40th VFI Conference – plenty to shout about
Some 350 delegates attended the 40th VFI Annual General Conference this year in the Knightsbrook Hotel in Trim, County Meath. Drinks Industry Ireland was there.
Print8 July 2013
Held in the Knightsbrook Hotel in Trim, County Meath, VFI delegates expressed their dissatisfaction with Government clearly.
“The pub trade is losing 38 jobs a week and the longer Government stalls on the introduction of legislation on the sale of alcohol, the more likely it is that this trend will continue,” VFI President Gerry Rafter told delegates, “Minister White and Minister Shortall before him championed a minimum price for alcohol and safer sale and promotion of alcohol but still we have seen no movement.
“We cannot be ignored any longer. The health lobby and public opinion firmly backs our stance. A recent IpsosMRBI poll showed an approval rate of over three to one for minimum pricing. The same poll showed an approval rate of almost two to one for reducing the number of outlets selling alcohol.
“Publicans and retailers all over Ireland see at first-hand the crippling effect on confidence and spending-power that austerity has had on already hard-pressed consumers. People either have no money or are afraid to spend and the government cannot take any more money out of people’s already shallow pockets. We’re all looking for a chink of light from this administration to boost confidence.
50,000 people rely on the pub as a means of employment and to support their families.
“The drinks industry has lost 6,000 jobs since 2009 and 1,300 pubs have shut their doors since 2005. The value of the pub as a large employer outside Dublin is often overlooked,” he said.
Many of the assembled publicans spoke about the pub as a major employer as well as the valuable contribution the Irish pub makes to rural Ireland.
Government ‘no’ to Lid Levy
In his report to conference Company Secretary Michael Fitzgerald pointed out, “The cheap alcohol in our multiples helps explain why our groceries prices are one of the highest in Europe”.
The Government had decided not to go with the Lid Levy suggested jointly by the LVA and the VFI late last year. It would have garnered some €280 million, he claimed, hoping that the Budget this October would take another look at it as it continues to be a work in progress.
Big 2 suppliers criticised over price increase
Suppliers too came in for criticism.
“To say that it has been a difficult year would be putting it mildly,” said Michael Fitzgerald, “Especially as two of the big suppliers put up their drinks prices before the Budget.”
The feedback he’d been getting is that smaller pubs feel disenfranchised by the big suppliers who didn’t even provide some of them with glasses or beer mats.
Chasing down the clubs
The Garda Commissioner had stated that information on any clubs abusing their position should be given to him and he’d put it down the line for action. In follow-ups it had been found that this had sometimes been the case but sometimes not, said Michael Fitzgerald.
“Some clubs continue to take the cream, opening only for funerals etc and closing when not making money,” he told delegates.
Rural transport stalls on insurance question
Michael Fitzgerald understood that Minister Alan Kelly was ready to go with a rural Hackney scheme. The problem was with the insurance companies who aren’t keen.
Emergency Motion passed
An Emergency Motion, that ‘The VFI deplores the level of inaction by Government on the reform of alcohol sales despite a public commitment to do so and the ongoing commitment to extreme austerity measures that are choking the public of spending power and thereby killing the retail sector including pubs’ was passed at this year’s conference.
VFI Chief Executive Padraig Cribben explained that this was something of a double-barreled motion with Government action in one barrel and Government inaction in the other.
Despite promises from Minister Alex White back in February, no action has yet been taken on tackling alcohol misuse.
It’s important that vintners get the message to Alex White that he’s the policy-maker who should stop talking and start acting, he stated, pointing out that if, as Enda Kenny had envisaged and enunciated initially, there were to be report cards on ministerial performances, ministers such as this would score somewhere between a ‘D-minus’ and an ‘E’.
Speakers coming up to the podium in support of the motion included Mike Power from Waterford who looked at the 14,000 jobs that had been lost in the last five years alone.
“Had that been in any other sector, there would have been an outcry,” he said, adding that we could well lose another 1,000 jobs in the next 18 months.
The answer was simple, he said – segregate alcohol in the multiples, abandon Below-Cost Selling and introduce the Lid Levy.
“The Government have to listen to us on this,” he said, adding that it was time to give a stronger mandate to save our pubs from extinction.
Cork’s Con Dennehy reckoned that the Government has to loosen the purse strings.
The pub is not the problem, he said, it’s the solution to uncontrolled drinking in the domestic environment.
“When there’s publicity about this now” he said, “at least it’s the stack of beer in the supermarket rather than the pint in the pub that’s shown.”
County Limerick’s Martin O’Dea pointed out, “We have to abide by the responsible sale of alcohol but that’s not a problem for the off-trade. The properly licensed people are those who’re being over-regulated as usual”.
Austerity was not working, if anything it’s operating in reverse.
John Brennan from Kildare even called for a Preservation Order to be put on the Irish pub.
Limerick’s David Hickey felt that morale in the Federation was at a very low ebb now.
The solution, he felt, was to appoint a strong committee to meet Government and say to them, “No more taxes or regulation”.
52 cent in every €uro spent on drink goes to the Government, he pointed out, “And banks need to be spoken to too regarding overdrafts. Suppliers also need to sit around the table and present us with a three-year plan so that we know what’s going to happen on prices,” he concluded.
Motions
- All motions were passed including one seeking to strengthen the publican’s ‘right to refuse’, proposed by Kildare’s John Brennan who pointed out that fellow-publican Michael Lambe is presently being sued for failing to take proper care of his customers by one of the combatants in his pub who was part of a fracas that required 100 Gardai to intervene.
- The right to refuse also needed to be extended further to those who anticipate violence, he added.
- A fairer means of calculating on- and off-licence fees was sought by Michael Gleeson of Gorey who explained that there was no turnover limit on an off-licence fee.
- Matthew Griffin from Clare proposed that “a minimum of three ordinary Publican’s Licences be required to open new premises as an off-licence”. This had as its main objectives the making of current premises more viable (on which banks could offer loans) and to make it more difficult for other off-trade outlets to open.
- The fact that this would raise the value of current licences would also have implications for using it as a pension in retirement.
- The conference was also asked to examine the possibility of getting new companies to quote for the block VFI business by Padraig McGann from Galway who stressed that vintners needed to check very carefully the wording on their policy to ensure that it’s suitable to the particular publican’s needs.
Surviving in a declining economy
“How do you survive in a declining economy?|” asked the Guest Speaker this year Frank Gleeson, Retail Director of Topaz Ireland which has 340 service stations. A former Retail Director of the O’Brien Off-Licence Group, he now dealt with 220 independent Topaz retailers but ironically he also runs the Parnell GAA Club in North Dublin.
His Topaz members do a lot of lobbying to help ensure survival.
“We rely on Irish banks that are reducing credit and customers like you who are getting less and less turnover,” he explained.
Under his stewardship the Parnell GAA Club had grown from 300 members to 4,500 members. He wanted the club to be the centre of the community.
It seemed to be working too with turnover going from €10,000 a week to €65,000 a week comprising €40,000 in alcohol and €25,000 in food (which achieves a 67% gross margin). The venue now employed 50.
Parnell GAA was successful because it encouraged its staff to engage in upselling; it managed its stock carefully and had the lowest labour costs in the industry.
Peer pressure is kept up through a daily communications meeting.
“I myself am optimistic but it needs the politicians to come out and say ‘no more taxes’,” he said, “They need to get consumers spending again or to at least feel like they’ve ‘permission’ to spend.”
He pointed out that independent off-licences and convenience off-licences are not making any money in light of the multiples’ pricing policy.
The other problem was how to get more money out of consumers who don’t feel like spending.
“There’s no Big Ticket item that’s going to grow your business by 3-5%, it’s the small things,” he advised.
What remains to be done is to stimulate the domestic economy.
“They can’t put any more tax on alcohol or tobacco and the black market accounts for up to 25% of sales,” he explained.
He’d witnessed a drop in pub licences of around 11.5% while alcohol sales in pubs had fallen 34.6%. VFI membership had fallen by some 800 between 2007 and 2012, but the issues for the trade remained competition, consumer behavioural changes and turnover dropping below sustainable levels.
The supply chain is very concentrated in a number of big suppliers, he pointed out.
“Are you getting enough from your suppliers?” he asked.
He regarded retailing as a contact sport so one had to have a business that was fit.
In the case of Topaz, constant surveys and feedback had got the company to a position where its consumer rating stood at 99%.
He advised publicans to keep an eye on how they’re doing by asking a friend to drop in and see what could be done better at the pub or by asking someone from another sector entirely to come in and evaluate their experience.
Enough is enough – and shout it out!
In summing up the conference VFI President Gerry Rafter believed that the pub trade still had plenty to shout about.
“We seem to want to be first to apply austere measures that have stifled economic growth,” he said, “If we were in Greece or Cyprus or Italy, we’d be out on the streets.”
So far this year trade had been down 6%. With austerity, the public had much less disposable income.
“Enough is enough. We need the Government to stand up to Europe or Germany and demand a re-negotiation of our position so that we can grow out of this recession,” he told delegates.
The biggest concern remained the major challenge of cheap, widely available, massively discounted alcohol in supermarkets around the country.
This practice is resulting in a net cost to the State and health ministers had committed publicly to dealing with this situation, the last such time being on 12th April when Minister Reilly wrote to the VFI Chief Executive to this effect.
In the letter, his Private Secretary stated that there was a real and tangible prospect that the proposals – currently being finalised – included a recommendation to place a social responsibility levy on the industry and that it was intended that these proposals be submitted to Government for consideration “as soon as possible”.
“Is this Government going to be remembered for delivering promises but not delivering on those promises?” he asked.
He called on suppliers to think “very hard” what they’ll do in relation to price increases – “Our consumers cannot afford it” – and he congratulated and thanked those who didn’t put up prices last November.
Describing the banking sector as “a joke” in telling the media that they were lending to SMEs, he added, “At the same time we must send out a positive message about the pub and how it’s a great place to hold a social occasion”.
Among those invited to attend this year’s VFI conference were David Hawksworth, President of the Federation of Licensed Victuallers Association in England and LVA Chairman Tom O’Brien.
The biggest concern remained the major challenge of cheap, widely available, massively discounted alcohol in supermarkets around the country.
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