PM makes clear sale of state-owned brewer Budvar unlikely before 2010

Since last year, the government has been slowly preparing the ground for the transformation and eventual sale of the state-owned brewer Budějovický Budvar. Originally, the government hoped to sell the famous brewery – worth an estimated 1.3 billion euros – by the end of its term, but now it appears the preparations won’t be completed before mid-2010. Prime Minister Mirek Topolánek made clear on Tuesday that the government would rather delay the company’s sale, rather than rush a deal, in order to ensure the brand’s survival into the future.

Before the Czech state privatises brewer Budějovický Budvar it will have to receive guarantees the famous brand will survive into the future. Originally, the government hoped to complete the privatisation process – from the company’s transformation to final sale – by the end of its term, but now things aren’t so certain. On Tuesday, Prime Minister Mirek Topolánek, meeting with Agriculture Minister Petr Gandalovič, expressed doubts that privatisation would take place before mid-2010. Petr Gandalovič stressed that no sale would go through unless key questions were resolved first: the Czech brewer has been involved in some 30 countries in long-running legal battles with US beer giant Anheuser-Busch over the Budweiser name, often cast as “David” to Anheuser-Busch’s “Goliath”. The Agriculture Ministry spokesman Petr Vorlíček stresses the importance of any sale of Budvar to a new owner not changing the firm’s position on the trademark battles:

“The survival of the Budvar name is what is important; it is vital even following its transformation that the company not back down from current legal positions.”

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Budějovický Budvar has not yet even undergone transformation to a joint-stock company and already Belgian brewer InBev – which recently bought Budweiser’s maker Anheuser-Busch – has been mentioned as a potential buyer. If that happened, InBev would own both Budweiser and Budvar trademarks and some have questioned whether the latter brand name would survive. But others are confident that dropping the Budvar label or anything less than promoting the famous name as a premium product would make little business sense. Prague-based journalist and beer-industry specialist Evan Rail:

“The company probably will be privatised of course, ideally with a very benevolent partner who will help it grow and expand and will utilise what Budvar has: a great product, a great brand, a great history that is known around the world. There would be no sense in ruining that: there is no sense in burying the brand or in making it anything other than one of the world’s great beers. Instead of buried, I think it would be far more likely the brand will be promoted and that production will be ramped up three, four, or even ten or twenty times.”