Irish alcohol exports hit by pandemic and tariffs
Overall alcohol exports for 2020 were valued at €1.3bn ($1.6bn USD). Whiskey exports were down by 26%, Irish Cream Liqueurs exports fell by 14%, and beer exports fell by 17%.
But while exports to key markets such as the EU and UK have been challenged, countries further afield appear to hold promise. And while exports took a big hit in 2020, the value of exports remains 12% higher than they were pre-Brexit in 2016, ‘underscoring the scale of the growth trajectory in this category in recent years’.
Whiskey and cream liqueur
The US is the main market for Irish whiskey exports: with 57% of the €620m category going to the country as well as 45% of cream liqueur exports.
“For whiskey and Irish cream liqueurs, a looming threat of tariffs from the US and uncertainty in terms of future trade into the UK, late in 2019, meant that customers wanted to be sure that they ordered sufficient stock, in advance of the introduction of any tariffs or additional Brexit related costs,” says Bord Bia.
“This meant that both markets were better prepared for a spike in consumer demand in the off-trade, which was a symptom of the on-trade shutdown and restrictions during Q2 to Q4. It also meant that exports in 2020 were negatively impacted because there were substantial stocks already in those markets coming into 2020. The pandemic caused the closure and restrictions in the on-trade in our key markets.”
Despite the imposition of tariffs on Irish cream liqueurs in the US, the sector has demonstrated ‘significant resilience’, according to Bord Bia.
“Traditionally the product has performed better in the off-trade and that, combined with the spike in cooking-at-home witnessed during the pandemic, has served the category well. Recent consumer-targeted digital marketing, promoting Irish cream liqueur as a dessert ingredient appears to have rewarded the category in sales performance. Irish whiskey exports declined by around a quarter but this does not reflect sales on the ground which held up well, especially in the second half of the year.”
Craft beer predicted to grow slowly in 2021
Overall, Irish beer exports were down by 17% to €254m and again reflects the closure of the on trade in key export markets.
Beer exports to the US declined by 42%, and to Europe by 20%. Exports to the UK were down by 7% and by 14% to Northern Ireland. Africa was similarly hit by the complete ban on alcohol sales in South Africa and Kenya, declining 13%.
In the craft beer sector, Board Bia anticipates growth will resume slowly in 2021 and to continue over the medium to long term, driven by increased off-trade presence combined with the reopening of the on-trade.
UK and Europe
While the UK will continue to be an important market for Irish products, exporters have also been reducing their reliance on the market post-Brexit.
“Irish alcohol exports to the UK market declined by 12% to be worth €198m, while in fact sales through off-trade and online channels have increased significantly, in a trend toward consumption in the home. Exporters view the UK as an important target for their brands and will continue to do so, but have simultaneously invested heavily in market diversification to limit dependence on the UK market.”
Exports fell in virtually all EU27 markets - declining 16% from 2019 – as a result of closure of the on-trade and travel retail.
Exports to Sweden and the Netherlands increased, however: with Sweden resisting closure of the on-trade until late in 2020. (The Netherlands, meanwhile, is a hub for exports and so not necessarily the final destination for exports).
Promising markets: Africa; Australia; Asia
While exports to the EU and UK have decreased, markets further afield appear to hold promise.
“Africa is a promising region for Irish exporters, and exports to African markets for Irish alcohol were in high double digit growth pre-Covid-19. Government responses to Covid-19, particularly in South Africa, were severe, closing down all channels. As a result, performance was dampened but held positive at 1% growth to reach €26m.
“Australia, another promising emerging market for Irish spirits, grew by 18% to €26m.
“Asia is a vital region for the future of the Irish spirits category — total alcohol exports to the region were worth €28m — and results reflect a tale of two parts. While China and South Korea exports grew by 7% and 30% respectively, because they had less disruption to their economies, Japan, Vietnam and Singapore, with a more conservative approach to the pandemic, have declined in low double digits. Interestingly India, again from a low base, almost doubled its sales of Irish spirits in 2020.”