Market penetration poor due to credit restrictions

Arrack giant claims its local brandy is best SE Asian product

The Distilleries Company of Sri Lanka Limited (DCSL) which dominates the arrack industry in the country claims that a locally manufactured brandy marketed by its subsidiary, Periceyl (Pvt) Limited, is gradually gaining its deserved recognition as the "best regionally produced brandy in South East Asia."

DCSL Chairman V. P. Vittachi said that this brandy carrying the Franklin brand was specially designed by their principals, Pernod Ricard of France who are the second largest liquor producer in the world.

"Galarie" brandy although even superior in quality did not see a similar rise in volume due to being more expensive than its average competition," he said.

Vittachi said that the wine segment it deals in had also shown significant growth during the year ended March 31, 2001. Wines were mainly consumed by tourists and other foreign visitors and the sales volume depended largely on tourist arrivals and the quality of the tourists coming here.

He said that the dwindling credit worthiness of the retailing sector had affected the penetration of Periceyl products in the market and many segments of local consumers were deprived of the opportunity to taste "these high quality products that are designed and blended by the best liquor professionals in the world."

They were reluctantly compelled to limit supplies as DCSL was unable to provide goods on credit for many licensed shops, restaurants and hotels, he said.

"As shareholders are aware, DCSL and Periceyl (Pvt) Ltd., pay all due taxes and levies on the products they manufacture and hence do not have unofficial margins to buffer defaults by the retailers," he explained.

"Also, as the percentage of profitability is minuscule due to taxes, any default of the value of one bottle would wipe out the profits made by selling 20 bottles."

Periceyl has made a post-tax profit of Rs. 3.3 million during the year under review.