COMMENT: Budvar court battles benefit the brand
Budejovicky Budvar and Anheuser-Busch have long argued over which brewer has the right to market 'Budweiser' beer. Despite Budvar's most recent loss in the French courts, Datamonitor's Dominik Nosalik explains that overall this battle has proved of great benefit to Budvar's marketing.
Last week, the Czech Budvar brewery lost the latest round in its continuing global battle with competitor Anheuser-Busch, this time over being the sole user of the 'Bud' trademark in France. A court in Strasbourg has ruled that Budvar's use of 'Bud' was not protected in France under geographical indication. Geographical indications restrict the use of a name for a product identified with a specific place, like Champagne.
Budvar, based in Ceske Budejovice in the Czech Republic, says brewers have used the name for hundreds of years. Anheuser-Busch meanwhile argues that it has used the trademark since 1876, 19 years before Budvar was established. Budvar argues that it has the sole right to the Budweiser name because only its beer is made in the town after which the beer is named. Anheuser-Busch, however, has long held the registered trademark for Budweiser in most countries.
For years, the brewers adhered to a gentleman's agreement defining their respective sales territories. But now brewing is big business and such niceties get in the way of increasing profits and market share.
Despite this most recent loss in the courts, the seemingly never-ending court cases are a marketing gift for Budvar. These days, consumers are engulfed in scepticism about civil and corporate institutions. And this is the classic story of the underdog fighting against a US corporate giant.
Budvar has racked up some wins, some losses and a draw in the UK, where the courts reached the unprecedented decision to allow both Budvar and Anheuser-Busch to use their Budweiser and Bud registered trademarks. Whatever the outcome of these cases, the free publicity has no doubt helped Budvar in tackling new markets outside of the Czech Republic.
The legal dispute has also has helped Budvar to define the brand's positioning. Budvar is keen to target the premium beer drinker, unlike Anheuser-Busch's Budweiser, which has more mainstream positioning. To this end, earlier this year Budvar launched its first marketing campaign in the UK focusing on the beer's provenance and craftsmanship.
All this legal drama provides a good talking point for beer drinkers - spreading brand recognition by word of mouth. Word of mouth is widely regarded as one of the most effective, yet least understood marketing approaches. However, what is undoubted is that consumers are more likely to spread information if the 'story' provides them with good social currency - that they are seen to be in the know or as having something interesting to say. The propensity to talk or communicate about something also varies considerably with one's level of interest or emotional involvement with it.
A growing number of consumers are citing word of mouth as the most important factor influencing their interest in products. Consumers increasingly do not trust corporations, preferring to rely on the relative credibility, honesty and impartiality of word of mouth.
Connectivity is one of the key 'mega-trends' that are significantly shaping the behavior of consumers worldwide. It describes the growing importance of consumers creating a lifestyle that is rich in relationships and experiences, with individuals increasingly expressing a desire for a greater sense of belonging and interconnectedness.
So long as Budvar continues to utilize the benefits of word of mouth marketing by tying it in with intelligent marketing campaigns focusing on the premium quality and provenance of the beer, it should prove a winning formula for a long time to come, even if success in the courts does not come so easily.
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