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Which Bud’s for you? That’s crux of brewers’ beer battle
Question of the Day
Budvar has some leverage in the dispute in that AB InBev may be missing out on a larger bulk of sales until a settlement is found, since its operations are so much bigger.
AB InBev brewed 73.9 billion pints last year, compared with Budvar’s 279 million pints.
“Budvar blocks the markets where AB InBev, due to its trading power, marketing and distribution potential, would likely gain significantly more,” said Karel Potmesil, an analyst at stock brokerage Cyrrus AS. “The dispute limits the development of the brands that the company considers the most valuable in the industry.”
If the issue is frustrating AB InBev, the company is not showing it.
“The dispute has not hindered our global expansion,” said Ms. Couck, the spokeswoman.
She cited figures showing AB InBev’s global sales were up 3.1 percent in 2011 and 6.2 percent in the first nine months of 2012.
The U.S. Budweiser is brewed in more than 15 countries and sold in more than 80 others. Its key markets are the United States, China, Canada and Britain.
Budvar holds rights for Germany and other European markets, as well as 11 Asian countries, including Japan, South Korea, China and Vietnam.
“It’s certainly quite unpleasant for AB InBev that it cannot sell the well-known brand it has developed on some key markets, especially in Germany, which is the most important market for Budvar,” said Mr. Potmesil.
Budvar also is being hurt by the legal standoff: Because of the legal issues, it takes seven to 10 years for the company to enter a new market.
But Mr. Potmesil noted that Budvar does not gain much by entering new markets. It has a smaller marketing budget, and its beer typically costs more, which hurts sales in lower-income countries such as China.
In the end, the dispute mainly provides Budvar with protection against competition from AB InBev. Against such a large rival, Mr. Bocek said, it is essential that Budvar use all the legal leverage it can.
“We have a right to exist,” he said.
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