The latest statistics released by the Alcohol and Drug Information Centre indicate a significant rise in alcohol consumption across Sri Lanka, prompting renewed concern among public health advocates and policymakers. Despite successive tax increases in recent years, the data suggests that shifting economic conditions and stable pricing have made alcohol more accessible to the general population, fueling higher consumption levels.
An analysis of data for 2025 shows a notable increase in production across key alcohol categories. Beer production rose by 5 percent, while the production of other alcoholic beverages surged by 17 percent. This upward trend reflects a broader pattern of growing demand, which experts say is closely tied to changes in affordability rather than cultural or seasonal factors alone.
One of the primary drivers behind this increase appears to be the relative stability of alcohol prices. Since the beginning of 2024, there has been no change in the pricing of alcoholic beverages. During the same period, inflation has continued to rise and personal incomes have gradually increased, effectively making alcohol more affordable in real terms. As a result, a larger segment of the population is now able to purchase alcohol more frequently.
This trend comes in the context of significant tax policy changes implemented in recent years. In 2023, the government introduced a 20 percent increase in alcohol taxes, which led to a substantial decline in sales by 8.3 million liters. However, despite the drop in consumption, government tax revenue from alcohol increased by Rs. 11.6 billion, highlighting the strong fiscal impact of excise duties.
A further 20 percent tax increase was implemented in 2024. This resulted in a smaller reduction in sales, with a decrease of 430,000 liters. At the same time, tax revenue rose to Rs. 42.15 billion, reflecting continued gains for the state’s treasury. These figures demonstrate that while higher taxes can reduce consumption to some extent, they also serve as a significant source of government income.
However, the Alcohol and Liquor Information Centre has cautioned against viewing increased tax revenue as a net positive outcome. According to the organization, the social and health consequences associated with rising alcohol consumption are far more serious than the financial benefits generated through taxation. Increased alcohol use has been linked to a range of public health issues, including liver disease, addiction, accidents, and broader social problems such as domestic violence and reduced workplace productivity.
The data suggests that tax policy alone may not be sufficient to curb alcohol consumption if prices remain effectively stable in real terms. When adjusted for inflation and income growth, unchanged nominal prices can reduce the intended impact of higher taxes, allowing consumption levels to rebound or even increase over time.
Public health experts argue that a more comprehensive approach is needed to address the issue. This could include regular price adjustments aligned with inflation, stricter regulation of alcohol sales, public awareness campaigns, and expanded access to treatment and rehabilitation services for those affected by alcohol dependency.
The findings also raise broader questions about the balance between revenue generation and public health priorities. While excise taxes on alcohol provide a valuable source of income for the government, reliance on such revenue streams can create policy tensions, particularly when increased consumption leads to greater long-term social costs.
