Thursday, 17 July 2008

After the InBev takeover

Does the shuffle at the top aid
the embattled Czech Budvar?

The only positive outcome of the InBev takeover of Anheuser-Busch is that it gives much-needed breathing space to Budweiser Budvar, the state-owned brewery in the Czech Republic. For more than a century, Budvar and Anheuser-Busch have been locked in court battles over which company has the rights to the Budweiser trade mark. In most countries, whichever company registers the Budweiser title first has exclusive use of the trade mark. For example, Budvar uses the Budweiser brand name in Spain, while A-B's beer can be sold only as "Bud". In Italy, on the other hand, A-B has won the right to use the Budweiser trade mark and Budvar is reduced to selling its beer as "Czechvar", the brand name it also used in the United States.
It seems unlikely that InBev will wish to spend millions of dollars and euros pursuing Budvar through the world's courts to defend the Budweiser trade mark. It's more likely it will seek some rapprochement with the Czech government to stop the ruinous waste of money over the dispute. The emergence of A-B InBev also means it's unlikely that the group will wish to buy Budvar when it is eventually privatised. As InBev already owns the the massive Staropramen group in Prague, the Czech government would probably block any moves for InBev to add Budvar to its portfolio.
The only downside for Budvar is that InBev may be reluctant to sell Budvar in the U.S. The brewing world was stunned when A-B reached agreement with Budvar -- its age-old enemy -- to market the Czech beer in the U.S. using the Czechvar brand name. But InBev will be eager to promote such brands as Stella Artois and Beck's as well as Staropramen in the vast American beer market and may consider "Czechvar" surplus to requirements.
Budvar will be able to absorb such a potential loss with the news that its domestic sales rose 4.7% last year, with annual production running at 639,190 hectolitres.
Meanwhile, the A-B InBev merger neatly boosts the group to Number One in the fast-growing China beer market. It's the markets in Asia, Russis and the Baltic States that is forcing the global brewers to reposition themselves to take maximum advantage of these markets.

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