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CRAFT DRINKS BILL WILL HAVE DRAMATIC IMPACT ON MICROBREWING AND DISTILLING INDUSTRY

24 March 2017

Speech by Alan Kelly TD
Spokesperson on Health

I thank the Deputies who are here for the debate on this Bill. It is a small Bill but it is very important legislation that will have a dramatic impact on the microbrewing and distilling industry. I welcome to the Gallery a number of my good friends and colleagues - craft brewers from the four corners of Ireland - who are here to watch proceedings. This Bill will change their lives, careers and economic prospects and the economic prospects of the localities they represent throughout the length and breadth of this country.


One of the craft brewers in the Gallery is Mr. Cuilan Loughnane, who owns the White Gypsy Brewery in Templemore. I thank him in particular for inspiring this legislation. I am only acting as the conduit. He employs three other people and last year, he won the best beer award. When I called in to congratulate him, he told me the story of a number of visitors to his brewery from the US and their exasperation that he could not sell them anything was clear. He could not sell them a bottle to be taken away or consumed on the premises. He told me of how a group of brewers came together because they wanted to deal with this issue. I committed there and then to helping him, because this anomaly must be addressed quickly if the industry is to grow.

The aim of this small but important Bill is to remove a major regulatory barrier to breweries, microbreweries, cider makers, distillers, vineyards - Ireland has more than a couple - and others and allow them to sell their produce to visitors and tourists on site and those who wish to take that produce off site. Currently, microbreweries cannot sell their own produce to tourists and visitors on site. The Bill would also allow for restricted off-sales and on-sales, but only in respect of the microbreweries' own produce and nothing else. They could only sell during normal trading hours and would be closed at 6 p.m. As such, this is nothing like a pub licence. Rather, it is a specific licence to address an anomaly and allow these individuals, who are working hard in a labour-intensive industry, to increase their outputs and their capacity to raise revenue and to give a tourism experience to those who wish to avail of their produce.


I will go through the Bill's various sections shortly; it is a common sense Bill. Imagine touring the amazing vineyards of Italy, France or Spain, for which there are significant tourism markets, only to be told at the end of the tour that people cannot taste the wines that they just saw being produced or order a case for when they leave. That would be mad, but it is the situation facing Irish microbreweries and microdistillers. Imagine not being able to purchase wine or allowing that industry to grow in Bordeaux, Tuscany or La Rioja. That is what is happening in Ireland.


It is a resilient industry, but even resilient industries need help. It is estimated that there are some 90 microbreweries operating in the Republic, of which 62 are production microbreweries and at least 28 are contracting microbreweries. There has been a 29% increase in the number of production microbreweries from 48 in 2015 to 62 in 2016. That is an incredible jump in a short time. The number of microbreweries has more than quadrupled since 2012. This has happened in other countries, for example, Canada, but because of a lack of supports, their microbrewery industries collapsed. We must ensure that the same does not happen in Ireland.


There has been a phenomenal growth in new enterprises in the past two years. Thirty-three of the 62 production microbreweries commenced production in the 2014-15 period alone. The output of craft beer microbreweries amounted to some 134,000 hectolitres in 2015, representing a 56% increase on the 2014 figure. In absolute terms, output rose by 48,000 hectolitres. Output from the 13 microbreweries that commenced production in 2015 accounted for one quarter of the increase. On the basis of trends, the breweries anticipated last August that output would increase by 63,000 hectolitres, or 47%, in 2016. Given the trends of recent years, it is clear that the percentage growth rate in production is in decline from a high of 75% in 2013. As such, now is the time to ensure that this industry is supported. Craft beer producers' estimated total turnover in 2015 and 2016 was €40 million and €59 million, respectively. In the more than five years since 2011, turnover has increased elevenfold. Based on international experience, there is substantial potential for further development of the Irish craft beet industry in terms of numbers, output and employment. An increase in the number of breweries to more than 100 and a fivefold increase in output are possible in the longer term.


The microbrewing industry sources more than half of its brewing ingredients by value domestically. For example, 95% of microbreweries source supplies of malted barley from within the Republic, typically amounting to 80% or 90% of all of their malted barley inputs. Distribution is a further source of local spin-off activity. Thus, there are significant downstream benefits for agriculture and other sectors.


At 2016 production levels, microbreweries employed 439 persons of full-time equivalent status. That number is constantly increasing. Of the industry's total employment, 399 persons were employed in production microbreweries and 40 were employed in contracting companies. Consider the two largest brewers in Ireland, specifically the number of people employed in their production operations. Compared with the numbers employed by microbreweries, there is not much of a difference. It shows that this is a labour-intensive industry that hits the four corners of the country and has benefits beyond all of that.
This industry has significant tourism capacity. I speak as a former manager of Bord Fáilte and Fáilte Ireland. I have discussed this matter with Fáilte Ireland extensively. I have seen visitors to many of the breweries represented by those in the Public Gallery. After taking a tour, visitors are told that they cannot buy and consume the beers on the premises or take the produce away. It is utter madness if one is trying to develop an industry around the four corners of Ireland.


Fáilte Ireland is so in favour of this legislation that it helped me launch the Bill a few months ago and spoke at the event. Imagine how Fáilte Ireland would promote this industry as a new product and experience for domestic and international tourists. It is already doing that in respect of distillers, particularly whiskey distillers, and it wants to create a craft brewing marketing map that it can promote domestically and internationally. We all know that the No. 1 visitor site in Dublin is the Guinness Storehouse at 1.6 million people. We are always discussing the need to spread tourist numbers around the country and to create more regional jobs. Imagine marketing these breweries to people who are interested in visiting these sites. There must be a considerable volume of such people.


There are opportunities downstream for many other industries, for example, farmers in terms of cereal sales, if we can get the industry to a level that sustains demand at a fair price for the cereal crops that the brewers need. Farmers need more distribution outlets and to diversify. This Bill presents a significant opportunity in the short to medium term.
I encourage Teagasc to examine the matter. The potential is not just limited to creating jobs downstream and through tourism and increased production. The Action Plan for Jobs has both a national and regional focus. There is also the Action Plan for Rural Development. This industry ticks all the boxes in terms of the action plans I have outlined. Many of the brewers live in rural areas and provide employment for local people. When they expand their operations, such employment will multiply. Furthermore, with the passage of the Bill, not only will there be more direct employment due to increased production, in the agriculture sector and in sales and marketing, there will also be employment in the construction sector because many brewers will expand their premises. I have met many brewers who wish to invest but that is conditional on the Bill being passed. As well as making the breweries bigger, there is a need to create visitor experiences. That will create employment. One can imagine the positivity that will create in rural areas.


Many of the large brewers have a significant market share and when it comes to incentivising sales through pubs, they can always do more than the small producers. I believe in supporting the small operator to get fair play. Small brewers will never be able to incentivise publicans to the same extent as the larger ones in order to sell their produce. While brewers might put together packages for publicans to exclusively sell their produce if this Bill is accepted, we will be able to create awareness of the produce of microbrewers and ensure greater knowledge and, accordingly, demand for craft beers and other artisan products which will ensure that the playing pitch is little bit more even as a result.


We have great microbrewing and microdistilling industries that need support. The Bill is a simple one that is just over a page long. The first section lists the beverages to be covered, namely, beers, spirits, cider, etc. On Committee Stage, I would be willing to add other products such as wine. Section 1(2) outlines the times microbreweries and microdistilleries can sell their products, which is from 10 a.m. to 6 p.m. Section 1(3) outlines the offences prescribed in the event of non-adherence to the terms of the legislation and the impact of that. The Bill also defines what constitutes a visitor for the purpose of the legislation.

The Bill is a principled one which has received great support in the House. The reason for that is the Bill is a common-sense measure. Those involved in the industry are investing in their communities and looking after their local culture and traditions. The connection with the history and culture of the locality is evident from the names of some breweries and the beers they brew. There is also a connection with cultural trends across the country. For that reason, I urge each and every Member to support this common-sense Bill to give microbrewers and microdistillers across the country a fair chance and to allow the industry to grow to a level that is sustainable in the long term, to develop an export market and to develop a tourism product of which we can all be proud.


I thank everyone in this House who has told me he or she will support the Bill. I also thank all the microbrewers who are present in the Gallery, in particular, Cuilan, Gráinne and Seamus who have been working with me since day one. It is very important that the Bill is passed.


I acknowledge the person who put much of his life into the microbrewring industry, namely, Oliver Hughes, a pioneer in craft brewing in this country. He developed the famous Porterhouse brewing company and he passed away over a year ago. It was his foresight that allowed this industry to grow to where it is today. I urge Members to be fair minded and to allow the Bill to pass. I hope the Bill will pass before the summer so that all of those who are in the Gallery - and other brewers across the country - will have a chance to grow their industry, which they desperately need to do.