Distilleries Company of Sri Lanka Plc (DCSL) has successfully acquired 99.4% of Heineken Lanka Limited's issued capital from Heineken Asia Pacific Pte Ltd, marking a Euro 12 million investment, as revealed in a stock exchange filing on January 11, 2024.
This acquisition ensures the ongoing production of globally recognized Heineken brands under license, allowing consumers to continue enjoying these renowned beverages. DCSL will brew Heineken, Tiger, and Anchor, as well as its own brand, Bison beer, under a Trademark License Agreement with the Heineken Company.
To reflect the new ownership, Heineken Lanka Limited will undergo a name change to DCSL Breweries Lanka Limited.
Distilleries Corporation of Sri Lanka, DCSL is a diversified Sri Lankan conglomerate listed on the Colombo Stock Exchange (CSE). Its move into the beer market intensifies competition, challenging Lion Brewery (Ceylon) PLC, a predominantly Sri Lankan owned and operated brewery and the current leader. Fitch Ratings suggests that the acquisition could potentially impact Lion's market share.
The effective purchase follows the signed Sales and Purchase Agreement between the two companies in November. Heineken agreed to sell all shares in Heineken Lanka Limited to DCSL and entered into Trademark License Agreements for Heineken's international brand portfolio in Sri Lanka, including Heineken, Tiger, and Anchor.
Jacco van der Linden, Regional President APAC at HEINEKEN, expressed satisfaction in November, stating, "We are pleased to have found DCSL, who can realize the full potential of our brands."
The sale encompasses the Mawathagama, Kurunegala brewery, operational for the past two decades, with advanced technology and stringent quality control, according to Heineken.
The sale can be seen in the context of an economic crisis in Sri Lanka. In 2023, the country's economy demonstrated signs of stabilization following the most severe economic and political crisis since gaining independence in 1948. This crisis was characterized by a significant economic downturn, escalating inflation, shortages of food and fuel, and financial instability.
In November 2023, after extensive negotiations lasting a year, Sri Lanka successfully reached an initial agreement with crucial bilateral creditors, including India and the Paris Club, to restructure a USD 5.9 billion external debt. This agreement played a vital role in reducing interest payments and paving the way for IMF financing in 2024. Notably, inflation declined from its peak of 70% in September 2022 to 3.4% in November 2023.
The substantial improvements observed in 2023 can be attributed to the decisive policies implemented by President Ranil Wickremasinghe's new government, which came into office in July 2022 following mass protests that led to the resignation of then-President Gotabaya Rajapaksa.
In 2021, Heineken started the local production of Heineken beer in Sri Lanka. The decision was “in line with the Sri Lankan government’s vision to reduce imports, thus saving on much needed foreign exchange and to offer discerning Sri Lankan consumers’ access to premium, world class brews at significantly more cost-effective prices,” said Maud Meijboom-van Wel, Managing Director of Heineken Lanka at that time. (inside.beer, 22.8.2021)
