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Slovakia: Beermakers Fear Flood Of Czech Brew

By Jiri Kominek

Prague, 13 January 1997 (RFE/RL) -- Slovak beer makers fear that renowned Czech labels will flood their market and slowly drive them out of business.

Their concern stems from cancellation of a 7.5 percent import duty on Czech beer, which will make it easier for Czech producers to increase their foothold on the Slovak market.

For Michal Pramuk, head of the Slovak Association of Beer and Malt producers, the concern that the local market will be inundated is genuine. He says that the more prominent Czech beer makers already enjoy an unfair advantage since they have more money to spend on advertising.

Pramuk predicts that with the abolition of the import duty, Czech beer makers will increase their sales very substantially, from last year's 647,000 hectolitres to over 1 million hectolitres this year, which would give them about a fifth of the entire Slovak market.

Pramuk gloomily says that Slovakia's 15 breweries are currently operating at only about 70 percent capacity, and that last year they produced just over 4.5 million hectolitres of the golden suds.

According to Pramuk, Slovak brewers have kept their retail prices down in an effort to stave off the Czech deluge, which in turn has served to decrease their profits. Pramuk's association has repeatedly pushed the Slovak government to impose everything from import quotas to licensed manufacturing, but has had no success.

"There is nothing left for us to do but to monitor and then criticize," he said. He grumbles that it's just "not collegial" of the Czech companies to be pressing onto the Slovak market so hard.

Across the border however, the Czech producers' organization sees the Slovaks as the "unsportsmanlike" ones.

"If the Slovaks want to get into the European Union as much as the Czechs do, then they must get accustomed to the free movement of goods," said Jan Lidmila, Secretary of the Czech Union of Beer and Malt Producers.

Lidmila points to the customs union agreement between the two countries, which states that there should be no limits set on imports and that companies on both sides of the border must accept this fact.

An RFE/RL correspondent in Prague reports that Slovakia is currently being targeted by major Czech labels such as Budvar, Gambrinus, Prazdroj, Radegast and Staropramen, all of which seem to be hits with Slovak beer drinkers despite the fact that Czech beer retails for approximately 15 Slovak crowns, while Slovak beer sells for 12-13 crowns per bottle.

Czech beer producers welcome the cancellation of the import duty, regarding it as an opportunity to further increase profits. For Radegast, Slovakia already represents a very lucrative market which in 1996 accounted for approximately 75 percent of the company's overall exports. Radegast spokeswoman Halina Dvorska says the company wants to gain further penetration of the Slovak market even though this year Radegast will be focusing on increasing exports to Poland.

It's not just the big Czech beermakers that hope do even better on the Slovak market -- the country's smaller regional producers hope to ride in on their coattails.

But in that regard there are some problems. Czech regional producers situated on the border between the two states saw their Slovak market effectively wiped out by the dissolution of the Czech-Slovak federation in 1993. Since then, they've been only slowly recovering their market, and their optimism is tempered with caution.

For instance, for Josef Zlatnik, general director of the Breclavske Pivovary, the cancellation of the import duty is a welcome event, but he says "Slovak customs officials always seem to come up with other barriers that obstruct importing our products."

Zlatnik would like his company to recover sales in Slovakia which prior to the 1993 split represented 30 percent of overall production, or 180,000 hectolitres. Today, Breclavske Pivovary is exporting 8 percent of its total production to Slovakia, primarily to border towns which once were traditional sales grounds for the company's brews.

Even worse, Michal Pramuk believes that regional Czech brands no longer have a fighting chance in re-gaining a foothold in Slovakia because Slovaks in the intervening years have become accustomed to domestic brands.

On a happier note, market analysts including Pramuk himself predict that overall beer consumption in Slovakia will steadily increase.

In 1996, beer consumption there stood at about 103 litres per person, much lower than in the Czech Republic, where during the same period it was 159 litres per person. Pramuk predicts that by the year 2002, every Slovak will consume 125 litres of beer, which according to him corresponds to 1982 figures.

Ultimately the winner in the war of the golden suds will be the side which wins over Slovak taste buds. And only time will tell which breweries can do that.