Craft cider producers call for excise reduction in the Budget
- Craft cider producers seeking to avail of similar excise relief benefits enjoyed by craft brewers
- Ireland has third highest excise rates on cider in the EU
- Cider sales have fallen significantly due to Covid lockdowns
Cider producers have called on the Minister for Finance to include a measure to reduce excise by fifty percent for craft cider producers in this year’s budget. Ireland’s craft brewers currently enjoy a special excise reduction and Drinks Ireland|Cider, the representative group of Ireland’s cider producers, says that this reduction should be extended to craft cider producers.
The call comes as Seamus O’Hara, Founder and CEO of Carlow Brewing Company, which produces a range of ciders including Falling Apple and Craigies, has just been re-elected to a second term as chairman of Drinks Ireland|Cider.
“We are asking for the excise relief programme, currently enjoyed by microbrewers, to simply be extended to craft cider producers. There are at least a dozen craft cider producers scattered across Ireland that would benefit greatly with this reduction.
“Ireland already has the third highest rate of excise on cider in the EU and this excise reduction for craft cider producers will enable further investment in the sector, with the aim of replicating the expansion that the craft beer industry saw over the past 15 years,” according to Seamus O’Hara.
The past 18 months have been challenging for the cider sector overall. The various rolling lockdowns on hospitality venues in Ireland increased cider purchases in the retail sector, but this was not enough to offset the loss of cider sales in pubs, restaurants, and hotels. Typically, around 45% of cider purchases are in the on-trade, with 55% in the off-trade. However, in 2020 just 16% of cider was sold in the on-trade, with 84% of sales in the off-trade, illustrating the massive shift in purchasing patterns. The Covid impact on cider, which is heavily reliant on the on-trade, meant that its market share of alcohol beverages fell from 7.4% in 2019 to 6.9% in 2020.
There are three key reasons why Drinks Ireland|Cider is requesting this excise relief for craft cider producers.
- The benefits of extending the 50% excise relief to the craft cider sector will result in a marginal loss of excise revenue to the exchequer while providing an economic boost to other sectors. Drinks Ireland|Cider estimates that the estimated loss to the exchequer is just €265,000 based on the consumption data from 2020.
- There is precedence for offering excise relief to small drinks producers. Craft brewers have enjoyed a 50% excise relief for 15 years. Since that time Ireland has seen an increase in the number of indigenous craft breweries go from 8 to 75. This is proof that the excise relief programme is good for small businesses in Ireland. Ireland already has the third highest rate of excise on cider which makes it challenging for the craft cider sector to grow.
- Ultimately the excise relief for cider producers will result in downstream benefits to the wider economy, particularly in retail, hospitality, and tourism. This will also lead to a greater demand for raw materials from Ireland’s orchards which will also have a knock-on environmental benefit.
Jonathan McDade, Head of Cider at Drinks Ireland said: “The Irish cider industry has had a challenging 18 months and any assistance from the Government would be welcome. The excise relief programme for Ireland’s craft brewers saw the number of physical breweries increase from 8 to 75 in the space of a decade. Extending this programme to craft cider producers could result in further growth in the sector, foster more innovation and potentially provide consumers with more choice.”