Three Coins & other McCallum brands to be soon brewed at Biyagama

The Carson Cumberbatch group of companies which last October acquired Millers Brewery Ltd. (MBL) in a Rs. 5.15 billion deal will soon begin brewing the well known brands Three Coins Lager, Sando Power, Irish Dark, Sando Stout and Grand Blond established by the McCallum Brewery Ltd. (predecessors to MBL) at the Biyagama facility of Lion Brewery, Ceylon Beverage Holdings PLC (CBHP), the holding company of Lion, has announced in its latest quarterly report.

McCallum Brewery founded in 1962 by the late Mr. U.K. Edmund, to compete with Ceylon Brewery Ltd., who was then monopoly brewer in the country, was acquired in 2011 by the Cargills Group (ultimate parent CT Holdings) through its wholly owned subsidiary MBL.

CBHP said that with the acquisition of trademarks, the MBL brands have now been consolidated with those of the group.

"The MBL brewery at Meegoda which has ceased operations prior to the conclusion of the transaction (the buyout) will remain thus pending a final evaluation by the board," a quarterly review of its business by CBHP said.

It said that the MBL brands together with the Lion and Carlsberg range "will be distributed and sold through the group’s well-well established network. Thus, this acquisition provides (the) group the opportunities of taking advantage of supply chain synergies whilst ensuring that loyal consumers of MBL continue to have access to their brands of choice."

In the nine months ended Dec. 31, 2014, the CBHP group posted a turnover of Rs. 22.9 billion and a pre-tax profit of Rs. 2.4 billion. The improved profitability was attributed mainly to the group ceasing to import canned beer to meet market demand.

"Last year, the import of canned beer was necessitated to fill a void between production capacity and the market demand and was done at the substantial expense to the group," the CBHP statement said. "This void has now been addressed and since Sept. 2013 the group no longer imports canned beer."

The review said that last Oct. the government taxes on beer was increased twice, first on Oct. 10 and then on Oct. 25 with the budget. In the first instance excise duties were increased and prices were increased to recoup additional costs.

"In the second instance, alcohol and tobacco businesses were exempted from VAT and NBT and in order to compensate for the loss in government revenue, excise duty was increased.

"However, the exemption from VAT meant that Lion Brewery could no longer claim input VAT and as a result faced across the board cost increase which would amount to approx. Rs. 600 million on an annual basis.

"Prices were not adjusted to compensate for this cost increase as it was felt that two such increases in a space of two weeks would be counter-productive," the quarterly review said.

It noted that for the nine months ended Dec. 31, 2014, the group had paid the government Rs. 13.9 billion in taxes and remains the country’s third largest taxpayer.

"In addition to the cost implications discussed above, the exemption of VAT & NBT has led to greater operating complexity in the supply chain. Since the Lion Brewery can no longer issue VAT invoices, customers liable for VA, particularly hotels, restaurants and supermarkets, can no longer claim input VBAT on beer," the review said.

animated gif
Processing Request
Please Wait...