Budvar boss sees off his critics

Moves by the Czech government to undermine the state-owned Budweiser Budvar brewery by handing its key export markets to its bitter rival AB InBev, which owns the American Budweiser brand, have been thwarted by the Budvar management and opposition members of parliament.

The right-of-centre government has planned for some time to turn the nationalised Budvar brewery into a joint stock company in preparation for privatisation. Since the late 19^th century, Anheuser Busch in the US and Budvar have been engaged in a legal battle over which brewery owns the rights to the Budweiser trademark.

The legal costs of defending the trademark are high and the Czech government is anxious to rid itself of the problem. It attempted to soften public opinion by announcing in February that the Minister of Agriculture, Petr Bendl, who is in charge of Budvar, planned to sack the brewery’s managing director Jiri Bocek on the grounds that Bocek had been slow to end the trademark dispute.

Bendl said he would implement an independent audit of Budvar’s accounts and would place a lawyer, Tomas Jindra, on the brewery’s supervisory board. The minister said the audit was necessary as he was not satisfied with Budvar’s trading performance.

The brewery hit back by pointing out that under Bocek’s management Budvar had doubled sales and profits and trebled production. Budvar was supported by the regional governor of South Bohemia, Jiri Zimola, who is also an opposition Social Democrat MP. Zimola said he would call a referendum of the people in the region, which includes Ceske Budejovice, Budvar’s home town.

It emerged last week that the key reason why the Minister of Agriculture threatened to sack Jiri Bocek was because the Budvar managing director had refused to sign an agreement that would have withdrawn the Czech brewery from such key export markets as North America, Latin America and Western Europe.

By handing those markets to AB InBev, the Czech government would have effectively ended the trademark dispute. This was facilitated by the sale of a second, smaller brewery in Ceske Budejovice, Mestansky, to AB InBev. Under European law, both breweries have the right to the Budweiser trademark and AB InBev now owns Mestanky’s trademark.

But a spirited fight-back by Jiri Bocek and opposition political parties has placed a road block in the path of the government. Petr Bindl has now reduced the size of Budvar’s supervisory board and his placeman, Tomas Jindra, has resigned. Budvar exports to 18 countries and last week Jiri Bocek said he had no intention of withdrawing from any export markets.

He also announced that in the past year Budvar’s profits had grown by 9%, domestic sales had increased by 3.4% and export sales by 7.7%, outstripping all its Czech rivals.

*A full interview with Jiri Bocek will appear next week. This report was first published in the Publican's Morning Advertiser, 3 May 2012.