It is cheaper to buy a bottle of Irish whisky from an Italian supermarket than from a distillery here.

That is according to a new report from Drinks Industry Group of Ireland (DIGI).

The group says 25 European Union member states pay less excise tax on Irish whiskey than Ireland does.

It says Ireland has second-highest overall excise tax on alcohol, the highest on wine, second highest on beer and third highest on spirits.

In France and Germany, excise tax rates on wine and beer are far lower.

A shopper in France pays just three cents in excise on a bottle of Cabernet Sauvignon, while a customer at a German beer hall pays five cents in excise on every pint of lager.

Fifteen EU member states - including Germany, Spain and Italy - charge no excise tax whatsoever on wine.

A bottle of Bushmills Irish Whiskey sits on a bar in Dublin city centre | Image: Brian Lawless/PA Archive/PA Images

Ireland has the highest excise tax on wine in the EU, while Ireland's excise tax rate on cider is more than double the UK's.

DCU economist Anthony Foley uses another example to demonstrate the difference in excise tax.

He says it is cheaper for an Italian tourist to buy a bottle of Irish whiskey from an Italian supermarket, than from a distillery in Ireland.

DIGI is calling for a 15% reduction in alcohol excise tax over a two-year period.

It also says, given the price differential in the North, cross border shopping for cheaper alcohol is now "a very real threat" to Irish businesses, the economy and to the Exchequer.

"Vulnerable businesses"

DIGI is calling on Finance Minister Paschal Donohoe to reduce Irish excise tax on alcohol - first by reducing it by 7.5% this year, then by an additional 7.5% in Budget 2021.

DIGI chair Rosemary Garth says faced with a no-deal Brexit, rising operational costs and an increased VAT rate, excise reduction will "give rural drinks and hospitality businesses breathing space".

"A high alcohol tax arbitrarily hampers the growth of one of our most promising, fastest growing sectors, much of which is located outside of Dublin.

"It also seriously endangers some of our most vulnerable businesses," she says.

"If the UK and EU fail to agree a withdrawal deal, which looks increasingly likely, Brexit will prove disastrous for rural Ireland.

"Sterling will sink closer to parity with the euro, making Ireland a less affordable destination for British tourists, who comprise our single largest tourism market".

"Duty-free pricing at UK airports and cross-border shopping will lead to consumers in the Republic making larger drinks product purchases outside of the country.

"That, of course, means indigenous retailers and hospitality businesses will lose out."

DIGI is an umbrella organisation for the drinks and hospitality industry in Ireland.

Its members include Drinks Ireland, the Irish Hotels Federation, the Licensed Vintners Association and National Off-Licence Association.