Lion Brewery reports Rs.80bn tax contribution

In its latest annual report, Lion Brewery (Ceylon) PLC highlights an impressive tax contribution of Rs.80.8 billion for the year, bringing the cumulative total over the past six years to Rs. 304.9 billion.
Further, reflecting its financial stability, Fitch Ratings affirmed the company’s National Long-Term Rating at ‘AAA(lka)’ during the year. 
However, the report also brings attention to the escalating affordability issue within the legal alcohol market, driven by a cumulative 64 percent tax increase over the year. This significant tax burden has widened the gap between the legal and illicit alcohol markets, propelling the latter’s growth due to declining affordability of licit alcohol.

The affordability issue is compounded by multiple excise increases passed on to consumers, impacting the licit market adversely. Lion Brewery has expressed its support towards future excise increases aligned to inflation, advocating for a transparent mechanism, similar to schemes in Australia and Canada. Without such measures, the sector faces a potential long-term decline if prices outpace inflation while real incomes grow slowly.

In addition, accessibility remains a critical challenge, with only one off-premise licensed outlet every 45 sqkm on average and in the Northern district, one per 167 sqkm. This limited access fosters informal market activities. 
The company commends the government’s policy on access liberalisation, which has shown positive results and hopes for continued efforts to increase legal product accessibility in underserved areas, promoting a consistent policy for the alcoholic beverage sector.