Food & Beverage Update: 2018 Developments and an Appetiser for Year Ahead
10 December 2018
All framed in the uncertainty caused by a potential no-deal Brexit landscape, and with no free trade agreement between Ireland and the UK yet, we examine some of the changes in the Irish regulatory landscape affecting businesses in the Food, Agriculture & Beverage sector.
Key changes in the law
Availability and Sale of Alcohol
The lifting of the Good Friday Ban this year allowed licensed premises to trade during the full permitted hours, including late exemptions.
On 12 November 2018 several important sections of the Public Health (Alcohol) Act 2018 were commenced with immediate effect. These include significant changes to the laws governing the advertising, sale and labelling of alcohol, including mandatory health warnings, the quantity of grams of alcohol per container and notices in licensed premises. A commencement date has not yet been set for the introduction of minimum unit pricing of alcohol products pursuant to this Act, but this is expected early in 2019.
The Sugar-Sweetened Drinks Tax (SSDT) came into effect on 1 May 2018. It affects beverages containing added sugar which are prepacked and ready to consume. A can of sweetened soda that cost €1 will now cost about €1.10. It is the characteristics of the product in the ready to consume form which are assessed. Examples of sugar sweetened drinks include concentrated products intended for preparation at catering level to produce ready to consume drinks (i.e. concentrates supplied to cinemas and restaurants), bottled squashes, cordials, flavoured syrups and beverages prepared from concentrated substances which are ready to consume. The Department of Finance has said the tax will yield in the region of €30 million this year and €40 million in a full year. We previously examined the SSDT in greater detail.
Grocery Sector Inspections
The CCPC announced that it will start inspections in the Grocery sector to ensure that traders are complying with their obligations under the Consumer Protection Act 2007 (Grocery Goods Undertakings) Regulations 2016. These regulations apply to "grocery goods contracts”.
Potential penalties for non-compliance with the Regulations range from imprisonment to a fine of up to €100,000 or both. Wholesalers and retailers should now take the time to check that they are in compliance with the Regulations, in order to avoid potential investigations and/or penalties from the CCPC.
Special Agri-food Work Permits for Non EEA Workers
The Irish Minister for Business, Enterprise and Innovation approved changes to the Employment Permit Regulations. These changes are expected to make it easier for agri-food sector businesses to source workers from outside the European Economic Area (EEA). A total of 800 work permits are due to be issued for non-EEA workers through this quota-based scheme.
The breakdown of these permits is 500 permits for the horticulture sector, 250 for the meat industry and 50 for the dairy sector. Ireland’s general policy still remains committed to promoting the sourcing of labour and skills from within the workforce of Ireland, but with the buoyant Irish economy now reaching close to full employment it has been necessary to look outside the EEA for lower-skilled, lower-waged labour. These special agri-food work permits are discussed in greater detail here.
The uncertainty over Brexit has meant that trade issues are still causing concern for the Food, Agriculture & Beverage sector, including:
The possibility of the introduction of trade tariffs in the absence of a free-trade agreement between the EU and UK
The possibility of non-tariff barriers to trade such as customs checks and border controls for paperwork on rules of origin and regulatory standards, causing delays and increased costs, and in the longer term, divergent regulations or product requirements and standard
How post-Brexit the CAP and CFP budgets, heavily relied upon by Irish farmers and fishermen, will be substantially reduced
For those involved in the movement of goods between Ireland and the UK, there are arguably two potential Brexit dates to be aware of:
29 March 2019 where no deal is reached - no transition period and WTO rules apply
31 December 2020 where a deal is reached - transition period during which current rules will continue to apply
In the absence of any further agreements there could be customs declarations, border checks, tariffs, quotas and different VAT arrangements in operation after March 2019. We discuss several steps that operators can take to prepare for Brexit.
The introduction of the Sugar Tax is consistent with the objectives being pursued by Ireland, namely tackling obesity and other sugar-related diseases. The Public Health (Alcohol) Act 2018 is seen as an important step towards tackling Ireland’s on-going issues with over-consumption and misuse of alcohol, and operators should prepare for the introduction of minimum unit pricing in 2019, and the phased introduction of restrictions on sponsorship of, and advertising at, sports events in 2021.
For employers, the announcement of the special agri-food work permits is a positive indication of the Irish Government’s willingness to meet Ireland’s changing labour needs.
The food and beverage industry in Ireland is especially susceptible to the impact of Brexit. For the year in prospect, industry participants should brace themselves for substantial challenges for doing business. These may include supply chain delays, further currency volatility and a reduction in margins due to customs and excise duties.
For more information, please contact a member of our Food, Beverage & Agriculture team.
The content of this article is provided for information purposes only and does not constitute legal or other advice