Growth in US demand stimulates recovery in Irish beverage exports

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THE global shutdown of pubs and restaurants hit the Irish beverage industry hard in 2020. However, there was a remarkable turnaround in the first half of 2021 – led by recovering demand in export markets, in particular soaring consumer demand in the United States, according to OSC data.

This rebound to sales of 754 million euros for the six months, represents an increase of 25% compared to the same period last year and brings the industry’s exports back above pre-pandemic levels registered in the first six months of 2019.

Healthy growth in the US market

The US market, the main Irish whiskey and beer market, accounting for 40% of export sales over the period, was the biggest boost to exports, with sales up a third from the first six months of Last year.

Analysts attribute some of the growth to the significant shift to home consumption and an element of restocking following the disruption of Ireland-U.S. Shipping routes.

Traditionally, sales in pubs and restaurants, or on commerce, have accounted for two-thirds of industry sales. This trend was reversed with the pandemic.

Ireland’s top exporter Diageo – which makes Guinness, Baileys and Hophouse 13 – highlighted strong demand in retail stores in the United States, offsetting weak activity in bars and restaurants in Europe, as it announced. a surprise increase in underlying net sales growth. .

The United States accounts for nearly 45% of the group’s profits and has been a beacon of hope for the world’s largest spirits maker, with 80% of its sales coming from retail stores. In other markets, bars and restaurants make up the bulk of sales.

Exports within the EU are slow to recover

Beverage exports to the EU, the second largest market, with sales of 171 million euros in the six months, although increasing compared to last year, remained below stable conditions of the 2019 market.

This is of particular concern for the industry, which saw the nearest and most expensive UK market collapse last year and remained down by a third in the six months leading up to June of this year. Export sales to Britain in the first half of the year recovered to 102 million euros, but fell short of the 2019 sales volume of 146 million euros.

Covid restrictions on pubs and restaurants have hit the EU beer market particularly hard. Major brewers across Europe have launched ‘welcome’ campaigns in the hope of re-attracting customers to pubs as the
the restrictions are lifted.

Diageo spent 83 million euros on its Raising the Bar campaign in 35,000 pubs in 11 European countries, including Ireland and the United Kingdom.

Target China and Japan

Perhaps most disappointing for Irish producers is the lack of penetration of the Chinese market. Scotch whiskey continues to dominate the market with sales last year of 120 million euros compared to 8 million euros for Irish whiskey. This image has not changed so far this year.

The market is one of the largest in the world, with an attractive import tariff currently low at 5%. However, Irish producers have so far not been able to navigate its complex distribution channels, let alone the multiple language barriers.

The fastest growing category of spirits in Japan is Irish whiskey. Although the pandemic has affected some business channels, the outlook within the industry remains positive.

The Bord Bia study found that Japan was the largest Asian market for Irish alcohol in 2019, with the value of exports increasing 9% to € 10 million.

The signing of an EU-Japan Economic Partnership Agreement in 2018 means that Irish whiskey is legally protected in Japan and that brands such as Tullamore Dew, Jameson, Bushmills and Teeling are spearheading the success of Irish whiskey there.

Irish brewers have also entered the Japanese market, recording exports to the market for 2.5 million euros.

Industry sales to the rest of the world were also very dynamic, with export sales up 43% over one year to 166 million euros and a virtual doubling of the volume in 2019. It should be noted that especially increased sales in South Africa.

• John Whelan is Managing Partner of Linkage Partnership.


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