8 Apr 2009

Analysing the news

Evan Rail reported in his blog yesterday that Heineken has started talks with AB-InBev to buy Staropramen.

If that turns out to more than just a rumor, then it will be the biggest news in the last few years in the Czech beer market. And since I am a beer philospher, it has given me quite a bit to think about.

If the sell takes place the plans of the Dutch brewer to become a leader in the Czech market will be realised, and from one day to the other they would have a market share of more than 30%. On top of that, they will ad to their already big portfolio the Staropramen brand, which has a terrible (and well deserved) reputation among Czech consumers (and not only among those with a more demanding palate) but it is very well positioned in markets like the British.

But to me, the most interesting thing is how this news affects the future privatisation of Budvar.

Their new position in the market will leave Heineken pretty much out of the picture. If they wanted to acquire the state brewery, the Dutch would end up with more than 45% of the market, which might put them on top of Plzeňský Prazdroj, at least in official figures. I wouldn't expect then that the Czech Antitrust Office would allow the operation, not because they are very efficient or interested in what they have to do, but because I'm sure that the Czech subsidiary of SAB-Miller are very good when it comes to lobbying.

And what about AB-InBev? According to the original report the brewing monster wants to sell their Czech business unit to raise some much needed cash, something they are lacking after the purchase of the St. Louis based brewing group. Somehow, this doesn't add up to me and makes me wonder about the following:

After selling Pivovary Staropramen, AB-InBev will not have any presence in the Czech market, which could save a lot of time and money with the Antitrust Office, and they will also have a wad of fresh cash that they could easily use to buy Budvar. And believe me, if there is a brewery that AB-InBev wants to buy really badly is Budějovický Budvar.

That would be terrible news! I'm not so naive as to think that after the privatisation Budvar will be allowed to operate and brew they way they are doing now, no matter who the new owner might be. But of all the contenders, the worst is no doubt AB-InBev. Their almost religious global strategy of brewing the cheapest possible way no matter what, was what ruined Staropramen and seems to be on its way to do the same with the American Budweiser">.

Still, that isn't the most worrying thing for me. During the negotiations to buy AB the people of InBev made a lot of promises to the shareholders, one of them was that they would make Budweiser a household name in Europe. Something already then pretty difficult due to the trademark litigations, and almost impossible to fulfill now after the recent ruling of the EU Court.

But what if both brands have the same owner?

Anyway, if I had to bet on who will be Budvar's new owner, I would put my chips on Carslberg. But whoever it turns out to be, it is us, the consumers, who will end up loosing.

Now, if all this means that, at least temporary, Stella Artois will be leaving the Czech market, then we have a little reason to rejoice. Yes, Heineken will stay, and it is the same sort of rubbish, but for some reason it is Stella that irritates me the most.

Na Zdraví!

6 comments:

  1. Could the annoyance with Stella come from knowing that when brewed in Belgium it is actually a decent beer? In an ideal world I would love to see a management buy out of Budvar, keeping it in purely Czech hands, as intended in 1895.

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  2. Terrible news! Budvar should be state controlled in my opinion. What are the czech politicians thinking of? The economic guide lines after the financial crisis are that the state should interfere in the economics. Profit seekers such as Inbev can ruin the czech beer scene. The state should interfere to save the czech beer.They have a opportunity in Budvar. Otherwise it will be another euro lager.

    Pingrid, Norway

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  3. It's not that what bothers me about Stella, I don't remember ever drinking the one made in Belgium, and even if it was that good, I would still hate Stella's guts. The reason is the way it came into the Czech market telling everyone how great it is, I remember their slogan in Czech said "Excellence has its price", that and turning Staropramen into the crap that it is today.

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  4. Staropramen wasn't a great beer to begin with, or at least not when I first came here, although the Granat used to be a lot better than it is now.

    What would you expect Stella's marketing to say? No one is going to promote their product as "just another average lager", and I still think that Stella made in Leuven is a darn sight better than the stuff foisted on us here.

    I think sometimes though we tend to over canonise the smaller breweries, as though they have some altruistic love of beer as opposed to wanting to be a successful company. Some brewers here deserve that kind of respect because they are innovative within the Czech context, Primator and Kocour immediately spring to mind, but a lot of the smaller regional breweries are stuck in the Czech beer = pale golden lager mindset, probably because they know it will make them money, so why bother to try anything different?

    Quite a few people I know here were turned on to varied beer by the presence of InBev, through beers such as Leffe and Hoegaarden, what will become of them in the brave new Heineken world?

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  5. Staropramen was never great to begin with, but at the right place, it was a very drinkable pivo.

    What I didn't think about though, is what will happen with those decent brews that InBev imports here. There is a market for them already, and I don't think they will dissapear, there will be someone, it could even be an AB-InBev office, who will import them.

    Oh! I don't believe small breweries just have an altruistic love for beer, they are businesses and they want to make money. Even Primátor does, they are just a bit more daring than all the rest, but that's it.

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  6. Wasn't havng a stab at you mate about the smaller breweries, just some people I know get very snobby about only drinking beer from small breweries. I know a couple of people who won't even touch Budvar because they are a big company and in their world that means they are probably cheating somewhere along the line.

    Primator deserve all the support they get because they bring different things to the market (although I wish they won't use hop extract and sugar in their beers), same as Kocour. I think breweries like Svijany and Herold could learn a thing or two about what people will drink in the Czech Republic.

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