Dublin, March 23 - Ireland's alcohol industry recorded its worst performance in 25 years in 2008 as recession continued to bite and prospects could be even worse this year, an industry group said on Monday.
Ireland faces its worst recession on record this year with global turmoil and the bursting of a domestic property bubble shattering consumer confidence. The volume of alcohol consumption fell by 5.9 percent last year compared with an increase of 2.5 percent in 2007, the Drinks Industry Group of Ireland (DIGI) said in a report."With little sign of an upturn in the national economic situation, the prospects for the next 12 months are even worse," DIGI chairman Kieran Tobin said.
Irish drinks group C&C, which sells Bulmers cider in Ireland and Magners in Britain, said this month it was writing down assets worth 141 million euros to streamline its business as a deep recession added to years of declining sales.
The drinks sector has also been hit by a weak sterling against the euro which has led to shoppers flocking across the border to Northern Ireland to take advantage of cheaper prices.
A government commissioned study published last week estimated Ireland lost between 58 million to 90 million euros in value-added tax and excise revenues in 2008 due to cross-border shopping, with a potential revenue loss to the exchequer of 72 million to 112 million euros this year.
The government will present an emergency budget next month -- its second since October -- in a bid to cut a ballooning budget deficit due to deteriorating public finances.
Economists expect the government to hike taxes on alcohol in a bid to raise revenue, but DIGI warned it would compound the pressures faced by the sector.
"Any such increase will simply encourage more and more southern shoppers to purchase their alcohol in Northern Ireland where the euro/sterling exchange rate and the excise and VAT differentials lead to significant savings," Tobin said.
"Ultimately, the state will lose further revenue to the benefit of the British exchequer," he said.
The DIGI report said the value of the alcohol market fell by 2.5 percent in 2008 to 6.9 billion euros ($9.41 billion) with all four alcohol categories -- cider, beer, spirits and wine -- recording volume declines.
"On the basis of these figures, up to 9,000 jobs will be lost in all sectors of the drinks industry in 2009," Tobin said.
"This will come on top of those losses that have already been sustained in the past year, meaning that the numbers employed in the sector will have fallen from 100,000 to approximately 80,000 in just over two years." ($1=.7329 Euro)