Sri Lanka: Sri Lankan beer consumers pay over 70% of retail price in taxes

The beer consumers in Sri Lanka are effectively paying over 70 percent of the retail price of beer purely in taxes, according to research by Jafferjee Brother Securities (JBS).

According to the report, the excise duties alone account for 47 percent of the retail price of a bottle of strong beer while the Value Added Taxes make up 15.3 percent of the price.

Additionally, the income tax adds a further 6 percent, Social Security Contribution Levy accounts for 2.4 percent and a tax on dividends adds 0.5 percent.

These taxes collectively amount to a whopping 71.2 percent of the retail price when adjusted for purchasing power parity (PPP), according to the research.

“Even with the PPP adjustments, enjoying a cold one is not as chilled as it seems,” JBS commented on its findings.

However, global analytical platforms project that the revenue generated in the beer market in Sri Lanka will grow at a compound annual growth rate of 9.32 percent between 2025 and 2029.

In 2025, the local market is expected to generate approximately US $ 661.5 million in total revenues.

Accordingly, the at-home consumption, driven by the sales in supermarkets and convenience stores, is expected to amount to US $ 523.8 million and out-of-home consumption, through restaurants and bars, is projected to reach US $ 137. 7 million.

This results in an estimated US $ 23.81 in revenue per capita from the beer sales in Sri Lanka in 2025.

Moreover, the total volume available in the local beer market is forecasted to reach 133.3 million litres during the year, with the at-home consumption accounting for 115 million litres and out-of-home consumption likely to hit 18.3 million litres.This brings the average consumption rate per person (at-home) to 5.23 litres in 2025.

However, the volume growth rate of the local beer market will likely decline in 2026, as a contraction of -1.1 percent is projected for the year.

According to the Export Development Board (EDB), beer brewing in Sri Lanka began in 1881 along with the colonial plantation sector.

The local breweries are located across several regions of the island, with lagers among the most in demand beer varieties in the country, according to the EDB.