National policies to curb the availability and affordability of licensed alcohol through distribution and pricing strategies, have not led to a decline in alcohol related social negatives, Carson Cumberbatch PLC (CARS) stated.
In the Beverage review of the company’s annual report, CARS states that this is because the economically under-privileged classes continue to resort to the cheaper and more widely available illicit liquor as a preferred option.
“Therefore, we continue to uphold our view that consumers can only be weaned away from harmful illicit alcohol by giving them an alternative that is less harmful, more affordable and more socially acceptable,” it noted.
According to the company, beer satisfies the criteria on all counts to become an accepted alternative that complements a more temperate lifestyle.
Carson Cumberbatch is the holding company of Lion Brewery (Ceylon) PLC which benefitted from the opening up of new markets and the growth of tourism which enabled it to maintain steady volume growth.
It has plans to expand capacity further which are under consideration, following the increase up to 800,000 hectolitres during the last year. Further, the overall “feel good” factor in the country contributed to more events, outdoor and entertainment activities taking place, which had a positive impact on sales of the company.
However, the review went on to state that the business did experience a setback due to cost increases across the board resulting from higher energy, raw material and finance costs; coupled with a regular increase in the tax bill, through two successive excise duty increases.
“Although considered a sector that can complement towards tourism growth in the country, we have experienced several adverse impacts in running this business, including the 40 percent corporate tax rate which penalized the industry at a time when other industries secured a tax reduction to 28 percent,” it further stated. “Despite the setbacks, we will continue to pursue our growth plans and expect that the sector will continue to follow a trajectory that reflects the growing consumerism in the country,” the review added.Profit after tax of the sector grew 46 percent from the previous year to Rs.1.3 billion contributing 13 percent to consolidated results of CARS.