Anthony Foley - "Purchases of Inputs by the Drinks Industry"

Anthony Foley has recently published "Purchases of Inputs by the Drinks Industry" on behalf of DIGI, shows that in addition to the direct economic benefits of 64,000 jobs, over €1 billion in exports, €1.8 billion tax revenue in VAT and excise and almost €7 billion in personal expenditure (including VAT), the drinks industry is a very substantial purchaser of inputs.

Wage, salaries and personnel costs are one of the highest inputs and total €1 billion per annum, with retail, wholesale and on/off-trade sectors paying €690 million in personnel costs each year and the manufacturing sector paying a further €311 million.

Purchasing of Irish materials and services for use in drink manufacturing in Ireland is worth €800 million to the domestic economy. Of the total purchases by manufacturers - €1.558 billion which excludes goods bought for resale - a high proportion of those materials and services are domestically sourced, at 42% and 62% respectively. The latter figure includes the 50k tonnes of apples, 200k tonnes of barley, 300 million litres of milk purchased from Irish farmers by the Irish drinks industry each year. The sector is responsible for a far greater proportion of domestic purchasing than the chemical and technology sectors. While personnel costs are the highest input purchased by the retail, wholesale and on/off sectors, at €690 million per annum; this is closely followed by the amount spent on materials and services other than food and drink at €583 million*. The amount spent on food purchasing is valued at €243 million. The total value of retail sales is €7 billion. The drinks industry spent €147 million on capital assets and investment purchases in 2010 and estimate a further €450 million will be invested over the next few years.

 The author of the report, Anthony Foley, commented: “The drinks industry, both manufacturing and retail, plays a very substantial role in the procurement of inputs as is apparent from this report. Previous DIGI reports have identified the direct economic benefits which derive from the drinks industry in terms of employment, output, exports and tax revenue and the positive impact which the sector has on tourism. An industry also contributes to the economy through its procurement from other suppliers.

The Chairperson of DIGI and Diageo’s European Corporate Relations Director, Peter O’Brien said: “The economic contribution that the drinks industry makes to the Irish domestic economy each year as detailed in this report demonstrates the importance of the sector. What is particularly significant is the high proportion of investment in domestic service and materials - 62% in services and 42% in materials – worth €800 million, and greatly exceeds the domestic content levels of other leading sectors in the country such as the high-tech and chemical sectors. It is apparent that where the industry can, it is supporting domestic business. In addition purchases, the industry is responsible for 64,000 jobs, over €1 billion in exports, €1.8 billion tax revenue in VAT and excise and almost €7 billion in personal expenditure (including VAT).”

The full report is available here.