Over €60 million worth of stock, including beer and food, has been written off by drinks and hospitality businesses, as a result of the Government's 'stop-start’ approach to reopening the sector so far, according to industry figures supplied by the Drinks Industry Group of Ireland.
Analysis by DIGI shows that pubs and bars have endured the longest lockdown in the EU.
On three occasions, the Government signalled a date on which so called ‘wet’ pubs and pubs serving food may be permitted to reopen after the extended lockdown. On each occasion, these were false-starts and very short notice was given that businesses were indeed not permitted to reopen, leaving many with extensive stocks of beer and food purchased from suppliers, while customers bookings were made and staff rostered.
The industry estimates that the cost of each of these false starts stands at up to €20 million in terms of beer and food stock. In Dublin alone, each false start cost up to €7 million in wasted beer stock for Dublin pubs.
DIGI said this is in addition to the investment businesses had, and continue to make, in preparing their premises including cleaning, PPE equipment and staff and wage costs to reopen. A recent survey of publicans showed that almost half took on €16,000 in debt during lockdown to cover staff and business costs, one in five as much as €30,000.
"Drinks and hospitality businesses have endured the longest lockdown in the EU and the short notice nature of the Government's three failed pledges to reopen the industry is crippling businesses who are incurring costs with no means of recouping them. €60 million is only the tip of the iceberg while we risk a credit crisis in the industry where product is written off and credit terms are reviewed – a situation we need to avoid," said Liam Reid, Chair of the Drinks Industry Group of Ireland.
"Dublin publicans, whose businesses have been caught in the government’s costly and unpredictable stop-start lockdown strategy, will endure further financial strain for the next period of weeks, or it could be months, we don’t know.
"The key challenge for the industry right now is that current Government policy is an outlier compared with other European countries," he said. "Ireland is closing far more of our hospitality sector, and for far longer. If this approach is maintained, and we fail to explore other ways of living with Covid and operating our businesses, it will cause long-term and irreparable damage to the sector. The Government needs to urgently look at what other European countries are doing and adapt the current approach."
The industry’s current commercial environment is bleak: restaurants are operating at approximately 60% capacity, pubs serving food at 50%, and hotels at 25%. These figures are unlikely to improve over Christmas and the winter period. Tourism is non-existent, and few social or cultural activities are permitted.
DIGI is calling on the government to aid the drinks and hospitality industry by removing barriers to business and deliver a comprehensive package of measures to support their recovery.
"We need to consider how best to reopen these businesses and in tandem, focus on the recovery. We must ensure we do all we can to make it as easy as possible to operate within Covid guidelines and support the recovery of this sector and our economy.
DIGI is calling on the Government to reduce excise tax by 15% for these businesses, which the group said can be introduced overnight and have a tangible impact by reducing costs for hospitality businesses.
"Ireland’s excise taxes are the second highest in Europe and will act as a further barrier to recovery. We cannot find ourselves in a situation where our drinks and hospitality businesses reopen and are subject to exceptionally high tax rates, among the highest in the EU."