By Madhusha Thavapalakumar
Sri Lanka’s liquor industry, one of the top contributors to the country’s tax revenue, has lost its annual Sinhala and Tamil New Year and Easter sales this year owing to the ongoing curfew imposed to mitigate the spread of Covid-19 within the country.
As noted by the industry, the losses could be in the billions, as Easter and New Year sales collectively bring in significant revenue, similar to that of Christmas any given year.
Speaking to The Sunday Morning Business, an official from a renowned liquor manufacturer stated that the company had lost sales of the value of about Rs. 3 billion that they were expecting to make during this festive season.
“We had high hopes for this New Year. We wanted better sales than last New Year and we were prepared for this season. Last year, the Easter Sunday attacks had an impact on our end-April sales, which was a considerable loss,” the official added.
According to the official, their sales are usually at 150% during this festive season compared to other months, and the seasonal liquor sales usually start to kick in from 20 March and last until 30 April.
“Considering the inability to cater to a larger demand in April, we start releasing stocks from mid-March itself. Consumers also begin buying for Easter and New Year from March. But this time, the liquor shops closed on 20 March and they are still closed,” the official noted.
The Government’s revenue will also take as much of a hit as the company, given that over 70% of the company’s revenue is settled as taxes, noted the official.
However, the official also stated that despite the fact that their manufacturing has come to a temporary standstill, their company will not resort to laying employees off, adding that the March salaries of their employees have been paid while April salaries will also be settled shortly.
Sri Lanka’s liquor industry, one of the top contributors to the country’s tax revenue, has lost its annual Sinhala and Tamil New Year and Easter sales this year owing to the ongoing curfew imposed to mitigate the spread of Covid-19 within the country.
As noted by the industry, the losses could be in the billions, as Easter and New Year sales collectively bring in significant revenue, similar to that of Christmas any given year.
Speaking to The Sunday Morning Business, an official from a renowned liquor manufacturer stated that the company had lost sales of the value of about Rs. 3 billion that they were expecting to make during this festive season.
“We had high hopes for this New Year. We wanted better sales than last New Year and we were prepared for this season. Last year, the Easter Sunday attacks had an impact on our end-April sales, which was a considerable loss,” the official added.
According to the official, their sales are usually at 150% during this festive season compared to other months, and the seasonal liquor sales usually start to kick in from 20 March and last until 30 April.
“Considering the inability to cater to a larger demand in April, we start releasing stocks from mid-March itself. Consumers also begin buying for Easter and New Year from March. But this time, the liquor shops closed on 20 March and they are still closed,” the official noted.
The Government’s revenue will also take as much of a hit as the company, given that over 70% of the company’s revenue is settled as taxes, noted the official.
However, the official also stated that despite the fact that their manufacturing has come to a temporary standstill, their company will not resort to laying employees off, adding that the March salaries of their employees have been paid while April salaries will also be settled shortly.
Meanwhile, we spoke to an established distillery where an official expressed disappointment over the unexpected halt in liquor sales during this season as their estimated loss due to the Covid-19 curfew is over Rs. 5 billion.
The company had bigger plans this New Year as they wanted to pick up the liquor sales that dropped in 2017 and continue to stagnate in that range as a result of the tax relief given to soft liquor in the Budget 2018, the official stated.
“Hard liquor sales dropped in December 2017 due to the tax relief given on beer. Even though there was satisfactory sales performance over the last two years, the impact of (the) drop is still there. We did not pick up to our pre-2017 levels yet,” the official added.
The Budget 2018 reduced Excise Tax on strong beer by 33% and raised the tax on hard liquor by 2% in November 2017, making soft liquor more affordable to consumers.
When asked about their forecast for the rest of the year, the official noted that the market should rebound in the coming months but that is entirely dependent on the levels of disposable income of people in the months to come.
“Our performance for the rest of the year is, as always, completely dependent on the bottom line of the consumers. Only their disposable income is going to decide our sales performance,” the official added.
The official further noted that despite the ongoing situation and its impact on their company’s financial performance, their company has paid their employees for March and April. However, the company might have to make a decision if the current situation continues in the long term.
According to a study done by LOLC Securities, Sri Lanka has recorded high per capita alcohol consumption when compared to the South Asian region. The significant loss in seasonal liquor sales is expected to reduce the Government’s revenue considerably. After identifying the first Sri Lankan Covid-19 patient, the Government announced an islandwide curfew starting from 20 March, which is still in effect. Even though the curfew is being lifted once every few days for few hours in districts excluding that of Gampaha, Colombo, Jaffna, Kandy, Puttalam, and Kalutara, liquor shops have been requested to remain closed during these hours.