The Drinks Market Performance 2008, compiled by Dublin City University economist Anthony Foley, revealed that the volume of alcohol consumption in Ireland declined by 5.9pc in 2008, compared to an increase of 2.5pc in 2007. In the first half of the year the decline, compared to 2007, was 3.9pc, but in the second half this rose to 7.2pc.
Per adult consumption of alcohol decreased by 7.3pc in 2008, while per capita consumption went down by 7.7pc. These rates are equal to the decline in consumption in the entire seven-year period between 2001-2007, with the result that average consumption levels are now back to 1997/98 levels, Foley said.
All four alcohol drinks categories suffered volume declines: cider was down 11pc, spirits 7.7pc, beer 5pc, and wine 4.1pc. As a result, the value of the alcohol market overall fell by 2.5pc to €6.9bn in 2008."
According to DIGI chairman Kieran Tobin, the weak local economy and the increase in cross-border sales combined to produce a dismal year for the drinks industry.
Tobin said that if current trends continue, 2009 will be even worse for the industry, with 10pc of off-license sales migrating to Northern Ireland, where the euro/Sterling exchange rate and the excise and VAT differentials has resulted in significant savings for shoppers (eg a saving of €10 on a bottle of whiskey).
If unchecked, this continued migration will result in the loss to the State of an estimated €100m in tax revenues in 2009, and will threaten the jobs of 10pc of the people employed across all sectors of the drinks industry in Ireland, Tobin said.
In light the results of the study, DIGI called on the Government not to increase the taxes on alcohol.
"With little sign of an upturn in the national economic situation, the prospects for the next 12 months are even worse "“ particularly if the Government decides to increase alcohol taxes and VAT in the upcoming supplementary Budget," Tobin said.
"Increasing taxes will exacerbate this situation, and will also encourage more cross-border shopping with further loss of revenue for the industry and the State.
"The Government must take heed of the implications of this report and not increase the burden on a key industry that provides significant employment, revenue to the State and much-needed exports for the country."
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