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Czech Republic: Beer War With U.S. Matches Tradition Against Marketing Skills

By Lyle Frink

The Budvar brewery in the Czech city of Ceske Budejovice is tiny by international standards, but it has massive "old world" tradition behind its name. The U.S.-based Anheuser-Busch company is immense by any standard, made that way through "new world" marketing know-how. RFE/RL contributor Lyle Frink says the two unlikely opponents are fighting a legal war in 40 courts around the world.

Prague, 31 July 2001 (RFE/RL) -- A 90-year beer war between the Czech Republic's Budvar brewery and the U.S. brewer Anheuser-Busch is coming to a head on both Western and Eastern fronts.

Germany's Supreme District Court in Munich ruled early this month (July) that Budvar alone is entitled to the Budweiser trademark in Germany.

But in Russia, the trademark office recently threw out the Czechs' claim to the shorter nickname of "Bud," opening up that immense market to Anheuser-Busch.

Each side tends to applaud its victories and minimize its defeats. After each battle, both return to work, brewing beer and preparing for their next court case.

Jiri Bocek, the general director of the state-owned Budvar, says the issue ultimately amounts to a clash between cultures.

"It is basically a dispute between 'old' and 'new' cultures. For example, European and Asian states have a long and rich tradition of producing food products. These products are known by the place of origin and, logically, they make an effort to protect this concept. New cultures or Anglo-Saxon cultures, on the other hand, try to imitate the older products and then argue that the use and protection of geographic indicators should not prevail."

The root of the dispute extends back almost 150 years. Adolphus Busch, a German immigrant to the United States, came through what was then Austria-Hungary to buy hops for his St. Louis, Missouri, brewery.

Today's city of Ceske Budejovice was called Budweis and the local beer was known as "Budweiser." Busch took both the hops and the Budweiser name home with him. His brewery began using the Budweiser brand-name in 1876.

Although beer had been brewed in Ceske Budejovice for at least 600 years, the Budvar brewery was founded almost 20 years after the Budweiser brand was first established in the U.S. The breweries have been in court off and on since 1911.

Bocek says the essence to Budvar's claim rests with the beer's connection to Ceske Budejovice: the place, the local ingredients, and the long brewing tradition.

"Consumers of our beer [not] only can distinguish its quality, but know that it comes from the Czech Republic, from a place called Ceske Budejovice, or Budweis."

Steve Burrows, the chief executive of Anheuser-Busch International, says geography is not the issue at all. He says his company deserves the Budweiser name since it was the first to take the name and promote it around the world:

"We've invested millions of dollars in establishing the name 'Budweiser' as a global, well-recognized name. An investment, frankly, that Budvar is living off of at our expense."

Naming a food or beverage for the location where it is produced is not new. Neither are claims that local environments lend decisive qualities to the final product. The French have champagne; the Scots have Scotch whiskey. In many countries, Budvar already claims Budweiser as a place name -- an appellation of origin -- and says that should take priority over the rights of a brewer with no links to Ceske Budejovice.

But tying its beer to a specific place exacts a price. Budvar can sell under its name only beer that is made in Ceske Budejovice, which severely limits the potential size of the market. In a similar case last December, the European Court of Justice prohibited a brewery in Warstein, Germany, from placing its "Warsteiner" appellation on a beer produced at another town less than 100 km away.

The U.S. brewer makes no claim to local distinction. It runs breweries all the way from St. Louis in the central United States to Wuhan in China.

As Burrows says:

"Beer can be made anywhere. We could make 'Budweiser Budvar' here in our brewery if we chose to, because beer is not unique to a specific region."

Anheuser-Busch boasts its Budweiser brand has been the world's top-selling beer since 1958. Anheuser-Busch produced 142 million hectoliters of beer last year. Budvar put out just 1.3 million hectoliters.

The question of whether beer -- like wine, for example -- can claim a specific local origin has not been settled at the international level. World Trade Organization rules protect appellations of origin for both wines and spirits, but beer is not mentioned.

Karel Cermak, a lawyer representing Budvar, says the Czech brewmasters are treading new legal ground.

"[The] protection of beer by appellation of origin is disputable. Particularly in the European Union, it is now being discussed. In the Czech Republic, beer has long been recognized as appropriate for protection. We are of the opinion that the characteristics of beer are due to the place where it is produced."

Within Europe, protection given to place names varies by country. Germany and Portugal recognize Budweiser as an appellation of origin. Italy has decided in favor of Anheuser-Busch.

As the European Union harmonizes its legal codes and moves toward a community-wide registration of trademarks, the fight is bound to intensify.

(Lyle Frink is a freelance journalist based in Prague.)