Rural pubs facing 'existential threat' without targeted government support

James Cox

The Vintners’ Federation of Ireland (VFI), which represents over 3,500 publicans across the country, has warned that rural pubs are facing an “existential threat to their ongoing commercial sustainability and survival” unless targeted Government supports are introduced in Budget 2027.

Speaking following his address to the VFI AGM in Mount Wolseley in Carlow, chief executive Pat Crotty said the situation facing pubs has reached a critical point, with closures accelerating and cost pressures continuing to mount.

More than 2,200 pubs have closed since 2005, with the rate of closure increasing in recent years to an average of 128 per annum.

“A pub is more than just a business. It performs a vitally important public function as a hub of social and cultural life, connection and community identity.

"When a rural pub closes, a community loses more than a business – it loses a social anchor.”

The VFI said pubs support the economic and social sustainability of local communities, supporting local employment, tourism, and social wellbeing and connectedness.

However, "many pubs are now at breaking point, driven by significant cost increases and an absence of targeted relief".

Electricity costs

Electricity costs have increased by 70 per cent in the past five years, wages by 40 per cent, while water tariffs have also risen significantly over the same period.

“There is simply no capacity left to absorb further cost increases. Ireland’s pubs, particularly smaller rural pubs that do not serve food, continue to face significant cost-of-business challenges which pose an existential threat to their survival,” Crotty said.

“Closures are intensifying and this points to an increasing rate of market failure in the sector.”

While welcoming the reduction in the VAT rate to 9 per cent for food services, the VFI noted that the measure does not benefit the majority of rural pubs, with 64 per cent not serving hot food.

Tax credit

The organisation is calling on Government to introduce a new On-Trade Sustainability Scheme, based on a tax credit linked to the supply cost of draught products, as a targeted approach to support the on-trade sector.

The proposed scheme would be capped at €20,000 per premises and is designed to support smaller pubs in particular.

“We have seen the Government move to support industries such as Film and TV, Gaming, and Reality TV through targeted tax credits. Under current arrangements, the TV and film industry can avail of tax relief when filming in an Irish pub, while publicans themselves receive no equivalent support”, Crotty said.

According to a newly released VFI member survey, trading sentiment has turned negative over the past year, with 41 per cent of publicans reporting that trading conditions are now worse than 12 months ago.

Irish pubs are recognised around the world as a defining part of our cultural identity. We must act now to protect them, and the people behind them.

Confidence in the future outlook is similarly concerning, with almost 42 per cent expressing a lack of confidence, while a further 30.0 per cent describe themselves as neutral.

Rising costs are also having a severe impact on viability, with 65 per cent stating that rising costs are having an unsustainable impact on operations.

Crotty added: “Government policy should recognise that pubs are essential social and cultural hubs, particularly in rural communities.

"Irish pubs are recognised around the world as a defining part of our cultural identity. We must act now to protect them, and the people behind them."