Cider Ireland has commissioned Dr Constantin Gurdgiev to research and write a report on the difficulties facing the craft cider sector: “Craft Cider Sub-Sector: Economic Feasibility Assessment of Active Tax and Regulatory/Compliance Policies Intervention”. Full report available to read here CraftCiderSubSectorEconomicFeasibilityAssessmentAugust2015 Chart 1 Chart 2
“Globally the consumption of cider rose by an estimated 50% between 2004 and 2013 – while in Ireland the production of cider has fallen 20.8% over the same period. Craft cider output in Ireland is out of line with craft beer production and independent whiskey distilling in domestic market terms” says Constantin Gurdgiev “Irish craft cider-makers are operating in a market environment that is not consistent with global trends and opportunities. Craft cider production holds significant untapped potential for job creation and export generation in a dynamic, indigenously-anchored sub-sector that strategically aligns with Ireland’s growing offers in the high quality food and drink sector, and high value-added tourism and agriculture.”
Cider Ireland is looking to Minister Noonan to level the playing field with Budget 2016 when it comes to excise and cider. Currently cider in Ireland attracts the 2nd highest excise tax in Europe and this, along with that fact that the excise rebate offered to micro-brewers does not apply to cider makers, is unfairly penalising growth of the craft cider industry in this country.
“Irish craft cider makers have just over 1% of the Irish cider market, and this from cider makers who, apart from one, started producing in the last 5 years.” says Con Traas of the Irish Apple Growers Association. “If craft cider were to follow the path of craft beer it could result in nearly 100 extra jobs in apple production and 70 in cider production.” Traas continues, “It takes about 1.5 tonnes of apples to produce 1,000 litres of craft cider whereas in industrial-scale cider-making, due to the watering down process, about a third as many apples are used per 1,000 litres produced.” Irish craft cider-makers use only Irish grown apples and for a cider-maker producing real cider, not watering down or using additives, the end product is quite likely to exceed the current excise limit of 6% alcohol by volume, pushing it into a punitive excise bracket when compared to cider that is in the 2.8-6% bracket.
Currently beer produced by micro-brewers at 6% abv attracts a duty rate of €67.65 per hectolitre, compared to €94.46 for cider. Micro-beer at 7% abv is €78.93 – cider is €218.44. Micro-beer at 8% is €90.20, cider at the same alcohol by volume is again €218.44 and if a craft beer reaches 9% abv the duty is €101.48 compared to €309.84 for the cider equivalent.
We strongly feel the current excise rates are unfairly penalising an indigenous craft industry, one that supports Irish apple growers as well as jobs in rural areas, and if given the support shown to craft brewers and distillers would further help Ireland in promoting our country as producer of quality food and drinks. We feel that craft cider manufacturing fits closely to Irish marketing platforms, such as Origin Green and Food Wise 2025 as well as craft cider manufacturing’s link to locally grown apples provides a pathway to significant carbon sinks strengthening the connection to Origin Green.
With Budget 2016 in mind, and among other measures, we are urging Minister Noonan to review the current excise bands applied to cider as detailed in Dr Gurdgiev’s report. We are also asking for a change the wording in Section 26 of the Intoxicating Liquor Act 2000 which currently permits the sale of beer under a wine ‘on’ licence (subject to certain conditions) but not cider.
The proposed change to excise rates will have minimal impact on immediate revenue streams from the craft cider producers, leading to an estimated decline in excise revenues in the region of just €36,000 (based on 2014 figures). However from Dr Gurdgiev’s report, the gross revenue loss due to the proposed change in the excise tax would be more than fully offset by growth in the sub-sector arising from the new measures that can help level the playing field for craft cider manufacturers within the first 12 months of the new regime operation.