Cigarette, alcohol firms seen benefiting from new bill- reports

Cigarette and alcohol producers in Sri Lanka are more likely to benefit from the National Authority on Tobacco and Alcohol (NATA) Bill than see sales dropping due to the new legislation restricting promotion, sales and marketing practices, Bartleet Mallory Stockbrokers (Pvt) Ltd said in a report last week.

Analysing the impact of the bill on these companies, Bartleet said the impact is unlikely to affect the bottom-line of listed companies like the Distilleries Company, Ceylon Tobacco and Ceylon Brewery Ltd and its subsidiary Lion Brewery and the government too, “would continue to possess their unchanged revenue streams by way of excise and customs duty.”

The report said the consumer is also not restricted too much in terms of consumption of alcohol and tobacco products.

“Therefore it can be safely said that it is these three companies that hold virtual monopoly status in their respective industries who will actually benefit from the Bill as new players are unlikely to enter the market due to the severe ban on advertising and the inability to create customer awareness,” Bartleet said.

The NATA Bill was passed in Parliament in July but has not yet been signed by the Speaker. Once it is signed, gazetted and comes into effect, a grace period of around 4 - 5 months will be given to enable all respective companies to align themselves according to the requirements of the Bill, the report said. The objectives of the bill is to eliminate tobacco and alcohol related harm through the assessment and monitoring of the production, marketing and consumption of tobacco and alcohol products and to discourage persons (especially youth under the age of 21) from smoking and consuming alcohol by curtailing their access to such products.

Bartleet said the bill prohibits any form of tobacco and alcohol advertising, sponsorship and product promotion.

Whilst television advertising was always taboo, Distilleries Co. and Ceylon Brewery engaged in occasional print advertising during the festive season, while CTC as part of its voluntary code of conduct stopped all forms of advertising other than at point of sale.

“Therefore, any distinctive writing, sign/symbol and corporate colours cannot be used to promote these products or the companies themselves.

However all companies concerned do not feel that this ban would have a negative impact on sales due to their respective strong established brand names. Even, point of sale advertising is strictly limited to a notice (with prescribed dimensions) identifying the products available for sale and indicating their prices,” the report said.