Press release 2009 - Europe remains world’s top beer producer according to Ernst & Young report - Ernst & Young - Ireland

Europe remains world’s top beer producer according to Ernst & Young report

•  Ireland is 3rd greatest exporter of domestically produced beer
•  Ireland has 4th highest excise duties – 9 times European Average
•  Irish people only purchase 30% of beer in shops and off-licences – European average is 60%

Dublin 08 October 2009 - The Irish excise duty rate on beer remains one of the highest in Europe according to a new report produced by Ernst & Young into the beer industry in Europe.

The report entitled “Contribution made by beer to the European economy (pdf, 1.6mb) “produced on behalf of the Brewers of Europe, also shows that despite a less favourable economic environment, Europe has defended its leading position as the world’s largest beer producer.

With a yearly production of 427 million hectoliters (hl), Europe remained ahead of China (393 million hl) and the US (234 million hl), the report stated, which was conducted in all 27 EU countries plus Norway, Switzerland, Croatia and Turkey.

Germany remains Europe’s largest beer producer (103 million hectolitres), followed by the UK (49.5 million hl), Poland (36.9 million hl) and Spain (33.4 million hl). 

Ireland – Production

Today’s report shows Ireland is the 3rd largest exporter of domestically produced beer behind the Netherlands and Belgium. The report confirms the extent of the size of these export markets with exports as a percentage of production numbers ranging from 52% (Ireland), 57% (Belgium) to 62 % (Netherlands).

These strong export positions are partly explained by the fact that these are home to some of the world’s largest brewing companies and that these are traditional brewing companies with a well established reputation for producing high-quality beers.

However, today’s report also shows there has been a reduction in recent years in terms of the amount of beer being produced by brewers in Ireland with 8.846 million hectoliters produced in 2008 from highs of 9.377 and 9.270 hectoliters produced in 2006 and 2007 respectively.
 
Ireland – Import & Consumption

Irish people consumed on average 98 litres of beer per head of population in 2008. Draught lager makes up the majority of beer sales (61%), with Stout (33%) and Ale (6%) making up the remainder.

Only 17% of beers consumed in Ireland are imported which placed the country 10th in Europe in terms of importation of foreign beers, slightly above the European average (10%).

The report also confirms a longstanding difference in drinking cultures between Ireland and its fellow European nations. Non-Irish European nations purchase 60% of their beer for home consumption from supermarkets and off-licences unlike their Irish counterparts who only purchase and consume 31% of beer in this manner; rather choosing to purchase and consume the majority of beer in pubs and hotels.

However, the report confirms that this trend has been changing since 2007 as beer consumption in the Irish hospitality industry has dropped by 4% whilst beer purchases in shops and off-licences has increased by over 8% over the same time. The introduction of the smoking ban in Irish hospitality venues is believed to have contributed to this trend.

Ireland – Tax Revenues

At €1,987 per hectoliter of pure alcohol, the Irish excise duty rate on beer remains one of the highest in Europe – nine times greater than the European average. Only the UK, Finland and Norway have higher rates. The total excise revenue arising from the brewing industry in Ireland amounts to €427m.

Total Government revenues from the beer industry are €1,485 million consisting of Excise duty (€427m), €416m from income-related taxes from beer production e.g. employee income taxes and VAT (€642m) largely coming from the hospitality sector where the greatest amount of beer is sold.

Dermot Quinn, Industrial, Commercial and Technology Partner with Ernst & Young comments,  “This report proves that Ireland's beer sector remains a key component of our export economy and the Government needs to ensure that their future approach to taxation policy does not further negatively impact an industry already heavily burdened by taxation.

Europe

Today’s report shows that the number of breweries across Europe has grown almost 25% in the last three years, up from around 3,000 in 2006 to 3,733 today.
Directly and indirectly 2.5 million jobs in Europe can be attributed to the beer producing and selling sector, which brings Europe’s economy in an additional €59 billion in terms of value added and national governments roughly €57 billion in beer tax revenues.

According to the report, since the last similar report was conducted by Ernst & Young in 2006, the general business conditions for Europe’s brewers have overall deteriorated.  Agricultural raw materials and the overall associated costs of production are up (nearly 24%) and taxes (up nearly 30% in the Netherlands) have gone up dramatically in some countries, while the general economic downturn has put further strains on the sector.

Quinn concludes, “In the current environment it is important to protect any industry which is bringing in revenue and sustains jobs. Business conditions for the brewing industry must remain competitive if we are to sustain the current benefits of this export market brings to Ireland.