Alcoholic Drinks in Sri Lanka

Sri Lanka’s population is very diverse in terms of ethnicity, religion and language. Its economy continues to grow based on tourism, construction and transportation, despite threats from natural disasters and terrorism.

Market insight: COVID-19 impact

The COVID-19 pandemic has had a devastating impact on sales of alcoholic drinks in Sri Lanka during 2020. The main reason for the substantial sales declines that are expected to be seen across industry is the complete ban on the sale of alcohol was enforced throughout the country for an extended period from 20 March.

Country insight: COVID-19 impact

Sri Lanka’s first case of COVID-19 was confirmed on 27 January 2020, a 44-year-old woman from Hubei Province in China. The government of Sri Lanka declared a curfew on 20 March throughout the nation to restrict the movement of people.

Country insight: Pre-COVID-19

The majority of Sri Lanka’s people are Theravada Buddhists, with these accounting for an estimated 70% share of the country’s total population. Most within this group view drinking alcohol as a violation of the Five Precepts, which state that Buddhists should avoid alcohol and other intoxicating drugs.

Socioeconomic trends

Low-income men are believed to be the most significant consumer group for alcoholic drinks. Drinking is not only most common and frequent among this group, but many men from this socioeconomic group also consume alcohol in large quantities when they drink.

Logistics/infrastructure

Because Sri Lanka is a small country with a reasonably well-developed road network, alcoholic drinks and other consumer goods can usually be transported from any location in the country to any other within 24 hours. However, permits are required for the transportation of alcoholic drinks and this must specify the vehicle number and the amount and type of product freighted.

Legislation

On 1 October 2019, changes were made to the excise regulations related to retail sale, transportation and possession of imported liquor. The Department of Excise has issued statements explaining that the amendments to the regulations were undertaken to permit the retail sale, transportation and possession of up to 80 litres of imported liquor.

Taxation and duty levies

Major changes were seen to the taxation applied to alcoholic drinks towards the end of the review period. Most notable were the changes made to VAT & NBT (Nation Building Tax) applicable from 1 January 2020, specifically that VAT has been reduced from 15% to 8%, while the 2% NBT was abolished.

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