Distillers to scale back production at Cork plant

Irish Distillers, the maker of world-renowned whiskeys such as Jameson, has blamed higher excise duties for a decision to scale back production at its Midleton plant in Co Cork.

The firm, which is owned by French drinks group Pernod Ricard, has cut its production target for this year at Midleton by 7 per cent.

The move reflects a 21 per cent drop in spirit sales in the Republic over the first half of the year.

It is also based on pessimistic expectations for demand over the coming five years.

Pernod Ricard joint managing director Mr Richard Burrows said yesterday that the group's Irish sales had been severely dented by the imposition of an extra 20 cents in excise duty on each measure of spirits in last December's budget.

Mr Burrows described the excise hike as "a fairly blunt instrument" and said the situation for producers was "worsening".

Quoting figures from the Revenue Commissioners, Mr Burrows said spirit sales had fallen by 21 per cent over the first half of the year, with the drop accelerating in later months.

Within this, Irish whiskey sales have declined by 14 per cent, while sales of other spirits such as gin and vodka are down as much as 26 per cent.

Irish Distillers' whiskey sales have held up well against the industry average but have still registered a drop of 12 per cent. Sales of Cork Dry Gin have fallen by 11 per cent, while Huzzar Vodka has seen a 14 per cent slippage.

"It's obvious that the decline will continue," Mr Burrows said.

He called for the creation of a "level playing field" for excise, whereby it would be levied strictly according to the alcoholic content of a product.

The Midleton plant, which dates from the 18th century, is by far Irish Distillers' largest production facility and, with 150 staff, is a significant employer in the east Cork area.

Mr Burrows said the firm had no plans for job cuts at the plant as yet but was reluctant to make forecasts on employment.

While healthy international demand for Irish spirits will help to fuel an increase in overall production at the plant this year, Mr Burrows warned that local suppliers of both raw materials and services would be hit by the scaling back.

Half-year figures released by Pernod Ricard yesterday show that the Republic has been one of the group's weakest markets in the year to date.

The company reported global sales worth €1.496 billion, down from an equivalent of €1.503 billion last year.

Mr Burrows said the firm had absorbed a €157 million currency hit over the first half, as the euro strengthened against sterling and the dollar.

Almost all of the group's brands contributed to an 8 per cent growth in sales, however, when the currency impact was stripped out.

Jameson was 7 per cent ahead in volume terms as international sales balanced against poor demand at home.

Mr Burrows also reported strong growth across Irish Distillers' brands around the Border region.

He said that consumers worked the currency differential to their favour, boosting sales by 15 per cent in the process.