Czechs win the Battle of Budweiser to flourish in UK

The quality of Budvar has been vindicated, but it has challenges ahead. David Bowen reports

It Has a label out of the 1950s, it is produced by a state-owned company in eastern Europe, it spends a pittance on advertising - yet it has just made it into Checkout magazine's ranking of the top 100 alcoholic drinks in Britain.

It is Budweiser Budvar, the lager from Cesce Budejovice (formerly Budweis) in the southern Czech Republic. In the last 10 years, it has moved from specialist beer shops and restaurants to the shelves of every supermarket chain in Britain, and 10 days ago it scored another victory. The American giant Anheuser-Busch, which makes the other Budweiser, said it was giving up its attempts to buy its Czech brewer, Budejovicky Budvar. It also implied that it was giving up its 85-year-old legal battle with the company over the trade name. That means the US drink cannot be called Budweiser in Germany and the Czech Republic: there it is just Bud.

The US group's decision means Budejovicky Budvar is likely to stay in state ownership. Czech ardour for privatisation has cooled, and the industry believes that the government is content to keep the brewery running as before.

The UK is one of the few markets where the name Budweiser is used for both beers. The US version outsells the Czech one massively - hardly surprising given an advertising spend last year of pounds 5.5m for the bottled beer alone. BB Supplies, which has been importing Budvar for the last 20 years, spent about pounds 125,000 last year on brief poster campaigns on the London Underground. Yet growth has been phenomenal: in 1984, it sold 10,000 cases, last year it sold 1 million. Sales have been growing at 20-25 per cent for the last five years.

The Campaign for Real Ale says Budvar has been doing well because it is one of the best lagers in the world. It uses the famous Zatec (Saaz) hops, and is "lagered" for much longer than most rivals. The company started to convert to modern fermenting vessels, as used by the German breweries, before changing its mind and sticking to at least some traditional containers.

But another reason for the growth is less positive - and could spell trouble for the brewers from Ceske Budejovice. The fastest-growing sector of the British beer market is "premium bottled lagers", and among young bottle-swiggers Czech labels are favourite. Young men and women who a few years ago were drinking Mexican Sol are now - to the horror of beer aficionados - drinking Budvar straight from the bottle. That Sol tastes of little and Budvar tastes of a lot is barely relevant, which means that this particular market will inevitably be swept away.

Budvar, though the best-selling Czech beer in the UK, is also under pressure from a plethora of compatriots. Under communism only it and Pilsner Urquell could be exported, even though every town had its own brewery. Urquell is more expensive and, beer experts say, spoiled by a shift to modern brewing equipment. Now the big supermarket chains each have their own Czech brands that undercut Budvar. More worrying for BB, Bass has this year started promoting its own Staropramen brand heavily.

Staropramen has the advantage of being an excellent product. Bass has preserved the old fermenting baths in the Prague brewery, which means it is even more "real" than Budvar. The British group owns six breweries in the Czech Republic, making it the country's third biggest brewer.

Despite the inferiority of the US product, the rights and wrongs of the naming case are far from clear-cut. Budvar is produced in Budweis, but the Americans bagged the name first. Adolphus Busch, a US immigrant from Germany, registered "Budweiser" in 1876. The first Budweis-based brewer registered it in 1882, with the current Budvar company appearing a little later. Arguments between the sides arose early in the century, with an apparent settlement in 1911 the first of many.

Premium lagers: bang for advertising buck

Off sales pounds m (1) Advertising spend pounds m (2)

Stella Artois 86.8 5.0

Budweiser (US) 50.2 7.9

Beck's 35.6 1.0

Holsten Pils 34.0 4.7

Kronenbourg 1664 21.9 6.5

Foster's Ice Beer 19.2 2.0

Grolsch 18.3 1.4

Carlsberg Pilsner 14.2 1.4

Labatt Ice Beer 8.5 2.6

Budweiser Budvar 8.5 0.1

Figures are for UK in 1995; include bottle and can versions.

(1) Source: Checkout, July 1996. Does not include pub sales

(2) Source: Campaign