Beer Monopoly




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Posted September 2019

The Brexit fiasco

Beer in Ireland │ Call it the luck of the Irish? While Ireland’s craft brewers have been struggling to build a local base by taking on the almighty duopoly of Guinness and Heineken, their bulging portfolios and deep pockets, consumers have moved on to drinking wines and spirits instead. And worse is to come. Once the UK leaves the EU, the whole industry will need to face up to its devastating consequences.

When news broke in May this year that Dublin was to get its first booze-free pub, the Virgin Mary on Capel Street, which would only sell beer, wine and cocktails with zero alcohol to the “Sober Curious”, all my preconceived notions about the Irish came crashing down. Blame them on Heinrich Böll’s Irish Journal (1957). In this book, the Nobel Prize winning author lovingly records a way of life before modernity swept through the country. Like millions of other arm-chair travellers, I had assumed that the Irish live by the maxim “Drink when you are happy, drink when you are sad”. So what about the stereotypes of the jolly Irishman singing and swaying on a bar stool, or the solitary drinker in his telephone-box sized snug, shutting out the world as he drowns his troubles? Have they since been obliterated by the march of time?

And true enough, data show that alcohol consumption on a per capita basis has dropped significantly since its peak in 2001, when it stood at over 14 litres per capita. At 11 litres now it is broadly in-line with countries such as France, Germany and the UK, according to Bernstein Research. Public health officials still think that this is an excessive amount and would like to see it drop further.

The Irish Republic’s tough Public Health Alcohol Bill, which took years to wind its way through parliament, was finally signed into law in 2018, and includes provisions for minimum unit pricing; cancer warning on labels; the segregation and reduced visibility of alcohol products in the off-premise, and a ban on TV advertising before 9 pm. There is a timeline for when different sections will commence over the next few years. The first to come into effect this autumn is the prohibition of advertising in certain places, including within 200 metres of schools and playgrounds, as well as the ban on alcohol advertising in cinemas and on children’s clothing.

The second significant dynamic affecting the Republic’s alcohol consumption is the change in what people are drinking. Beer has been the big loser. Since the turn of the century, per capita consumption of beer has declined: from over 100 litres to reportedly 80 litres in 2018. Part of the decline is probably due to the influx of the “New Irish”, mostly Central Europeans, who migrated to the Republic following their countries’ access to the EU. Not only have they hiked the Republic’s population by 600,000 people to 4.8 million since 2004, they would have also knocked down average consumption figures.

More worrying to brewers is another data set. In 2001, beer had 55 percent of the alcohol market, but this has dropped to 45 percent in 2018. There have been long-term gains for both wine and spirits. Plenty of women seem to enjoy a glass of wine these days. This may help explain why wine has doubled its share of throat (28 percent of total alcohol), followed by spirits (20 percent) and cider (8 percent). Of course, the anti-alcohol lobby thinks that women should not be drinking at all because of alcohol’s detrimental effects on their health. Libertarians will retort that this is the first time in Irish history that women can hold proper jobs and have their own incomes. Who is to tell them what they can do with it and mustn’t?

Guinness’ omnipresence

Any report on Ireland’s alcohol market will need to start with the country’s most famous and most recognizable beer brand, which is, without a doubt, the iconic Guinness. Arthur Guinness (1725–1807) started brewing in 1756 and his brewery at St James’s Gate has gone on to dominate the industry and become a world force. Nowadays, it ranks fourth among global beer brands by value, behind Budweiser, Heineken and Corona.

In 1932, Guinness’ headquarters moved from Dublin to Park Royal in London. At that point, the Guinness family still held a 51 percent ownership in the company. In 1997, Guinness merged with Britain’s Grand Metropolitan to form the world’s largest drinks company, Diageo.

Under Diageo’s reign, Guinness has embarked on a consolidation course and concentrated all brewing in Dublin. Diageo first closed the Park Royal brewery in 2005, followed by the shuttering of the Kilkenny brewery (brands Kilkenny and Smithwick’s) and the Dundalk brewery (Harp lager) in Ireland in 2013. In 2008 Diageo had also proposed to cut production at St James’s Gate and move to a new greenfield site in Leixlip, west of Dublin. However, the USD 870 million programme was shelved in 2009 after Ireland was hit by the global financial crisis and property prices tanked.

Two other breweries have had a national impact and went head to head with Guinness. These were Williams, Beamish & Crawford, established in 1792, and Murphy’s, founded in 1856, both of county Cork, in the south of Ireland. Through circuitous routes of ownerships, those two breweries eventually ended up with Heineken, which decided to shut the Williams, Beamish & Crawford brewery in 2008.

Walk into any pub in the Irish Republic these days and you will feel overwhelmed by the number of different beers on tap. Among the big brands, there will be a Guinness, Heineken, Carlsberg, Coors, Budweiser, plus a host of imports like Moretti, Asahi, Peroni, Corona, and ciders – you name it. If you are lucky, there will be a few taps dedicated to craft beer brands, either local or imported.

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For my report on Northern Ireland in the run up to Brexit, please go >>here




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