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Budweiser Negotiating to Buy Budweiser

No, you read that right. In April it was announced that the Czech Republic, who owns and operates Budejovicky Budvar — from the Bohemian town of Budweis — was considering selling it to the highest bidder to help with the country’s budget woes. Naturally they used the gentler word privatize, but the result is the same. Forbes is reporting that Anheuser-Busch has been in negotiations for some time now.

A-B and Budvar have been bickering over the Budweiser trademark for over a century, though recently A-B agreed to distribute Czechvar (Budvar’s trade name in the U.S.) in the American market. Buying the Czech brewery would make good sense from a business point of view, because the still numerous pending trademark disputes would simply vanish, saving untold millions in legal fees. Plus A-B would be able to market its own Budweiser uniformly throughout the world. Currently there are a number of nations where Budvar has prevailed in litigation and the American Budweiser must be sold in those countries under a different name. Buying the brewery then seems like it would be worth its weight in gold. Of course, the Czech government is apparently not one to let an opportunity pass it by and is exploiting the situation. They’re asking $1.5 billion, even though that’s twelve times its annual sales of just over $125 million. Most valuations use a formula of around 2.5 times annual sales, making a pricetag of $300 million or so a bit more reasonable, at least to prospective buyers.

A-B began selling beer under the name Budweiser (admittedly taking the name from the Bohemian town of Budweis) in 1876 (registering the trademark in 1878), whereas the present brewer, Budejovicky Budvar, didn’t begin brewing until 1895. But as the Czechs are quick to point out, beer was being brewed in the town of Budweis since the 13th century, since 1265 to be exact. And in that time before trademarks and brand names per se, beer brewed in the town was called Budweiser to distinguish it from beer made in other towns, it just wasn’t made by the same company. To a number of people, however, the dispute is about more than just who used the brand name first. To the Czechs it’s understandably a matter of national pride. How do you tell someone they can’t use the name of their own town on their own labels with a company name that also includes the name of the town?

Well if you’re Anheuser-Busch, you rely on the fact that you’ve spent millions and millions of dollars building a brand name and some upstart company shouldn’t be able to just waltz in and trade on all that hard work. And while I do understand A-B’s position, I’d be more sympathetic to it if this dispute just started recently after they really have created a worldwide brand name over many, many years spending untold dollars to do so. But that’s not exactly what happened. This dispute began early in the 20th century, only ten years or so after the modern Budvar was formed and only 30-odd years after Anheuser began using the Budweiser name. At that time they were certainly a successful company, but nowhere near the international behemoth they are today. Looked at today, it’s much easier to accept A-B’s arguments, but not when the dispute began. The vast majority of the effort and resources that A-B has spent building up the value of the brand name took place after Budvar began complaining that A-B was using their town’s name. I’m not sure that matters from a legal standpoint (though perhaps it should) but it just feels wrong. I know that’s idealistic and isn’t how the world really works, but I’m not convinced that most people want to live in a world where the bully with the most money usually wins. A-B may have even figured out a way to market Budweiser in the Czech Republic, by buying another local brewery, Jihocesky Pivovary, which is currently located in southern Bohemia. But in 1997 they found documents indicating they were the first brewery in Budweis, having been founded in 1795.

But buying Budejovicky Budvar would finally and forever put this dispute to bed. I just don’t know if that’s really the right result. It certainly doesn’t feel like it would end the controversy or really answer the question of who really should be entitled to use the name “Budweiser.”


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