Economic Impact Studies on Craft Beer in Ireland
2017 Economic Impact Report
November 2017 Irish Craft Beer Economic Impact Report Launches
The Independent Craft Brewers of Ireland, in association with Bord Bia, today launched its third report on the impact of Irish craft beer on the Irish economy.
This 2017 edition reports strong growth within the Irish craft beer market both domestically and internationally. Economist Bernard Feeney also explores the potential future growth expectations of the market by drawing comparisons with more matured international counterparts.
2015 Economic Impact Report
Press Release 01/09/2015
IRISH CRAFT BEER ECONOMIC IMPACT REPORT LAUNCHES IN ALADDIN'S CAVE OF IRISH CRAFT BREWERS!The Independent Craft Brewers of Ireland, in association with Bord Bia, will today launch its second report on the impact of Irish craft beer on the Irish economy.
This 2015 edition reports strong continuous growth within the Irish craft beer market both domestically and internationally. Economist Bernard Feeney also explores the potential future growth expectations of the market by drawing comparisons with more matured international counterparts.
Speaking at the report launch today Bord Bia’s Karen Tyner welcomed the encouraging results and highlighted the opportunity for growth at home and abroad.
"Since 2011, Irish microbreweries' output has risen more than threefold and given the influx of new firms in 2014 and the industry's expansion plans, output is expected to rise substantially again this year" she said.
"The craft beer market accounts for just 1.2% of total Irish beer production and based on current trends and growth forecasts, it is likely to increase to reach 3.3% over the next two years, providing a really positive outlook for the industry."
Key findings from this research include:
There are 63 microbreweries operating in Ireland, of which 48 are production microbreweries and 15 are contracting companies. There has been a 50% increase in the number of production microbreweries from 32 in mid-2014 to 48 in mid-2015. As many as 22 new production microbreweries commenced production in 2014. By end year 2015, the total number of production microbreweries may have risen to approximately 58.
The output of craft beer by production microbreweries amounted to some 86,000 hl in 2014. This represents a 71% increase on the 2013 figure of 49,000hl. Between 2011 and 2014, the output of production microbreweries rose by more than threefold. Given the influx of new firms in 2014 and capacity expansion among older firms, output is expected to rise substantially in 2015 to 145,000hl, an increase of over 70%. Microbreweries are forecasting a further 64% increase in output to 241,000hl in 2016.
Of the total microbrewery production of 86,000 hl in 2014, an estimated 21,400hl was exported, representing almost 25 % of the total. This is an almost doubling of export volumes since 2013. Some two-thirds of microbreweries are already exporting, albeit many of them on a small scale as yet. On average, microbreweries are targeting an export share of almost 50% of total production.
Given the growth in microbrewery production to 86,000hl in 2014, the share of craft beer in total beer production was 1.2% in 2014. With the current and anticipated trends in craft beer production, the Irish craft beer market share is likely to reach 2.0% and 3.3% in 2015 and 2016 respectively. The turnover of craft beer producers in 2014 is estimated at €23m and at a projected €39.6m for 2015. Five microbreweries had a turnover of more than €1m in 2014.
The report will be launched today at the opening of the Irish Craft Beer Festival. For the fifth year running, the largest congregation of Irish craft brewers returns to the RDS in Dublin from the 27th – 29th August. Having attracted over 10,000 visitors last year, the organisers are once again predicting a record turn-out of punters to reflect the record number of breweries and cider makers signed up to date.
This year’s line-up consists of over 50 breweries and cider makers – totalling an astounding number of over 200 Irish produced beverages on offer to attendees. In comparison to last year’s 40 producers, this year has seen an increase of over 25% in the number of breweries attending, a reflection of the massive growth of this local Irish market sector. Also launching at the festival will be the Irish Craft Beer Economic Impact Report by leading Economist Bernard Feeney.
This year’s festival promises to bring visitors an experience that is unrivalled throughout the country. It is the pinnacle of the year within the Irish craft beer and cider industries. For three days, each supplier sets up its own space within the venue and chats with consumers, enjoying discussions about the intricacies of each unique combination of flavours making every individual product stand out from the next.
Breweries and cider makers participating include: Northbound Brewery, Black Donkey Brewing Ltd., Carrig, Killarney Brew, Long Meadow Cider, Wicklow Wolf, Porterhouse, Dingle, Rascals Brewing Co, Dungarvan Brewing Company, Lagunitas, Blacks of Kinsale, The White Hag Brewing Company Limited, Eight Degrees, Mac Ivors Cider Co., Trouble Brewing, Falling Apple, O'Hara's, Independent Brewing, Kinnegar Brewing, Wicklow Brewery, Galway Hooker Brewery, Craft Works, Cask Mates, Tom Creans, Jack Cody's Brewery, Rye River Brewing Company, Stationworks, JW Sweetmans, Single Pot Still, O Brother Brewing, Armagh Cider, Stonewell Cider, Metalman Brewing Company, White Gypsy, Boyne Brewhouse, Mountain Man Brewing, Manor Brewing Company, N17 Brewery, Beoir Chorca Dhuibhne/West Kerry Brewery, Radikale, Dan Kelly's, 9 White Deer, Western Herd Brewing Company, Toby's Cider Ltd, Scotts Irish Cider and Starr Hill.
2014 Economic Impact Report
Press Release 19/11/2014
Minister Coveney Launches First Irish Micro Brewery Economic Impact Report
A market showing growth of over 45% for 2014
Minister Coveney joins Ireland’s leading craft brewers and industry influencers to launch the first official development and economic impact report on microbreweries in Ireland. The report was commissioned by the Independent Craft Brewers of Ireland (ICBI), an association set up earlier this year in response to the dramatic growth within the micro brewing market in Ireland.
Although significant growth and development within this market was noted in recent years, there was no numerical or growth research carried out prior to this to quantify the market growth and the resultant economic impact of such.
Seamus O’Hara, spokesperson for the ICBI and of Carlow Brewing Company, comments, “Having witnessed the extraordinary growth and development within this industry over the past few years, it is vital step for us, as Irish craft brewers, to set up an official association. A natural first step of an association is to establish an official piece of research on what impact its industry is having on both the national economy and on its operational market. We are honoured to have the support of Minister Coveney this evening to launch the report and look forward to working alongside the minister in the coming months and years to make a difference for our fellow microbreweries – both those new to the market and those who are more established.”
The report was researched and written by Bernard Feeney, a respected Economic Consultant. Some of the key findings within the report include:
A significant increase in the number microbreweries occurred in the last two years. It is estimated that there are 33 microbreweries operating in Ireland, the majority of which are microbreweries engaged in own production. At least 17 other microbreweries are at development stage, with the majority expected to be in operation by end 2014, when the total number could rise to some 50 microbreweries.
The output of craft beer by microbreweries amounted to some 49,000 hl in 2013. Based on trends to date, this will rise to 71,000hl in 2014. This contrasts with an equivalent figure of 26,000 in 2011 and 37,000 hl in 2012.These figures indicate that production of beer by microbreweries grew by 32% by volume in 2013 and is set to grow by at least 45% in 2014.
The microbrewery production of 37,000 hl in 2012 represents 0.45% of the market. Given the strong growth in microbrewery production, this is likely to have increased to approximately 0.9% in 2014. Of the 37,000 hl produced by microbreweries in 2012, some 28,000 hl were sold in the domestic Irish market, indicating a microbrewery share of 0.6%. Again, this share is likely to have risen to approximately 1.2% by 2014.
In 2013, craft brewers reached 7.8 percent volume of the total U.S. beer market, while the craft dollar share of the total U.S. beer market reached 14.3 percent in 2013. This points to the potential for Irish microbreweries to achieve a five-fold increase in market share in the longer term.
It is estimated that at current (2014) production levels, microbreweries that are in operation are employing 153 persons in all: 93 persons on a full time regular basis, 38 on a part-time regular basis, and 22 persons on an occasional or seasonal basis. This is 116 persons on a full time equivalent (FTE) basis.
Employment in craft brewing has almost doubled since 2011. At current rates of growth, a five-fold increase in production could be achieved in about six years. Even allowing for a decline in employment intensity, as firm size increases, the total direct workforce in micro-brewing could reach 500 within that time frame.
The micro-brewing industry sources over half of its brewing ingredients by value domestically. Distribution is another source of local spin-off activity. Thus, there are significant downstream benefits for the agricultural and other sectors in Ireland. Indirect employment was arising from micro-brewing is estimated at 119 persons. This means that every person employed in micro-brewing is matched by another in the wider economy that supplies the industry.
Employment in the micro-brewing industry is very widely dispersed throughout the country. By end of 2014, there will be microbreweries in operation in 21 of the 26 counties.
The micro brewing industry is expected to generate over €1m in income tax and PRSI receipts for the Exchequer in 2014. This rises to €2.8m when indirect and induced tax revenues are taken into account.
The micro-brewing sector is very export focused. Irish craft beer is currently exported to 25 countries. Some 38% of microbreweries are already exporting, albeit many of them on a small scale as yet. Of the total production of 49,000 hl in 2013, an estimated 11,300 hl was exported, representing almost 23 % of the total.
Domestic craft beer production supplies only a fraction of the demand for craft beer in Ireland. Importation of craft beers dominates. Although, this picture is changing as more and more Irish micro-breweries come on stream and focus initially on the domestic market, the scope for further import substitution is very large.
The Irish pub is an important element in the tourist experience and the increasing retailing of craft beer in pubs is serving to enhance the tourism offer. Food festivals are also an important vehicle through which tourists gain access to Irish food and drink culture and steps need to be taken to ensure that craft beers producers can full participate in these events.
As the craft beer offer in Ireland develops, the potential for specific “craft beer tourism” will increase. The evidence is that the development of a micro-brewery cluster is important for the success of such tourism. With the current rate of expansion of microbreweries, it is evident that brewery numbers will soon become sufficient for such clusters to be identified: Dublin, Cork, and Galway are already on this path.
The output of the micro brewing industry is currently doubling every two years, so it has the potential to become a major element in the Irish drinks industry, with huge benefits to the economy.
The industry is showing a healthy growth in start-up activity. The key challenge in this respect is to ensure that the failure rate is kept low and that these start-ups can achieve full utilisation of their plant capacities.
The excise tax rebate is an essential support to micro-brewery start-ups. It would be made more effective if it were put on a non-rebate basis to improve the cash flow of new entrants.
Changes in the regulatory environment to permit sales from brewery premises and at festivals would not only help the breweries, but also are a requirement if craft beers are to help the development of a specific food and drink culture in Ireland that is attractive to tourists.
The current tax rebate is withdrawn in full once the brewery reaches 30,000 hl in annual production. This forms a very substantial barrier to the expansion of independent breweries in Ireland. It is also at odds with the best practice in other systems that involve a tapered withdrawal of the relief up to the EU mandated limit of 200,000hl. This tapered withdrawal not only affords firms the opportunity to grow to an economically effective size, but also involves a process whereby the support is withdrawn in a manner that is least disruptive to the firm’s operations.