Distilleries loses sales momentum due to restrictions on alcobev sector

The restrictions on liquor sales and the subsequent partial lockdowns, which lasted for a month, had a bearing on Distilleries Company of Ceylon PLC in the quarter ended in June 2021, as the company lost its sales momentum it built through the end of March 2021. 

Sri Lanka’s largest distiller, with 70 percent market share, reported revenues of Rs.21.7 billion for the April-June quarter, up 49.3 percent from the same period in 2020, during which time the company lost nearly half of the quarterly sales, due to more stringent lockdowns.

The June revenue eased from Rs.26.6 billion reported for the three months to March 2021, the company’s fourth fiscal quarter, when the things were much more relaxed and consumption activity was happening at a much heightened pace. 

Still robust liquor sales in the June quarter may have been possible, due to the seasonal peak demand in April, which the company lost in the corresponding period last year. 

The request by the Excise Department to allow people to order liquor online, although was approved by the Finance Ministry, was shot down by other bureaucrats in the COVID task force, losing the government the much-needed revenues via excise duties. 

The excise duty collected by the government during the quarter was Rs.14.9 billion, down from Rs.18.8 billion in the March quarter. However, this is significantly up from Rs.10.0 billion collected in the year earlier period.  Besides the excise duty, the company also booked Rs.987 million tax on profits for the quarter. 

The company reported earnings of 32 cents a share or Rs.1.47 billion, compared to earnings of 21 cents a share or Rs.982.8 million in the corresponding period last year, which translated into a 49.2 percent surge. 

There were calls from the alcoholic beverage industry to increase the number of liquor outlets and lower taxes on the industry to give people more choice and access to legally distilled liquor, which in turn will curb illicit liquor and generate more taxes to the government to 
fund public services. 

Sri Lanka has only 2,800 liquor outlets for a population of 21 million, making the distance between two liquor outlets on average to 23.21 square kilometres, with the highest being the 80 square kilometre in more distant provinces.  Billionaire business Harry Jayawardena-controlled Melstacorp PLC directly held a 92.44 percent stake in Distilleries Company, as of June 30.