Sri Lanka’s legal alcohol consumption decreased by 9.5 percent year-on-year (YoY) in the first ten months of 2024 due to a significant drop in hard liquor consumption due to tax increases, the Ministry of Finance said.

Total legal alcohol consumption fell from 28.2 million absolute liters in 2023 to 27.2 million absolute liters in the same period. Consumption of hard liquor declined by 8.9 percent to 15.5 million litres in absolute terms, while beer consumption experienced a slight increase of 3.6 percent to 11.5 million litres in absolute terms.

Consumption has been declining since the government increased excise duty on liquor by 14 percent effective January 1, 2024, as part of the annual inflation-adjusted excise duty policy.

Despite the decline in consumption, revenue from excise duty on liquor increased by 20.8 percent year-on-year to Rs. 167.7 billion in the first ten months of 2024, compared to Rs. 138.8 billion in the same period in 2023. Liquor duty contributed 34.4 percent to total excise revenue during this period.

The Ministry of Finance said that legal alcohol consumption in Sri Lanka fell by 9.5 percent year-on-year (YoY) in the first ten months of 2024 due to a significant decline in hard liquor consumption following tax increases.

Total legal alcohol consumption fell from 28.2 million absolute liters in the same period in 2023. Hard liquor consumption fell by 8.9 percent to 15.5 million absolute liters, while beer consumption experienced a slight increase of 3.6 percent, reaching 11.5 million absolute liters.

The decline in consumption is being seen with the government increasing excise duties on alcohol by 14 percent, effective from January 1, 2024.

Despite a decline in consumption, excise tax revenue on alcohol increased by 20.8 percent year-on-year to Rs 167.7 billion in the first ten months of 2024, compared to Rs 138.8 billion in the same period in 2023. Alcohol taxes contributed 34.4 percent to total excise revenue during this period.

However, revenue from alcohol taxes in the first ten months of 2024 was 72.9 percent of the annual estimate, which was as low as 89.3 percent of total excise tax revenue.

The Ministry of Finance said that the shortfall was due to widespread reports of counterfeit stickers found in many parts of the country despite the full implementation of the security features and security features management system by licensed manufacturers and importers since January 3, 2022. In addition, there is an illegal alcohol industry. In Sri Lanka, a tax of Rs. 7,969 is levied on a liter/kilogram of locally produced liquor, while a tax of Rs. 5,735-6,015 is levied on a liter/kilogram of beer. In addition, separate taxes are levied on the raw materials used in the production of ethanol. The government plans to collect Rs. 240 billion from liquor taxes by 2024.