E-Malt.com News article: Czech Republic: Budvar could be partially privatized

A privatization tender for Budejovicky Budvar, the last major Czech brewery in state hands, could be prepared in roughly one year and could bring more than CZK 20 bln into state coffers, according to Interfax News Agency, April 10.

The announcement followed a Friday statement that the government would take the first step toward the lucrative brewery's privatizations by changing its legal status to that of a joint-stock company. "It doesn’t necessarily need to be a 100% sale - it could be a partial privatization," Agriculture Minister Petr Gandalovic said.

In a prepared statement Friday following a meeting with the brewer's management at which Prime Minister Mirek Topolanek was also in attendance, Gandalovic said the government wants to begin the transformation of Budvar to a joint-stock company "so that there is space for further development of the brewer, regardless of its ownership." Gandalovic added that Budvar's eventual privatization should be preceded by the settlement of legal protection of Budvar's trademarks, a reference to several dozen legal disputes being fought in courts throughout the world with the U.S. brewing group Anheuser-Busch over the "Budweiser" trademark.

Anheuser-Busch and Budejovicky Budvar announced an alliance in January in which Anheuser-Busch became the U.S. importer of Czechvar, the name under which Budvar is sold in the United States due to the trademark dispute.

The agreement gives the premium Czech lager, currently sold in 30 U.S. states, access to Anheuser-Busch's marketing and sales expertise and wide-reaching U.S. distribution network. The brewers said the distribution deal would not affect ongoing trademark disputes. "It is now clear the agreement neither undermined nor strengthened Budvar's market position. Nor did it affect Budvar's trademark disputes," Prime Minister Mirek Topolanek said, as cited by HN, contradicting Trade and Industry Minister Martin Riman's criticism of the distribution deal at the time it was announced as detrimental on both points.

Gandalovic, who spent five years as former general counsel to the Czech consulate in New York, during which his time his responsibilities included representing Budvar's interests in the trademark dispute, said the results of the agreement could not yet be calculated. "To analyze the economic benefits of the agreement requires a longer timeframe - three months is too short a period," Gandalovic told HN. Earlier this year, Riman suggested that Budvar could be sold at the same time as Prague's Ruzyne International airport, the state carrier Czech Airline and the Czech Post to help the government cover a fiscal budget gap. He said the Czech brewer could fetch CZK 20 bln - CZK 30 bln.

The main opposition Social Democrats, however, are opposed to selling off what many Czechs, who are famously proud of the nation's brewing tradition, consider the "family jewels." "There is no economic rationale for the possible privatization," CSSD Deputies Head Michal Hasek told HN. Budejovicky Budvar uses the "Budvar" brand within the Czech Republic and in foreign markets uses mainly the "Budweiser" brand. Budejovicky Budvar is brewed in the Czech city of Ceske Budejovice, or Budweis in German. The companies have disputed the trademark since 1911.


11 April, 2007