Sri Lanka’s Beer Industry Caught between Tax burden and Tourism Boost
- CNL Reporter
- October 22, 2025
- News, Political
- beer
- 0 Comments
Sri Lanka’s beer industry is facing mounting pressure as heavy taxation offsets the benefits of recovering tourism and steady consumer demand. The sector—led by Lion Brewery (Ceylon) PLC and Distilleries Company of Sri Lanka (DCSL), now owner of Heineken Lanka—remains a major revenue source for the government. In FY2024/25, Lion Brewery paid nearly Rs. 97 billion in taxes, equal to about 3 percent of total state revenue.
However, January’s excise hike raised levies up to Rs. 446 per litre depending on alcohol strength, pushing legal beer prices beyond affordability and dampening sales volumes. The Index of Industrial Production for beverages rose 6.4 percent year-on-year in Q2 2025, but revenue growth stayed flat as brewers warned of rising demand for illicit alcohol.
Tourism has offered some relief, with arrivals surpassing 1.3 million by end-July 2025, lifting hotel and bar sales. Still, analysts caution that further tax indexation could stall recovery and erode state revenue.
