Hard Brexit a ‘huge challenge’ for Irish trade

23rd January, 2017 by Kristiane Sherry

A hard Brexit at the introduction of Ireland’s Public Health Alcohol Bill (PHAB) will result in a “perfect storm” for the drinks sector in the country, according to a new report.

A hard Brexit and the introduction of a public health bill represent “huge challenges” for the Irish drinks industry

Commissioned by the Alcohol Beverage Foundation of Ireland (AFBI), a coalition of distillers, brewers, brand owners and distributors, the economic impact study cites sterling’s 20% devaluation and the rising cost of Irish products as key challenges for the sector.

In The Impact of Brexit on the Drinks Industry, agri-food economist and report author Ciaran Fitzgerald also argues the proposed PHAB will “significantly hamper the exportability of the sector”.

Measures to be introduced under the PHAB, which was published in draft form in December 2015, include minimum unit pricing, alcohol advertising restrictions, separating alcohol in mixed retail stores, and Ireland-only labelling requirements.

The report also highlights the existing “all-island” supply chains between the Republic and Northern Ireland, which are under pressure from both sterling’s devaluation and the uncertainty over the reintroduction of a hard border.

In addition, the importance of all-island geographical indications (GIs) and the need for verification of how this will be managed when some will be EU-made and others UK-produced needs to be considered.

The ABFI is calling on the Irish government to implement a range of policy measures to “offset the risks posed by Brexit and the PHAB” in the medium term.

Policy calls include a an excise duty cut; a reintroduction of a ban on below-cost selling; tax and regulatory measures to incentivise investment south of the border; a guarantee that additional costs on business, for example health labels, will not be introduced; a challenge to EU State Aid rules to promote future trade with the UK; the protection of all-island GIs for Irish whiskey, Irish cream and Irish poitín/poteen; and assistance for the food and drink sectors to gain entry to new markets.

“Since the Brexit vote last June and the subsequent decline in the value of sterling, the food and drink sector in Ireland has faced enormous challenges in the short term, including a surge in cross border shopping,” said Fitzgerald.

“In addition, measures proposed under the PHAB place will exacerbate pressure on a sector that employs 200,000 directly and indirectly. The outcome of Brexit negotiations remains unclear. However, its vital that the Government puts in place a series of policy measures which will support the sector, ensure it gains access to new markets, supports new entrants and protects the unique geographic indicators for Irish Whiskey, Irish Poitin and Irish cream that we share with the North.”

The Irish beverage industry exported €1.4 billion-worth of products to 139 markets in 2015. The annual wage bill for the industry each year is over €4bn.

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