Three challenges facing the Irish whiskey industry

Ireland’s whiskey distilleries are investing more in tourism as sales pick up pace, but the sector’s leading trade body claims there are three obstacles that could “devastate” the industry.

Inside whiskey label Jameson’s visitor centre and barrel room in Midleton, Ireland. Premium Irish whiskey is one of the “fastest-growing spirits categories in the world”, according to ID’s CEO. (Photo: Edith Hancock)

There were 923,000 visitors to Irish whiskey distilleries last year, a 13.4% increase from the previous year, according to the Irish Whiskey Association.

The figures are based on revenue and footfall at 13 Irish whiskey distillery visitor centres within the country, but drinks companies are looking to raise the number of visitors to 1.9 million by 2025.

Eight new attractions have been slated to open this year, including Diageo-owned Roe & Co’s distillery in Dublin. The drinks giant launched the new whiskey label in 2017.

Sales of Irish whiskey soared in its home country in 2018, making it one of the fastest-growing spirits categories behind gin.

Overseas visitors made up 88% of total visits to Irish whiskey distilleries in 2018, with 40% coming from the US and Canada (40%). Irish staycationers made up 12% of the visitor count last year.

But the IWA, which has pledged to ramp up Irish tourism over the next five years, says distillers should be “warned against complacency” as there are a number of challenges facing the nation’s spirits producers.

1. Tax hikes

Ireland’s lawmakers recently rose the rate of value added tax for businesses in the hospitality sector in October 2018. The rate, which was cut to to 9% to stimulate the tourism industry in 2012, will now go back to its original 13.5%. it is expected to raise around €400 million for the government’s coffers, but Adrian Cummins, chief executive of the Restaurant Association of Ireland, told reporters at the time that “hours will be cut and many restaurants and businesses will have to lay off staff.

IWA boss William Lavelle said this could also pose a threat to whiskey tourism as eating out and accommodation will become more expensive “putting pressure on the already relatively low proportion of tourists spending on paid attractions like distillery visitor centres.”

2. Brexit

Unsurprisingly, Brexit is also a fear for Ireland’s distilling community, particularly as it will mean a drop in visitors from the UK. British tourists currently make up around 14% of the overall number of visitors to Ireland’s whiskey distilleries.

“A disorderly Brexit will likely lead to a further weakening of Sterling,” Lavelle said, “harming tourism from the UK and Northern Ireland.”

3. Health warnings

Lastly, the Irish government has made more efforts to curb problem drinking with the introduction of the Public Health (Alcohol) Act in October 2018. The legislation is part of a range of measures that aim to reduce per capita alcohol consumption in Ireland from 11 lr to just over 9.1 lr for every people aged 15 and over by 2020.

The measures include restricting alcohol advertisements on public transport systems near schools and public playgrounds, banning drinks adverts at cinemas for films without and 18-or-over age restriction, and eventually banning alcohol advertisements at sports events or events aimed at children.

Health warning labels will also be enforced on bottles of spirits like whiskey.

Lavelle said these new regulations, which will be enforced gradually over the next two years, will “constrain opportunities for the advertising of Irish whiskey distilleries as visitor attractions.

“The act also imposes an internationally-unprecedented stigma on Irish whiskey in the form of cancer warning labels which our competitors, the Scotch and Bourbon whiskey tourism industry, don’t face.”