Anheiser Bush Vs Budvar Essay

This essay has a total of 2362 words and 12 pages.


Anheiser Bush Vs Budvar




Introduction

Anheuser-Busch has been the nation’s largest brewer for more than 40 years. In the
mid-1800’s 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 1870’s Adolphus Busch registered Budweiser as a trademark in the U.S.
Adolphus Busch dubbed his company’s Budweiser “the king of beers.” Budweiser is a
registered trademark of the St. Louis-based Anheuser-Busch, which is the world’s 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 profits.

Budweis 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. Budvar’s 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 1990’s 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 world’s largest brewing company. Budweiser is a popular trademark
of Anheuser-Busch. A problem is that Anheuser-Busch can’t 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 town’s 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 doesn’t 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 product’s
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 don’t 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. Budvar’s 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
Budvar’s 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-Busch’s 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-Busch’s 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-Busch’s 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 Budvar’s management is less than
enthusiastic about partnering with Anhauser-Busch.





Opportunities
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