Sri Lanka’s largest beer seller notes increase in government revenue from beer industry
The largest beer seller in Sri Lanka, Lion Brewery PLC (LION), in their latest quarterly review has reportedly noted that revenue from the country’s beer industry to the Sri Lankan government has grown by Rs. 8.2 billion to Rs. 35.4 billion during the financial year ended 31st March 2019.
The financials of LION has reportedly noted that during the 12 months ending 31st March 2019, on a turnover of Rs. 42.8 billion, company achieved a post‐tax profit of Rs. 3.2 billion.
“The pickup in tourism has been a key contributor to our results” the company has been quoted as stating in its review, adding that in the last month of the financial year, beer taxes were increased by 12.5%.
According to the report, excise duty on the major contributor to arrack volumes – Extra Special Arrack – remained unchanged whilst, those of other arracks were increased by 7.5%.
“Once again it seems that policy consistency is being compromised, an age‐old challenge for the private sector in Sri Lanka. Ostensibly, the tax on Extra Special Arrack remained unchanged since it was the “poor man’s drink”. Encouraging the “poor man” or for that matter anyone to drink the much more harmful hard alcohol is an unusual policy measure to say the least,” the company has been quoted as saying in its latest financial review.
The local media publishing the financial review by the company notes that call by the company for policymakers to give confidence to the private sector by being consistent with policy adding that they have noted the intent of Government – as stated in the budget speech ‐ to index future increases in alcohol taxation to a transparent data point such as GDP growth.
“We are fully supportive of such an initiative and hope that it will be implemented without delay,” LION Breweries’ management has further stated in the financial review.
OSL take:
The increase government revenue from the beer industry is indicative of the increase in beer sales in Sri Lanka. Given the tax incentives for beer, foreign beer manufacturers could explore the possibility of selling their products to the Sri Lankan market.
| Article Code : | VBS/AT/24052019/Z_3 |