Bottled Lager: Czech invasion

The Czech Republic's licensed trade enjoys an interesting relationship with ours. In recent years, cheap flights have dropped scores of revellers on hen weekends, stag weekends and other assorted drinking jaunts on the nation's capital, Prague. In return, we seem to have got the main attraction for these holidaymakers: beer.

The Czech Republic's historic brews have established a firm foothold in our market. Their growth could be a model for how the bottled format is used to seed brands in pubs before establishing them in the more risky but potentially more profitable draught format.

Budvar features in Nielsen's top 20 premium packaged lager brands. Staropramen and Pilsner Urquell are household names, with the latter launching a major bartender training programme earlier this year in a bid to raise its profile. Even traditional ale brewer JW Lees has got in on the act, last month signing a 10-year deal to distribute Czech lager Bohemia Regent.

Like most emerging lager categories, the Czechs developed through bottles. It is revealing to compare the sales split of Budvar, the best-established Czech lager in the UK, with its competitor Pilsner Urquell. Draught Budvar, available in 1,200 outlets, made up 55 per cent of Budvar UK's sales last year. Meanwhile, bottled Budvar was distributed to 8,000 outlets, indicating the difference in the rate of sale between the two formats.

For Pilsner Urquell, by contrast, draught currently accounts for only 30 per cent of UK sales.

After a succession of brand owners, Miller Brands acquired it in October 2005, so has only recently taken it by the scruff of the neck.Both brand owners state their ultimate goal is to push draught over bottled. However, both acknowledge the role bottles play.Crucially, Czech lager is a category whose main brands have been carefully targeted at certain sectors of the trade, which has avoided discounting, and cultivated associations with that pub trade buzz word 'premium'.

The fortunes of these two major Czech players in the bottled lager sector make an interesting comparison…

Pilsner Urquell​

Miller Brands UK was set up in 2005 to build up a number of lager brands. Pilsner Urquell was added to its portfolio when it took control of its UK distribution from agency Ubevco three months later.

While bottles currently account for 70 per cent of its sales in the UK, this figure nosedives to just five per cent in its home market - indicating the position it wants to be in. In that market, it is the biggest of the home-brewed lagers. In fact, it was even the first beer recognised as a lager, when in 1842 the brewery came up with the world's first golden-coloured beer.

Over here, though, Pilsner Urquell has passed through a string of distributors, never being given the necessary marketing attention. "That has undoubtedly made it very more difficult to build its distribution," says brand manager Lucy Kilborn.

However, momentum is now finally building, with a campaign stressing Pilsner Urquell's history, its status as the original Czech lager, and the need for bartenders to serve it in its traditional style.

As you read this, Miller Brands is deliberating over which UK bartender will go forward to a competition in New York that will crown a Master Bartender. Bartenders were assessed on their ability to serve the lager, in draught and bottled formats, the way it is traditionally served to Czech drinkers - namely with a continental head.

Pouring into a branded oversize glass with a specification 35ml head, and being able to communicate the lager's 'story', is essential, according to Lucy. "The head maintains flavour while it is being drunk," she says.

"We are setting out to serve it the way it's meant to be served.

"The brewers in Plzen brew it to be served like that, as did their fathers before them. It would not be holding true to the brand if we didn't."There are lovely stories for bartenders to tell about Pilsner Urquell. What does that give consumers nowadays? The fact that it has stood the test of time means a lot to people.

"Ideally, it would be along the lines of 'this is a great-tasting beer. By the way, it's the world's first golden beer.'"

The beer will continue to be pushed, largely at this point through bottles, until the point when it can break out of the fridges to have a bigger draught profile.

But, as befits the Czech story in the UK, Lucy wants it to retain a certain niche appeal. "We have a very special brand that's not been marketed that much over here," she explains.

"I don't anticipate that it will be a massive mainstream brand. We want it to stay in the right places."

Budvar​

Budvar UK was established in 2002 after what sales and marketing manager Neville Hall describes as an "acrimonious finish" with the agency that had been handling the brand's distribution in the UK market.

It was the latest controversy surrounding a beer that has been involved in infamous legal wranglings with American giant Anheuser-Busch for more than 100 years (see box, right).

From these acrimonious beginnings, it has become a significant draught brand. Last year, its UK draught business grew 22 per cent. "There's been consistent activity just to keep it in front of consumers," Neville says. "We have put together a very strong policy of never discounting."

His satisfaction at becoming in the main a draught lager brand is tempered by the belief that Budvar is well placed to retain strong sales in the bottled format too.

The packaged lager market is declining ahead of draught lager, with a drop of seven per cent in the year to May, according to Nielsen.However, Budvar is focusing on 500ml distinctive brown bottles. These have recently picked up listings by Laurel and Mitchells & Butlers, and Neville believes the larger serve is where the future lies for bottled lager. He explains: "The packaged lager market is difficult, but we are a lot better placed than our competition. The bigger bottles are performing well. Everyone has been scrapping over 330ml space, but 500ml is where I think that development will come."

The battle of Budweiser

So which is the real Budweiser - the Czech lager also known as Budvar, or the American self-styled 'king of beers'? The debate has raged for more than a hundred years…

1256 - Otakar II, King of Bohemia, founds the town of Ceské Budejovice, in Czechoslovakia, giving citizens brewing rights. Brewing tradition begins

1857 - Eberhard Anheuser purchases a bankrupt brewery in St Louis, America, eventually passing the reins to son-in-law Adolphus Busch

1876 - C. Conrad partners with Anheuser-Busch to produce a beer replicating European style

1891 - American Patent Office awards Anheuser-Busch right to use trademark Budweiser Lager Bier

1894 - Anheuser-Busch wages successful court battle against other North American breweries labelling their product Budweiser Bier

1895 - Joint Stock Brewery, established in 1884, begins brewing Budweiser Budvar in Ceské Budejovice (or Budweis, as the town has become known)

1911 - Agreement concluded in which Czech brewery maintained ownership of the Budweiser trademark with the attribute Original for the whole world. Anheuser-Busch retains the right to use trademark Budweiser in North American territories

1937 - Joint Stock Company applies to register label 'Imported Original Bohemian Budweiser Beer from Budweis City' in America, causing further dispute

1938 - Second trademark agreement between Joint Stock Company and Anheuser-Busch prevents Czech brewery from using designations 'Bud', 'Budweis' and 'Budvar' in North America

Today - Despite a wave of court cases in individual countries, the agreements of 1911 and 1938 still stand.