Exports could offer double win to Irelands drinks sector

Exports could offer double win to Ireland's drinks sector

A falling number of foreign visitors to Ireland poses an added risk to the country's embattled drinks sector, but exports could help to cushion the blow.

As if it were not enough that Ireland's consumers face wage cuts and higher taxes in a ferocious, four-year austerity drive, the country's drinks industry is also set to suffer from a drop in foreign tourists.

A significant number of visiting tourists have fled from Ireland's side as it has been slowly, yet surely, dragged to the brink by the global economic downturn. New figures from the country's statistics agency show that the number of foreign visitors fell by almost 16% in the first nine months of 2010, on the back of a decline in 2009.

While the fall in the third quarter was only 8%, this year still looks set to be Ireland's worst for foreign visitor numbers in at least four years.

It seems almost cruel to heap yet more bad tidings onto Ireland's drinks sector. But, if visitors continue to shun the Emerald Isle, it will likely mean extra bad news for drinks sales, particularly in the country's on-trade.

The Drinks Industry Group of Ireland (DIGI) said recently that pubs are "used extensively by foreign visitors". A vast majority of these pubs lie outside of the capital, Dublin, and rely on tourist trade to help them stay in business.

The drinks sector is already shrinking. Across Ireland's drinks industry, employment has fallen from 100,000 at the start of 2008 to 78,000 in mid-2010, DIGI said in a report at the end of last month. Per capita alcohol consumption has fallen by 16% over the same period, it said.

There are signs of a further deterioration, too, as the Irish Government prepares a range of austerity measures designed to satisfy markets and the country's lender of last resort, the EU. C&C Group announced last month that it would cut more jobs at its Bulmers cider division due to a "dramatically weakening consumer environment".

The one positive for Ireland's drinks sector, if a positive can truly be found in this mess, is exports. In Jameson, Tullamore Dew, Baileys and Guinness, Ireland is punching above its weight in terms of drinks brands that are recognised in many countries around the world.

Pernod Ricard said in September that it would build a new warehouse for Jameson whiskey to meet rising global demand. Ireland's drinks sector in total exported EUR1bn-worth (US$1.3bn) of products in 2009 - around 1% of the country's total exports by value - which produced a drinks trade surplus of EUR330m for the year, according to DIGI.

While the drinks sector has helped to boost Irish exports during the recession, it could also bring tourists back to the country. The Guinness Storehouse in Dublin received 1m visitors in 2009 and, although numbers fell by 2% on 2008, it has outperformed several other attractions and remains the most visited in the country.

The Old Jameson Distillery in Dublin welcomed 0.25m visitors last year, putting it 11th in the list of most popular national attractions, while the Jameson Experience in Middleton attracted 100,000.

Drinks exports, then, could achieve a double victory for Ireland in terms of higher sales and pulling in visitors. That's where the silver lining ends, however: for rural pubs and domestic suppliers, the situation still looks extremely tough.