Anheuser-Busch and the Czechs: Best Buds?
MarketWatch
By William Spain
Anheuser-Busch has cut a U.S. importing and distribution deal with a Czech brewer -- the same one it has been warring with for years over who owns the rights to the Budweiser trademark.
Budejovicky Budvar and Anheuser-Busch have been fighting for almost 100 years in a country-by-country spat over the brand -- and the deal will not stop that -- but the two have now joined hands this week in a pact that will make the St. Louis-based brewer the importer of Czechvar, the name under which Budvar has been sold in the U.S. since 2001.
The lager, currently sold in 30 states, will have access to Anheuser-Busch's vast American sales and distribution network, while Anheuser-Busch gets another European import to add to its growing portfolio in the fast-growing category. It already imports Grolsch, Tiger, Kirin and Bass, among other higher-end suds. The company is aggressively branching into the import and craft sectors as sales and market share for its mass-produced offerings flatten or decline.
The U.S. import segment grew 7% in 2005 and 10% through the third quarter of 2006. By contrast, Anheuser-Busch said last week that its total U.S. shipments to wholesalers -- including some imports -- rose just 1.2% to 102.3 million barrels last year.
There will be no impact on existing litigation and trademark disputes between the two brewers in other countries and that the partnership cannot be used to support either side in any of those cases.
Which Bud?
The spat has generated hundreds of thousands of pages of legal documents in dozens of languages in the century or so since it started, generating millions of dollars worth of legal fees for lawyers from St. Louis to Sydney . Outside the European Union – and in the entire Western Hemisphere -- Anheuser-Busch tends to hold the upper hand, thanks to a 1911 agreement with Budvar's predecessor company. And in 21 of the 27 EU member countries, it has the right to use “Budweiser” or “Bud” on its products (in Germany , it is called “Anheuser-Busch's Bud”) with the big exceptions being the nations that made up the former communist bloc.
And in some markets, notable the U.K. , it coexists with the Czechs as both companies use some variation of the Budweiser name.
"After years of differences, this is a meaningful step for two great brewers to form a relationship that is good for both of our businesses," said August A. Busch IV, chief executive of Anheuser-Busch. "For Anheuser-Busch, it also represents an opportunity to enhance our import portfolio with a super-premium Czech import."
For Budejovicky Budvar chief Jiri Bocek, "the agreement represents a historical turning point between our companies. We have managed to move away from discussions between lawyers and towards a practical dialogue, which is going to be beneficial to both sides."
The agreement went into effect last Friday; financial terms were not disclosed.
“It's been a mudfight, a really ugly one,” said Tom Pirko, president of consultancy Bevmark. He added that while “there has been an element of arrogance” on the part of Anheuser-Busch over the years, the new agreement could signal an overall softening.
“They may have realized that it is time to do a little diplomacy, not send in more troops,” he said. “Everybody could have prospered if they had brought them in long ago.”
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