The Czech Republic & UK: Small Czech brewers counting on higher exports to the UK after Brexit

The tiny craft brewery in a quaint Czech village near the border with Germany and Poland is perhaps an unlikely place to be plotting a Brexit strategy, Bloomberg reported on September 3.

Co-owner Viktor Tkadlec is betting his “clean taste without foreign additives” will help him elbow into the crowded U.K. market even after it leaves the European Union. Cvikov Pivovar is part of a group of Czech brewers aiming to break into Britain even as the country risks crashing out of the EU at the end of next month without any agreement to keep trade flowing.

“The U.K. market is very competitive and every pub has 10 to 15 types of beer,” said Tkadlec, who exported “tens” of barrels to British pubs in a test run this year. “We’re not an export brewer and we’ve never had that goal. But let’s see how it goes.”

While much of the Brexit focus has been on multinationals navigating potential customs barriers, the effort by Czech craft beer producers shows how Britain’s tortuous departure from the EU is resonating across the continent.

The Czech Beer Alliance was started by Filip Celadnik, a Czech lawyer living in London. He first teamed up with the state-run CzechTrade’s U.K. office to ship high-quality premium lager to Britain before the 2016 referendum on leaving the EU. Following the vote, there was some soul searching. Celadnik and CzechTrade U.K. head Martin Macourek then pushed ahead and gathered eight small-time brewers under the slogan “Real Bohemian Lager” earlier this year.

“It’s a very challenging time,” Macourek said. “We thought we would wait, but then we waited for a year and Brexit did not happen so we said, ‘Let’s do it.’ Otherwise we would be waiting for ages.”

It’s not the prospect of higher tariffs following a no-deal Brexit the group should be worried about, but an economic meltdown and widening unemployment, according to analysts. Even without Brexit, Czech beer sales to the U.K., dominated by Pilsner Urquell, Staropramen and Budvar, fell last year almost 10%.

British Prime Minister Boris Johnson faces a showdown with parliament this week over his plan to keep the possibility of leaving the EU without a deal with Brussels. Allies of Johnson are considering a snap general election while his critics are drafting a new law to force him to delay Brexit by three months.

The Czech craft beer makers have a mountain to climb because of Brexit, said Spiros Malandrakis, the industry manager for alcoholic drinks for Euromonitor in London. “In normal times it would be a great marketing trick,” he said. “The story is right, but the timing is wrong. They can try to spin it, but we have to separate reality from spin.”

In the first three months of this year, with a small batch of targeted placement, the alliance sold 500,000 koruna ($21,160) worth of lager to local pubs. Celadnik and Macourek estimate that sales may reach 4 million koruna in its first year after Brexit.

Wandering through a maze of pipework, steel barrels and pools of fermenting wort in the brewery basement, Cvikov brewer Tkadlec said he is glad to be part of that effort.

He said that he didn’t know how much of his batch being brewed at the moment will go to the U.K. But he hopes that Britain will eventually become a larger part of his total sales.

“It’s all about beer – good beer – the best in the world,” said Tkadlec.

03 September, 2019