Economic Impact Studies on Craft Beer in Ireland
2018 Economic Impact Report
The ICBI welcomes the publication of the latest craft beer report which identifies an accurate reflection of the market difficulties faced by our small but vibrant sector.
The Independent Craft Brewers of Ireland (ICBI) is a trade organisation representing Independently owned microbreweries across the Island of Ireland.[i]
The ICBI Welcomes the release of updated figures for the independent Beer Sector which unfortunately reflect a difficult market for many of our members. The market share of beer consumption in Ireland from the independent microbreweries currently sits at just 2.8%.
The independent craft beer sector is comprised of a large number of mainly small micro enterprises with two thirds producing significantly less than 1,000 hl per year (in layman’s terms this is around 200,000 pints), with over a third of microbreweries having an annual turnover below €100k. To retain viability, the ICBI believes that the sector needs continued supports to grow, primarily to help educate consumers about the benefits to the local economy of switching to Irish owned craft beers. The multinationals currently attract the vast percentage of the beer market in Ireland.
The craft beer market contributes significantly to employment within their communities. Employment in the sector has increased and it is estimated that 425 jobs are in place directly within industry and that an equivalent of 960 jobs are in place throughout the economy through direct and indirect employment.
We are pleased to see that there has been a growth in consumer interest of 12%. This means that independent craft beer consumption when viewed in the context of overall Irish beer consumption has risen from 2.5% in 2016 to 2.8% in 2017. In order to achieve what successful overseas counterparts have shown to be the magic figure of 5% and above (to achieve real sustainability within industry for our members and the wider independent brewing community) we would need to see a very significant increase in consumer purchase of independent Irish Craft Beer.
The ICBI consider that the difficulties in gaining a more sustainable foothold in the sector to be largely owing to the dominance of the multinational beer brands; our members experience significant difficulties in gaining access to taps for example because of incentives offered to publicans by macro breweries.
There is a lack of financial resource to develop and promote a more cohesive brand umbrella for independent microbreweries. Given that the individuals within the sector are largely extremely small artisan companies it is difficult for the sector to have any chance of competing with the macro-breweries (large corporate beer companies) with their disproportionate budget for marketing built in to product cost prices.
75 Microbreweries are currently estimated to operate in ROI. In 2018 Vs 70 in 2017. There are a further 50 companies who are brand owners and outsource their production to independently owned microbreweries. The increase in newcomers would have been significantly higher if this was not offset by closures, estimated at 7 since the beginning of 2017 which represents just shy of 10% of all microbreweries in Ireland during the period.
Growth percentage figures in the industry as a whole will of course always look quite significant when it is noted that only as recently as 2012 there were just 15 microbreweries operating in ROI. Notwithstanding this fact one of the most attractive aspects of our industry is its relative newness and the passion and vibrancy which accompanies this burgeoning and unique sector.
Given that utilisation of capacity in currently operating microbreweries sits at just under 50% it is clear that the current market will find it difficult to support a growth rate of new entrants unless the market share increases significantly
The dominance of the macro brewing multinational businesses in Ireland with their significant distribution networks and budget for marketing direct to consumers as well as for supports to the trade plays a significant role in hampering the growth of the independent microbrewing sector. For example, in the USA where craft beer consumption sits at 12.7% there are very strict competition laws which mean that pay to play is not a factor.
The ICBI welcomes the ongoing support to small businesses owing to an excise rebate in place for independent microbreweries and notes that the direct contribution to revenue from the sector is estimated at €6.7m a figure which increases to €9m when indirect and induced tax and PRSI revenues are taken into account. This is approximately twice the value of the rebate figure for the same period (a figure which includes rebate mounts for imported Craft beer also[ii]).
The ICBI also welcome the increased uptake in participation from microbreweries for this survey.[iii]
[ii] According to the Minister of Finance in response to a parliamentary question on 11th July 2018
[iii] The report is not limited to members of the ICBI and all or as many independent breweries as the report author are aware of are surveyed.
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.