The just-drinks Interview - Budejovicky Budvar CEO, Jirí Bocek - Part II
Jirí Bocek became group director - effectively CEO - of Budejovicky Budvar in 1991
In the first part of just-drinks' interview with the head of Czech brewer Budejovicky Budvar, Jirí Bocek discussed the company's ownership structure and its position in the Czech beer market. Here, in part two, he tells us about his plans beyond Czech and gives us his view on the never-ending legal tussle with Anheuser-Busch InBev.
The main markets for Budejovicky Budvar outside of Czech are all known to be pretty tough ones for brewers. Germany, the UK, Slovakia and Austria could all safely be described as mature - stagnant even - while Russia has been little more than a headache for beer producers in recent years.
“We operate in the original, imported brands segment,” explains Bocek. Every market is segmented differently. We have exported to Germany, Austria, Italy, since the beginning of our brewery. We have been in these markets for a long time.”
That's as may be, but not a quarter goes by without a major brewer flagging the “challenging” conditions in Europe and the “booming” growth in the Far East and Latin America. “In Asia and Latin America, consumption is growing,” agrees Bocek. “But, do we want to produce our beer under licence in these markets? We don't want to do that with a brand that has a geographic indication and that is currently only produced in one place, according to a defined process and with defined raw materials.
“Yes,” he continues, “consumption is good in China, for example. But, original imported brands are at roughly zero there. Most of the beer sold in China is either domestic brands or beer brewed under licence in the country.”
Budejovicky Budvar's group director, Jirí Bocek
Another export target for Budvar is the US, a market in which it changes distributors last year. It's new distributor is Connecticut-based United States Beverage. The previous incumbent? Anheuser-Busch.
Wait, they're the guys you've been locked in a global legal row with for over 100 years, right?
“This is an interesting story,” Bocek laughs. “We had meetings with the people at Anheuser-Busch from as far back as the beginning of the 1990s until around 2006. Of course, we discussed the legal dispute and trade marking and so on. Then, in around 2004, (A-B's then-CEO) August Busch III called me and said we should meet. We spent two or three hours in a hotel in Prague and we agreed that both sides had spent a lot of time and money on lawyers: Why should we continue in this way? Maybe we could look for some commercial cooperation? This was a big surprise for me, but I said okay. For a long time, we had been enemies but I felt that, if his proposal was based on fair cooperation, then we could try it. For a year, we discussed such cooperation and A-B proposed that it be the exclusive importer for Czechvar in the US. The discussions were very professional and we reached an agreement. This was really a new situation in our relationship.”
So, in 2007, A-B began distributing Czechvar, as the brand is known for legal reasons, in the US. Five years down the line, however, Budvar decided it would be time to move on in the country.
“In 2009,” says Bocek, “A-B was bought by InBev.” The Belgium-based company subsequently saw greater possibilities in the US for its own European premium brands, such as Stella Artois and Beck's. “With new management, a new philosophy and strategy and a new portfolio, the new company had no focus on Czechvar,” says Bocek. “So, we terminated this agreement in 2012.”
And, how is Czechvar performing with United Stated Beverage? “It's still in a transition period,” he says, “but the US remains a very important market for imported brands. We expect better development.”
Until now, we've skirted around the matter of Budvar's court battles with A-BI. The clock is ticking, Mr Bocek. Go.
“This is a big dispute between the new and the old culture,” he starts. “If you compare the European products and the products in North America, you can see a lot of copies. When a lot of generations left Europe, they went to the US. It was quite logical that some of these people who produced things like beer, ham and cheese, started doing the same when they arrived in the US. Many of these people then claimed they had the original Parma ham, Budweiser beer or Feta cheese.”
Herein lies the problem, according to Bocek. “For us, at the beginning of the 1990s, we had only two possibilities: To accept Anheuser-Busch's proposal to split the countries using the Budweiser trademark, or to start legal action. In a lot of the legal disputes, we were the defender, not the plaintiff. We decided it was necessary to defend our brand and our potential export activities.”
“We are the real, original Budweiser beer,” he says. “In 1995, our lawyers visited the national archive of the US and found documents regarding legal disputes between Anheuser-Busch and breweries such as Fred Miller Co in the US from the end of the 19th Century. The founder of Anheuser-Busch said in his sworn testimony that his idea was to brew beer similar to the beer made in Budweis or in Bohemia.
“At that time, Anheuser-Busch brewed the Budweiser beer lager and Fred Miller brewed Fred Miller Budweiser. The two were in a legal dispute over who was the better producer of a copy of the original Budweiser beer. I have seen this official testimony in black and white. And, for this reason, we say that we are the original Budweiser; why should we limit our usage of the Budweiser Budvar trademark? We are from the city of Budweis. That's all.”
Each twist and turn is widely reported, not just by the drinks trade press but by the broader media. This must be a boost for Budvar's profile? “But, this is not our decision,” counters Bocek. “This is not our marketing strategy – we didn't start this legal dispute. For a long time, we were the successful defender. Anheuser-Busch was the plaintiff, not us.”
There appears, then, to be no end in sight for the row. So, as our time draws to a close, I ask Bocek how he sees the company's broader future panning out. “We are in the process of discussing our strategy for 2014 to 2016,” he says. “We are realistic. We believe that we can grow slowly but surely. That is our aim.”
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