By Indika Sakalasooriya
Speculation is rife that Cargills Ceylon PLC (CARG) is eyeing the soft liquor business through the acquisition of McCallum Breweries, the manufacturers of niche market beers, 3 Coins and Irish Dark Riva, The Bottom Line reliably learns.
According to market analysts, the entry of Cargills into the beer market makes real sense as the company already has the distribution channel through its super market chain, ‘Cargills Food City’.
As they pointed out, the lack of a proper and a wider distribution network has always been the problem for McCallum in taking their beers to consumers.In contrast, Cargills owns a super market chain which has close to 200 stores island-wide, most of them having liquor counters within the premises. Yet some are of the view that Cargills going into soft liquor could tarnish its corporate image as ‘Cargills Food City’ has become a household name in Sri Lanka.
It is also believed that McCallum Breweries has been in a web of debt since almost its inception as the company had sought financial assistance from several banks including People’s Bank, DFCC Bank and Seylan Bank.
“If Cargills is looking at McCallum Brewery, then they will have to restructure the debts and organise the finance. We believe the brewery is inflicted with a heavy debt burden”, a market source, who did not want to be named said.
In our attempts to contact the head of McCallum Breweries, Chandana Ukwatte, The Bottom Line learnt that McCallum Breweries has closed down its head office in Union Place, and the attempst to contact their factory in Meegoda too was fruitless.
When contacted, Cargills chairman Ranjit Page told The Bottom Line that he is not aware of such a move and refused to comment further.
Founded in 1963 by the well known entrepreneur U K Edmund, McCallum Breweries is one the oldest brewers in Sri Lanka. It is a part of the McCallum Group which owns Mount Lavinia Hotel, McCallums Nurseries, McCallums Cargo Pvt Limited, McCallums Shipping Pvt Ltd, McCallums Exports Pvt Ltd, Rusirimal Pvt Ltd, and McCallums Books Pvt Ltd & McCallums Press Ltd.
According to a recent report from Asia Securities on the beer market in Sri Lanka, Lion is the undisputed leader of the soft alcohol/beer market in Sri Lanka and commands a composite 82% share of the market.
The second largest producer, Asia Pacific Brewery, has only a 15% share, whilst McCallum Brewery holds approximately 2%. Imports account for a very minute portion of the market.
