Irish whiskey: Northern Ireland faces duty free disadvantage

Irish whiskey is performing robustly in travel retail, but producers in the north of the island are caught in a duty free limbo.

*This feature was originally published in the May 2023 edition of The Spirits Business magazine. 

The Irish whiskey category is strong in travel retail, offering an array of channel exclusives to meet demand for ever‐more premium products. It has received a boost in the form of post‐ Brexit duty free sales between the UK and Europe – although the absence of duty free allowances for Northern Ireland remains a hindrance.

Overall, the category is performing well, particularly since the return of travel in the wake of the Covid‐19 pandemic. Shane O’Sullivan, global buying manager for liquor and tobacco at Aer Rianta International (ARI), says: “The category has always been a robust performer for ARI, and it has continued to grow as travel has rebounded.”

Category leader Jameson is a significant part of the strength of this channel, according to Liya Zhang, vice‐president of marketing for owner Pernod Ricard Global Travel Retail. “Irish whiskey continues to grow at an exceptional rate, driven by Jameson, in one of the fastest‐growing spirits categories in duty free,” she says.

The major players aren’t the only ones enjoying success here, as Liam Brogan, cofounder of Ireland Craft Beverages, maker of Two Stacks whiskey, confirms. “We have seen growth over the past year for our travel retail listings, mainly with ARI at The Loop Duty Free at Dublin Airport, and also overseas, in the Middle East with Qatar Duty Free, Dubai Duty Free, Sharjah, and Muscat,” he says.

“We continue to work towards growing our footprint across global travel retail, including Northern Ireland and UK duty free.”

The latter has been particularly appealing since Brexit, with the resulting duty free allowances for passengers between the UK and the EU. Barry Geoghegan, founder of wines and spirits agency Duty Free Global, confirms that it’s benefitting sales.

“With the four‐litre spirits allowance, we are seeing an increase in volume sales from the Republic of Ireland to the UK for Paddy Irish Whiskey, as well as from EU airports to the UK,” he says.

The notable omission is Northern Ireland. John Hume, senior advisor for Penta Group, advisor to the UK Travel Retail Forum, says: “We have EU law and British law contradicting each other, while being jointly enforced, and the end result is that the three airports in Northern Ireland are unable to sell duty free to anyone travelling to either the EU or to the UK. In practice, this means they’re pretty much unable to sell duty free at all, because there are very limited routes out of Northern Ireland to third countries.”

Those allowances would undoubtedly benefit retailers and brands alike. “Duty free has a halo effect on these shops, as evidenced by the significant upturn in spirits sales in mainland Great Britain airports, and as very clearly evidenced by the increase in spirits sales at EU airports for travellers to the UK,” Hume continues.

Local goods

There’s also travel retail’s marketing role to consider, particularly for Northern Ireland’s whiskeys. “In many ways, duty free is about the promotion of locally produced goods,” says Hume. “Bushmills whiskey is an iconic Northern Irish product, and there are lots of new brands coming through too. Belfast International Airport, Belfast City Airport and Derry Airport are the shop windows for showcasing their goods, where they can create international awareness.”

It’s unsurprising, therefore, that there are those who are keen to see these regulations changed, and Hume is optimistic. “It looks to me like a solution can be found – there’s bound to be a route forward here,” he says. “Northern Ireland airports and their retail partners are very keen to engage politically in the weeks and months ahead, to try and sort this out,” he adds.

But the current situation is causing some producers to focus their efforts elsewhere.

“The opportunity to have duty free status on goods bought in Northern Ireland when travelling to the UK or EU would have been advantageous to Irish whiskey producers to grow their global travel retail footprint, especially local craft producers in Northern Ireland, but unfortunately this hasn’t come to fruition,” says Brogan.

“As a result, we are continuing to focus on other global travel retail opportunities in the Americas and Middle East but would like to grow our Northern Ireland presence at duty free.”

Travel retail isn’t without advantages beyond duty free, at least, as ARI’s O’Sullivan points out. “Price is, of course, one motivating factor, but it is not the only driver,” he says. “UK passengers seek out travel retail‐exclusives and the unique products they cannot find anywhere else.”

Northern Ireland’s leading whiskey is at the forefront of products like these, he adds. “We have seen great innovation in the category recently, particularly from the likes of Bushmills, which has been very focused on newness and travel retail‐exclusives.”

Along with the rest of the spirits category, the trend towards more premium products is a driving force for Irish whiskey in this channel. “We have seen a rise in customers trading up, investing in quality products for gifting or self‐treating,” adds O’Sullivan. “Customers are also willing to explore new premium brands, so the appetite for newness and travel retail‐exclusives is only growing.”

Higher-value propositions

Zhang is seeing this move towards higher-priced products too. “Consumers are looking for higher‐value propositions versus what they can buy in domestic markets.” Brogan reports the same demand from travel retail shoppers. “We see a trend towards more premium expressions, including our Blenders Cut Cask Strength blend, and continued strong demand for premium single malts such as Two Stacks Smoke & Mirrors, using Imperial Oatmeal Stout casks for finishing,” he says.

The latter seems to be the sweet spot for Irish whiskey in travel retail at the moment – products that are not only premium, but offer something different too. As Duty Free Global’s Geoghegan confirms: “We’re finding whiskey consumers seeking out and discovering new, smaller distilleries, in particular experimental Irish whiskeys with different stories and finishes.”

Zhang agrees. “Shoppers are increasingly looking for innovative, craft propositions that are only available in travel retail,” she says.

With consumer demand like that, it’s an exciting time for Irish whiskey in travel retail. And if the duty free allowances for Northern Ireland get sorted out, all the better.