_Anheiser Bush Vs Budvar _
By: Anonymous
Introduction Anheuser-Busch has been the nations largest brewer for more
than 40 years. In the mid-1800s Adolphus Busch became familiar with the beers
of a small Bohemian town called Budweis. After emigrating into the United
States he married into the Anheuser brewing family. In the 1870s Adolphus
Busch registered Budweiser as a trademark in the U.S. Adolphus Busch dubbed
his companys Budweiser the king of beers. Budweiser is a registered
trademark of the St. Louis-based Anheuser-Busch, which is the worlds largest
brewing company. In recent years Anhauser-Busch has faced increased
competition in the U.S. market. As a result of this increased competition the
company has been looking overseas for growth and increased profitsBudweis
is a small brewing town in the Czech republic. The town has a 700-year-old
history of beer brewing. The brewing company Budvar of Budejovice registered
Budweiser as a trademark in Europe in 1895. Budvars Budweiser is considered
by beer experts to be a greater beer than the American Budweiser. Czechs are
very proud of the Budvar brewery and considers its beer to be a national
treasure. In the days before a global marketplace, the American Budweiser and
the Czech Budweiser have never really competed with each other. However, in
the 1990s with increased global competition in the beer market, this dispute
over who actually owns the Budweiser name takes on increased importance.
According to a 1958 agreement signed by the Czech government, brand names that
denote geographic origin are protected. So the Czech government which owns
Budweiser believes that they should be the only ones allowed to carry that
name in Europe. However the United States did not sign that treaty in 1958, so
they do not agree with this. They have decided that it was no longer necessary
for them to have a trademark settlement to develop the American Budweiser
business in Europe. They decided to sue the Czechs on a country-by-country
basis to win that right. What Anhauser-Busch does with this offer and if and
when the trademark dispute is settled is the focus of our paper. This is a
very interesting case, because there are two different companies with
different beliefs. Because, they are from different countries they follow
different sets of laws. In this case we will try to come up with a resolution
that will benefit both the American and Czech Budweiser. Key Issues
Anheuser-Busch is the worlds largest brewing company. Budweiser is a popular
trademark of Anheuser-Busch. A problem is that Anheuser-Busch cant use it
trademark Budweiser name in every country of the world. This goes back to
European brewing industry, which dates back to the 14th century. Back then
Bohemia, now the Czech Republic was famous for its beers. One particular town
called Budwies was the center of this brewing history and activity. A person
from Budweis would be know as a Budweiser; the same would be true of the
towns beer. In 1985, the Budejovicky Budvar brewery was established in
Budweis, and its beer was officially named Budweiser, the beer of kings.
(Budweiser Case 202). So Anheuser-Busch had to find a way to market the
Budweiser name in European countries. So in 1911 they signed an agreement with
Budvar that allowed them to sell Budweiser beer in continental Europe. This
would help end the trademark issue. There were many responses to the
Anheuser-Busch and Budejovicky Budvar agreement
The Czech consider the name
Budweiser to be more than just a brand name. In United States, a name brand is
just a name brand. It doesnt represent anything. Americans try to sell the
name brand in the United States. Americans are just trying to sell the name
brand image. The Czech Budweiser meant a geographic name that indicates a
products origin and is a source of Czech national pride. In 1958 the Czech
Republic signed a European agreement that denotes that brand names that come
from a particular region are protected trademarks. The US never signed this
agreement, leaving Anhauser-Busch able to continue to legally use the
Budweiser trademark. The Czechs believe that their beer is the only beer that
should be allowed to care the name Budweiser. This means that the name
Budweiser should be allowed to only Czechs. The Czechs feel strongly about
their beer name
Also, the issue of privatization comes up. The Czechs dont
like to sell part of their share or company to Western companies. This is like
giving something away. This Budvar beer is well- known, and signing this
agreement with Anheuser-Busch made the people mad. Why did they sign with
Anheuser-Busch? Budvar was already doing well by itself. It like giving away a
secret or competitive advantage of their to another company
Lastly, the
issue that comes up is the taste of the beer. American is famous for many
things, but the taste of beer is not one of them. The Czechs feel that their
Budweis beer is so much better than the American Budweiser. These two beers do
not compare to each other. Budvars Budweiser is considered by beer experts to
be one of the worlds premier brews. If these two companies are combined many
Czechs feel that the merger will drag Budvars reputation down to the level of
the American Budweiser. The taste of Budweis is so much better than Budweiser
in the eyes of the Czechs. This issue of the pride in Budvar by the Czech
people and government, has been one of the issues that has spurred
disagreement between Anhauser-Busch and Budvar. SWOT Strengths The most
important strength for Anhauser-Busch is its sheer size. The beer brewer is
also part of the Fortune 500. Anhauser-Busch controls 45% of the massive US
beer market. Anhauser-Busch has twice as much market share as any other
brewery. Its Brand names like Bud, Michelob, and Budweiser are well known to
American beer drinkers. The Budweiser frogs and lizards commercials are well
liked and prominent during events like the Super Bowl. This dominance of the
US beer market has a 100 year old history. Anhauser-Busch has large amounts of
cash reserves permitting it to fight for any market it wants. Anhauser-Busch
also has the resources to compete with any European brew in the European
market In he several years Anhauser-Busch has won about 8 courtcases in
European courts over the Budweiser trademark with Budvar. These victories
strengthen Anhauser-Busch in its battle over the trademark. As a result of the
victories, Budvar recognizes Anhauser-Buschs new strength and has made an
offer to Anhauser-Busch of a 10% stake in Budvar. In many countries in Europe
Anhauser-Busch has begun to gain some market share and turn some profits. Some
of these countries include Ireland and the United Kingdom. Weaknesses The
American market is a relatively stagnant market for Anhauser-Busch. There is
very little growth in America and 94% of Anhauser-Buschs sales occur inside
America. Imports like Amstel and Heineken have made inroads in the American
beer market. To increase sales and Profits Anhauser-Busch must look for
business in foreign markets. American beer is not very well liked in Europe.
Many Europeans consider American beer to be weak and they do not like the
taste. This presents a very large challenge for Anhauser-Busch. It will be
very difficult to change the tastes of an entire continent of beer drinkers
Previous attempts to form a joint-venture or purchase Budvar have failed. The
Czech government and people consider Budvar to be a national treasure and
looks at Anhauser-Buschs efforts to purchase a stake in Budvar to be an act
of economic imperialism. Top management at Budvar has rejected numerous
attempts by Anhauser-Busch to purchase Budvar. This fact leads to the
conclusion that Budvars management is less than enthusiastic about partnering
with Anhauser-Busch. Opportunities There are a great number of opportunities
for Anhauser-Busch in its potential relationship with Budvar. The opportunity
to partner with Budvar will give American based Anhauser-Busch access to the
secrets of one of the best beers in the world. Anhauser-Busch can also expand
and market this superior brew in Europe and in the US. An imported beer with
the quality of Budvar can take on successful imports like Amstel and Heineken.
This would be a great opportunity for Anhauser-Busch to gain some market share
in the imported beer market in the US. This relationship will also resolve the
trademark dispute between Anhauser-Busch and Budvar. An end to this dispute
will end the expensive process of litigating the dispute country by country.
Threats The threat from Budvar itself is rather small. Budvar is a small
underfunded state run company. A major threat to Anhauser-Busch would entail a
competitor like Miller investing in Budvar. This would be the nightmare
scenario for Anhauser-Busch. If Budvar aquires the resources of a large
competitor, Budvar will be in a position to compete with Budweiser in Europe
and able to export and market Budvar in America. This would also give Budvar
the resources to litigate more effectively against Anhauser-Busch in disputed
markets across the world. The other potential threat to Anhauser-Busch is the
legal threat. Budvar could potentially win some of the court cases in the
ongoing litigation between the two parties. This would prevent Anhauser-Busch
from entering some markets in Europe. Alternatives Recently Budvar s
Management has been given the opportunity to purchase a 10% stake in Budvar.
Anheuser-Busch will offer to buy this stake in Budvar. One alternative is for
Anheuser-Busch to invest into Budvar. They will have the opportunity to obtain
more ownership as the years progress. This is one way for Anheuser-Busch to
get involved in the entire European market with Budweiser beer. As of now,
Anheuser-Busch has only been allowed to use their Budweiser through selected
foreign countries due to the trademark dispute with Budvar. Anheuser-Busch has
decided to go country by country and suing them in order to sell
Anheuser-Buschs Budweiser in Europe. They have won in 9 countries and have 27
other cases pending worldwide. If joined with Budvar, Anheuser-Busch will have
the ability to grow within Europe and not have the litigation expense or
conflict with Budvar, but rather work together as one team
Through this
partnership, Anheuser-Busch will expand Budvars brewing capabilities and
through the American marketing abilities, become Europes leading beer. After
successfully developing their position in Europe, Anheuser-Busch will take
Budvar and export it back to the United States. They will compete directly in
the premium import beer market with Hieniken and Amstel
The second
alternative is for Anheuser-Busch to continue through all the troubles of
litigation and try to win as many cases as they can to allow Anheuser-Buschs
Budweiser to expand through the European market. This direction will be very
expensive and possibly have a negative outcome. There is a possibility that
the majority of the countries Anheuser-Busch is suing can reject its attemps
to move into the European market. This procedure will also be very time
consuming if the litigation cases are not settled for many years. The third
alternative is to stop with all the litigation cases throughout Europe and
proceed with the countries that Anheuser-Busch has already entered. This is
basically a surrender on the part of Anheuser-Busch. They can stay within the
US and continue with their prevous strategies. This would not be the best
course of action because Anheuser -Busch needs to expand their global markets
to compensate for a stagnant US market
Recommendations As a group we
recommend that Anhauser-Busch make an offer to management at Budvar for the
10% stake in Budvar offered by the Czech Government. !0% now could turn into
30% and then maybe 50% sometime in the future. This is a graet opportunity to
team up with one of the top brewing companies in the world. Though this
partnership Anhauser-Busch will gain access to the secrets of 700 years of
brewing experience. These secrets will give Anhauser-Busch new ways to brew
its beers in America. Better brewing in America can lead to better beers and
more market share
This investment to Budvar will also put an end to the
expensive process of litigating the dispute country by country. This
litigation is both expensive and a waste of time. Time wasted litigating can
be better spent marketing Budweiser in Europe and turning larger profits.
Anhauser-Busch can take its resources and macro-brew experience and expand
Budvars brewery. Expansion and better management of this brewery will lead to
more production of Budvar. Anhauser-Busch will have the chance to use its
marketing expertise and resources to market Budvar across the European market.
Budvar will change from a small local brewery into a large brewery capable of
competing against the largest beers in Europe. This will be a tremendous boost
for Budvar and Anhauser-Busch. Budvar will gain more profits and
Anhauser-Busch will share in these same profits. Anhauser-Busch can then
market and sell its brands across Europe without the threat of litigation from
Budvar
Expansion of the brewing capabilities of Budvar will give
Anhauser-Busch a unique opportunity in the American beer market. With excess
production of Budvar there will be sufficient Budvar to export Budvar back
into the United States. This a tremendous opportunity for Anhauser-Busch to
compete in the premium imported beer market. Imports like Amstel and Heineken
have recently stolen market share from Anhauser-Busch in the American market.
This partnership with Budvar will allow Anhauser-Busch to compete directly
with these two imports with its own superior imported beer
There is the
chance that the opportunity to purchase a share in Budvar will never
materialize. If this occurs we suggest that Anhauser-Busch continue its
present course of litigating the issue country by country.
_Bibliography _
Bibliography Global Marketing, 1999. Warren J.Keegan and Mark S.Green. Case
5.2 Bud versus Bud. Pages 202 -203
Budvars homepage:
http://www.budvar.cz/english/ Budweiser homepage: http://www.budweiser.com/
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