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CASTLE MALTING NEWS in partnership with www.e-malt.com
09 May, 2019



Brewing news Sri Lanka: Lion Brewery Ceylon Plc looking to cut costs, boost exports

Sri Lanka's largest beer manufacturer, Lion Brewery Ceylon Plc, is looking to cut costs and boost exports after a fall in local demand following the Easter Sunday bombings, EconomyNext reported on May 7 citing a top official.

"We're at the moment looking to reduce costs wherever possible and improve our efficiency, like any corporate would do in such a situation," Chief Executive Suresh Shah said.

Lion closed at 503.30 rupees a share on the Colombo Stock Exchange on May 6, down from 580 rupees a share prior to the Easter Sunday bombings on April 21.

The beer manufacturer's sales were hit after the attacks, which resulted in dozens of deaths at three luxury hotels in the capital Colombo.

"There is an impact for us, because people may not be going out as much as they used to due to security concerns," Shah said.

"The declining tourism will also play a part," he said.

Sri Lanka's Finance Ministry has projected tourism arrivals to the country to fall by around 30 percent, and earnings from tourism to fall by 1.5 billion US dollars.

Shah said it is difficult to measure exactly what portion of its produce is consumed by tourists, as visitors to the island buy beer at restaurants and wine stores, while locals consume at hotels.

In the days following the attacks, many hotels had restricted their operations, but most are now offering normal services, albeit with higher security.

However, there have been few guests at hotels, with numerous photos being shared on social media on empty hotel lobbies and common areas, especially in Colombo.

Meanwhile, Shah said that a slowdown in economic growth would be most likely, and would also hit beer sales.

He said that beer shipments to regional distribution centres, and deliveries from them to retailers, restaurants and hotels had been disrupted until end-April due to security operations.

Logistics have now returned to normalcy, but getting a clear idea about the changing demand for beer sales would be delayed till end-May, Shah said.

May is the Buddhist holy month of Vesak, when beer consumption falls, he said.

Lion will attempt to sell more beer in export markets, as there is little that can be done to rekindle local demand, Shah said.

"We are also looking to push for more exports," he said.

Lion exports beer to 19 countries, with the largest markets in the Maldives, United States, and the United Kingdom.

However, exports are a very small portion of Lion's business, accounting for 490 million rupees or 1.6 percent of total revenue in 2018.





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