Saturday, September 15, 2007

A-B to buy Budvar

The PacMan-esque brewery gobble continues.

InBev buys 'em up and dumbs 'em down (or simply closes them). A-B purchases a virtually controlling 49% stake in northern Virgina's Dominion (just one example of similar acquisitions). South African Breweries purchases the venerable Pilsner Urquel (the original Pilsner, from the 1800s), changes brewing procedures, and moves a lot of its production from Pilsen to Poland.

Now, as reported by Brew Blog, it appears that Anheuser-Busch will purchase Budvar Budweis, known as Czechvar in the U.S. This was probably a foregone conclusion, when, in January of this year, A-B acquired the US distribution rights.

[UPDATE: Correction - there's no purchase ... yet.]

A-B has a had a long trademark fight with the brewery. From Budvar's website:

The dispute between the Budějovice brewery and Anheuser-Busch concerning the trademark ‘Budweiser’ has been going on for almost 100 years.

In 1938, Anheuser-Busch began anew to exert pressure and place demands under which the Budějovice brewery was expected to give up globally the right to describe its product with any terms containing the words “Bud”, “Budweiser”, and “Budweis”, save for Europe. The brewery described the demands as outright insulting and refused to consider them at all.

It was not before 1939 that the above mentioned agreement, unreservedly disadvantageous for the Budějovice brewery, was executed. It was signed a mere one week before Germany annexed the Czechoslovak borderlands, and Europe found itself on the brink of the Second World War.

I might expect that some of this passage would be expunged if the sale were to be completed!

Brookston Beer Bulletin has more:
Buying the Czech brewery would make good sense from a business point of view, because the still numerous pending trademark disputes would simply vanish, saving untold millions in legal fees.

Of course, the Czech government is apparently not one to let an opportunity pass it by and is exploiting the situation. They’re asking $1.5 billion, even though that’s twelve times its annual sales of just over $125 million. Most valuations use a formula of around 2.5 times annual sales, making a pricetag of $300 million or so a bit more reasonable

The brewery was awarded appellation protection of a sort in 2005 by the EU: Protected Geographical Indication. I'm not certain what commercial rights this designation provides. Could it be used to successfully protect the Budweis name, as Champagne can to some extent for its sparkling wine? And where? In Europe alone? Globally?

And then, what does that mean to a beer name, Budweiser, which translated means 'from Budweis'? Wait and watch.

[UPDATE: sale not happening ... yet]

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