Sri Lanka soft drinks market recovering from sugar tax

ECONOMYNEXT – Soft drink sales have started to pick up after the initial shock of a sugar tax, while a price cut after taxes were reduced, while the firm is also moving into selling water and milk, a top beverage maker has said.

Sri Lanka slammed an interventionist European style tax, discouraging the use of non-alcoholic drinks and pushing manufacturers to use alternative chemicals instead of natural sugar.

Sri Lanka also has high alcohol taxes.

"The Beverage business displayed signs of recovery and is expected to witness growth in volumes following price reductions, post the introduction of a threshold on the sugar tax," John Keells Holdings, which owns the Elephant Brand drinks said.

The firm said volumes fell 25 percent after the tax, but started to recover in the second half of 2018.

An upper limit had been placed on sugar taxes in the 2019 budget.

Selling prices of large plastic bottles had been cut by 20 percent after the tax change. Other price cuts are also planned.

"The revisions in prices are expected to have a positive impact on the volumes, which were in any case seeing a positive momentum," the firm said.

"In furtherance of the Beverage business’ strategy to diversify its portfolio to create a more balanced mix of CSD and non-CSD variants, the business launched dairy and water products in April and June 2018, respectively.

"Both the dairy and water ranges, launched under the "Elephant House" brand, have been very well received by consumers." (Colombo/May27/2019)





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