The Truth About Budvar

The great British beer writer Roger Protz has posted an update on the situation at Budvar on his blog. This echoes the news about Budvar that was posted here, but with more insight and opinion. Please read it. Now.

To me, Roger’s post shows Budvar’s firm place in the heart of beer fans outside of the Czech Republic, probably due to the easy-to-recognize David vs. Goliath story line in Budvar’s fight with America’s Anheuser-Busch over the name Budweiser. I do think that foreign beer lovers’ emotional attachment to Budvar sometimes tends to cloud their our judgment: it’s as if we are certain Anheuser-Busch is pure evil, therefore Budvar, as its opponent, must be perfectly righteous. Of course, this line of thinking would make sense only in a comic book — in real life, situations are generally more nuanced.

Roger’s been a great help to me personally, and I do agree with his basic premise. But assuming you’ve read the post, I’ll pick a few bones with it in order to present what I think is the truth about Budvar as it appears on the ground here in its home country.

Let’s start with the second paragraph:

Budvar’s success is all the more remarkable when you consider that the Czech beer market is dominated by two global giants. SABMiller, which owns Pilsner Urquell and Gambrinus, and InBev, the world’s biggest brewing group, which owns Prague Breweries, have invested massively in their brands.

It’s true that SABMiller and InBev are the two largest brewing groups in the Czech lands, but what Roger doesn’t mention is that, at least for now, Budvar is the third largest brewer in the country and growing, a full order of magnitude larger in annual production (at 1.2 million hectoliters) than a beloved independent like Bernard (156,000 hectoliters). In fact, Budvar is relatively close to InBev’s Staropramen (about 3 million hectoliters), and thus has economies of scale that small Czech brewers could only dream of.

In other words, in terms of production, Budvar is hardly getting man-handled by the “big guys.” For the real independents here, Budvar is a big guy.

To continue:

They [SABMiller and InBev] have built branded pubs and restaurants,

Yes, they have, creating the Pilsner Urquell Original Restaurants and Staropramen’s Potrefená husa franchise. But Budvar has done the same, however slowly (more on this later), launching its own line of Budvarka pubs.

and [SABMiller and InBev] have discounted their beers heavily.

This would be surprising news to anyone who lives here, as Pilsner Urquell remains the most expensive standard golden lager in the country, with Staropramen not far behind. Just about every January, Pilsner Urquell announces its latest price increase, with the InBev breweries and others then following suit. (This happens so regularly that it feels like the arrival of some weird annual holiday: Yay! It’s Pilsner Urquell Price Increase Day!)

As my colleague Max Bahnson pointed out on his excellent Pivní Filosof blog, a keg of SABMiller’s lowbrow Gambrinus is more expensive here than a keg of premium lager from a great small brewery like Klášter. Pilsner Urquell is, of course, even more expensive. You can check out wholesale prices for Czech beers at JiMi and see that Pilsner Urquell and Staropramen světlý ležák are the two most expensive 50-liter kegs on the list. How exactly are SABMiller and InBev discounting their beers by charging more?

For from being hidebound or conservative — the usual charges made against nationalised companies — it has been innovative and has introduced new brands, including the acclaimed Budvar Dark.

To be honest, Budvar practically defines hidebound and conservative, at least in Czech terms. It was extremely slow to move forward with its Budvarka pubs while Pilsner Urquell and Staropramen pushed hard in this direction. And the introduction of a dark lager can hardly count as cutting-edge: 95% of Czech consumption is Pilsner-style golden lager, while the remainder is dark lager. Coming up with a version of your country’s second most-popular beer style after 110 years is far from groundbreaking.

In the Czech Republic, there are perhaps four current beer trends: well-made non-alcoholic beers; amber (aka polotmavý, or half-dark); strong dark lagers brewed at 18° or above; and the return of wheat beers. Budvar has introduced a great non-alcoholic, hitting one out of four, and several years back it came out with Bud Super Strong, a high-alcohol golden beer. Make of that what you will; I personally like it, though I should point out that Michael Jackson called it “not what Budvar should be doing” while he was in Prague. Currently, Budvar has no wheat beer, no amber beer and no strong dark lager.

Innovative? It may be a great, historic brewery, but it is far from an innovative one.

And year after year it tops the poll in the annual awards — chosen by beer lovers — in the competition organised by the newspaper Pivni Kuryr (Beer Courier).

For me, those awards would be much more convincing if the issue of Pivní kurýr announcing the prizes didn’t include a a full-page advertisement paid for by the winner.

Actually, I’m surprised that Roger, as a member of CAMRA, doesn’t mention the awards from SPP, the Czech beer consumer’s union which is CAMRA’s counterpart in the Czech lands. SPP produces, without doubt, the most reputable of all Czech beer awards (there are about a dozen other contests, many of which are highly questionable). As Max reports on the winners of the 2007 SPP awards (in Spanish and Czech, but you’ll figure it out), Budvar picked up just one silver medal last year: second place for dark beer of the year.

That is to say Budvar got nothing for 10° or 12° golden lager of the year. And nothing in the category of half-dark beer of the year — because remember, they don’t produce one.

As I wrote before on Beer Culture and elsewhere, I think the sale of Budvar would be an unpopular political move here: most Czechs I know are proud of the brewery, and they’re glad they still own it. However, that doesn’t mean Budvar is the country’s favorite beer. The empirical evidence: repeated surveys reported by ČTK, the Czech news agency, say that Pilsner Urquell is widely considered the beer with the highest overall quality.

The allegorical evidence: I’ve spent Christmas with three Czech families over the past nine years, and last year’s dinner at my future in-laws’ was identical to all of the preceding meals. Although my fiancée’s family comes from Southern Bohemia — the same region as České Budějovice, Budvar’s home — most of the year they drink Platan, their local, independent brew. Christmas, however, is a special occasion, so they put out Pilsner Urquell.

Don’t take this the wrong way: I love Budvar. I’m rooting for Budvar. But it would just be easier to root for them if they would respond to the growing interest on the ground here and brew an amber lager, a wheat beer, a strong dark, or all of the above. And it would be even easier to be on their side if they didn’t pull stupid moves like the ridiculous marketing stunt in late 2004 by which CAMRA members denounced Pilsner Urquell, a move which completely backfired, incensing many local beer fans toward both CAMRA and Budvar. It was a nice little firestorm with underlying overtones of cultural imperialism, and as I wrote at the time, many people here were certain “that the comments of CAMRA were part of a marketing ploy by the rivals of Pilsner Urquell,” meaning the state-owned one. If you were at the meeting in Prague when the group of Czech beer lovers told the Budvar marketing representative exactly what they thought of this ploy, you’d know that not everyone here approves of the way the nation’s third-largest brewery has operated.

To be clear, I do agree with Roger’s basic premise: state-owned breweries can compete successfully with the private sector. He’s absolutely right. I just don’t think that, in Czech terms, Budvar is the best example of this. I’d rather point to a brewery like Primátor, which is gaining ground across the Czech Republic with its excellent wheat beer, its new English Pale Ale, as well as its outstanding new amber and its noteworthy line of strong lagers brewed at 16°, 21° and 24°.

With a list like that, Primátor is among the most innovative breweries in the country, and it doesn’t hurt to know that the profits go to its owner, the eastern Bohemian city of Náchod, paying for schools and roads and parks and more. In terms of innovation, responding to consumer interest, and creating goodwill, Budvar could take a lesson.