Sri Lanka’s legal liquor consumption dropped by 9.5% year-on-year (YoY) in the first ten months of 2024, primarily due to a significant decline in hard liquor consumption following tax hikes, as reported by the Ministry of Finance.
Total legal liquor consumption decreased to 27.2 million absolute liters, down from 28.2 million liters in the same period in 2023. Hard liquor consumption fell by 8.9% to 15.5 million liters, while beer consumption saw a slight increase of 3.6%, reaching 11.5 million liters.
This reduction in consumption comes after the government raised excise duties on liquor by 14% on January 1, 2024, as part of its inflation-adjusted indexation policy.
Despite the drop in consumption, excise duty revenue from liquor increased by 20.8% YoY, reaching Rs. 167.7 billion in the first ten months of 2024, compared to Rs. 138.8 billion in the same period of 2023. Liquor taxes accounted for 34.4% of total excise duty revenue.
However, the realization of revenue from liquor taxes in the first ten months of 2024 stood at 72.9% of the annual estimate, falling short of the 89.3% realized in overall excise tax revenue.
This shortfall was attributed to the prevalence of counterfeit stickers in various areas, despite the implementation of security features by licensed manufacturers since January 2022. The illicit liquor industry also contributes to the gap. The government has set a target of Rs. 240 billion from liquor taxes in 2024.
