Sri Lanka: Increased taxes on alcohol make leading glass bottle manufacturer turn to overseas markets

Sri Lankan glass bottle manufacturer, Piramal Glass Ceylon Plc, is turning to overseas markets as local sales fall due to increased taxes on alcohol, a company official said.

“The management has tried its best to channel the extra capacity towards the export market to bridge the gap due to the loss of domestic volumes,” Piramal Glass Ceylon (PGC) Chairman Vijay Shah said in the company's annual report.

While local sales of glass bottles fell, export revenue of PGC has increased 77 percent to 2.1 billion rupees in 2017/18, Shah said.

“The export to US has grown by over 150 percent, Australia by 72 percent and a six-fold increase in the Canadian markets,” he said.

The firm is also entering into Malaysia, Africa, Vietnam and Myanmar.

PGC last year completed a 3 billion rupee upgrade of its furnaces, which increased production capacity by 20 percent to 300 metric tonnes per day.

Shah said that the production capacity taken up by the local market has fallen below 70 percent in the last financial year, compared to the normal levels of over 75 percent.

The local market contributed 4.7 billion rupees to PGC’s revenue in 2017/18, which was a 16 percent fall compared to a year earlier.

“This was mainly contributed by the introduction of new taxes and levies on the beverage and liquor segment of the market as it made the final products a lot more expensive,” he said.

Last November, the government introduced a policy of taxing alcoholic beverages based on their alcohol content. Prior to that, beer was taxed at a higher rate than hard liquor.

Sri Lanka’s largest beer producer said that the new policy has seen more consumers switching to beer consumption, which is mainly sold in glass bottle form, but also includes sales of canned and draught beer.

The government also placed extra taxes on beverages based on sugar content.

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