Falling beedi revenue due to lack of cohesive strategy

Despite being the fastest growing combustible tobacco product in Sri Lanka, the Excise Department laments a significant revenue drop from beedis this year.

- BY Jeewa Siriwardena

Being market leader with a 67 percent share of the tobacco industry in Sri Lanka, beedis puffed up only Rs. 469 million in earnings for the first half of 2025 and will likelyfall short of last year’s collection of a mere Rs. 1 billion. There is a huge disparity between revenue and market dynamics.

This comes in the backdrop ofa growing illicit cigarette trade with 39 percent market share, as legal cigarette volumes dropped below 2 billion sticks last year.

Tax effect

With over 6.5 billion beedi sticks smoked annually in Sri Lanka, the drop in earnings establish that higher taxes on beedi is driving a segment of registered producers underground. Only a handful of beedi manufacturers in Sri Lanka are registered and the number of registrations are seemingly declining on the back of the introduction of tobacco tax on sticks. To make bad matters worse, an even smaller share pay taxes. This was highlighted at a meeting of the parliamentary Committee on Public Finances (COPF), as the Excise Department pointed to rising illicit trade and lowering registrations as attributing causes of ailing tax revenue from beedi, following the tax increase.

Authorities cannot comprehend the true extent of Sri Lanka’s beedi trade and its complex network. In a report published in 2019, the Social Development Network (SDN) revealed over 8,000 families manufacture beedi, when volumes were just over 2.5 billion sticks.