which comes from a very local radius of about 100 miles of the Midleton distillery. It is, however, necessary at times for Irish whiskey producers to source maize from further afield as Ireland does not have the climate to produce maize in the quantities needed for our production process. The three producers I have listed are just some of many now. We have a burgeoning membership and a burgeoning industry. For example, Walsh Whiskey and O'Hara Brewery in Carlow, the Shed Distillery in Drumshanbo, Teelings Whiskey in Dublin's Liberties, Tullamore D.E.W. and many more have signed up to Bord Bia's Origin Green scheme. Under this scheme, the producers have specifically made commitments to source more grain and raw material locally. For example, the Shed Distillery has committed to sourcing 100% of its grain from Origin Green suppliers. We think it is a fantastic initiative.

Irish drinks producers are trying to innovate and produce new products, which means they must work closely with growers and merchants to improve quality, efficiency and sustainability. What is key is reliable, secure production. In the context of trying to innovate, we are looking at different things. For example, Irish Distillers has recently launched a project experimenting with rye blends grown locally. I think we will see more such examples follow through. As more and more people bring new product, there is more opportunity to look at recipe, whereas with traditional recipes it is harder to diversify the grain mix.

Last week, ABFI had a general meeting with the Minister, Deputy Creed, at which we briefly discussed this issue. We have already requested a further meeting with the Department to examine what additional opportunities there are for the Irish drinks industry to collaborate. We are very interested in innovation and research proposals regarding Irish grain usage in brewing and distilling. We are very positive about it. I think the members are willing to look at funding of research and innovation and we look forward to exploring that further with the Department, Teagasc and anyone else who may be interested.

We are conscious of the difficulties the committee has heard from other witnesses before us that face Irish grain farmers and we are supportive of calls from farm organisations for a Government plan to revitalise the tillage sector. At the same time as I have given the committee our good news story, we are aware there are threats on the horizon. Brexit is an obvious one but we have two specific threats to the drinks sector in Ireland which I would like to touch on briefly.

The basic message is that if our industry is growing, so will that of tillage farmers because we will need more supply. However, anything that could damage our overall growth and projections will be problematic. Growth should not be taken for granted in any industry and certainly not in ours.

We have an issue with the Government's Public Health (Alcohol) Bill that will shortly be before the Legislature in terms of it providing for a blanket ban on the marketing and advertisement of drinks products. That would be particularly damaging for start-ups as they would never be able to build brands in the Irish market, although it would be essential to do so before they could go on to export their products. The Alcohol Beverage Federation of Ireland, ABFI, would like to see workable legislation. As was mentioned in reference to barley farmers, our current advertisements might show an orchard or a farmer in a field. That would be banned by the Bill and we would not be able to show a person or a location other than the production process. Breaking that link to our heritage and rural supply chain would be damaging for us. I flag that to members and ask for their assistance in getting legislation that businesses can work with and that will deliver the public health objectives.

The budget will be announced next week and many others are probably more involved in it than we are, but Ireland has the second highest excise duty in the EU on alcohol and that is very damaging to our industry, especially so in the context of Brexit and the North-South divide. The devaluation of sterling has already put strain on our exports.

Those are the impending threats to the drinks industry. The broad vision for the sector is very positive, but if companies' ability to compete is hampered and there is not a supportive home market, there will be less investment in spite of the contribution of the many start-up businesses because a significant portion of them have foreign investment backing.