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Bud versus Bud

Bud versus Bud The American company Anheuser-Bush (AB) cannot market its beer using their trademark name Budweiser in every country around the world. This is due to the fact that there is an European brewing company that uses the same trademark. After Adolphus Bush immigrated to the United States, he got married into the Anheuser brewing family. He used and subsequently registered the name Budweiser as a trademark. A few years after Adolphus Bush did this, a new brewery was established in Budejovicky Budvar and its beer was officially named and registered as Budweiser. This Budweiser is considered by beers experts to be a greater beer than the American Budweiser. (College Term Paper) Now days, AB has a domestic market share of 45 percent and 94 percent of its total production is being consumed domestically. Forced by decreasing demand in the domestic market, major competition by small breweries, imported beers and the increasingly scrutiny of the regulatory agencies, AB started to look abroad. Looking towards the international markets for expansion in the new century. AB faced a trademark problem in some Europeans countries, where it couldn’t market its beer under the Budweiser name and it had to use the Bud brand name instead. In Great Britain the court of Appeal ruled that American brewery AB and Czech brewery Budejovicky Budvar might both use the Bud name in England. (Real Beer, 2/7/00). More recently the Swiss courts ruled in favor of Budvar’s Budweiser, where the Swiss court banned AB from selling beer under the names of Budweiser or Bud. AB has to come up with a new name, but they can retain their logo design in order to ensure that they were still recognized in Swiss territory. After the end of the communism in Czechoslovakia in 1989, AB saw this as the opportunity for them to invest in Budejovicky Budvar and end the trademark issue. But reality had proven to be different because the company has almost tripled its sales since the Czechs gained independence. (Business Journals, Inc. 2/28/01) AB executives sent a letter to Czech officials offering to invest capital on the Budejovicky brewery, but the response that AB got back was not positive. One of the things that contributed to this response was that Czechs considered that the name Budweiser meant more than just a brand name or trademark, they believe that it denotes a geographic area and subsequently indicates were the products is from. Secondly, the simple fact of privatization concerned the Czechs that already had a bad experience with the German carmaker company Volkswagen. Where Volkswagen promised some amount of money to the Czechs, but Volkswagen executives fail to provide. Besides this issue, the wages paid to the Czech’s factory were far below from the ones paid in the Germans’ factories. The third factor was, like I mentioned before, that the Czechs consider that the American Budweiser to be far inferior to Budvar’s Budweiser. AB has being trying to win over the Czechs in various ways. One of them is by spending over $1 million of dollars cultural centers, offering English classes, opened a café and with a baseball team that is equipped with the Saint Luis Cardinals’ uniforms (The team that belongs to the same city where AB have its headquarter). After all this effort from Anheuser-Bush, the Czech government decided not to go on with the privatization of the Budvar brewery. More conversations followed these events, but AB and Budvar never agreed on the value of the Czechs brewery. After this last attempt, AB officials decided not to pursue the acquisition of Budvar and decided to file lawsuits against them on all the countries that they encounter the trademark conflict. 1. Constantly make an offer for the stakes that the Czech government is offering to Budvar’s top management. This should be the priority of the AB executives, in doing so, if the offer is accepted, they will gain access to recipe of how to make one of the world best beer produced. This will also bring an end to the high cost of having to litigate in each and every country that they find the trademark conflict and convert the litigation expenses in promotional and marketing budget. It will definitively turn into profit. 2. Keep filling lawsuit in a country-by-country basis, only in strategically important countries, this can be determined by the population, demographic, culture and per capita income. This will put some pressure to Budvar brewery in these countries and may persuade them to sell to AB. It is important not to be aggressive during these litigations; Budvar may see it as offensive. 3. Convince Budvar’s management that AB is going to use their process to produce a beer of higher quality in America and that they will compete with the premium imported beers with Budvar’s best and not the other way around. This will make Budvar proud of their beer and will think of AB as a friend and not as an imperialistic take over by the American company. 4. Assure the Czech government that they will keep their promise of providing better wages, infrastructure and capital for plant expansions. 5. Present the purchase offer as being advantageous to Budvar, emphasizing on their gains if they get together. Also, with the large cash balance that AB has, they can overpay a little for Budvar. At the end this will increase the goodwill of AB. 6. AB has to be humble during the entire process. The American ethnocentric philosophy should be avoided. AB is dealing with a nationalistic and proud group that knows that they are succeeding in the beer industry. 7. Continue spending money in public relations. Like the English lessons, baseball team, café, etc. This will continuously build the goodwill of the AB. Profitability for AB and Budvar breweries will increase. The profits of the new venture will be seen almost immediately after the ends of the litigations and the beginning of the integration of both breweries. With the reputation of Budvar’s beer as being one of the best beers around the world, will enable AB to gain market share from the premium imports market in its national country and around the globe. The joint venture will allow both companies to join forces and conquer the market. The combination of a large company like AB and the prestige and finesse of a small one like Budvar will allow them to be successful in different markets. AB’s competition will have to face a company with the taste of a homemade beer, but the capital of the biggest brewery of the world. The European market can see this venture as degrading to Budvar’s beer and they may look at it as Budvar’s beer becoming like the American one, of lower grade, and therefore losing its prestigious place in the European market. Cutting back on sales in this market. AB and Budvar’s management may never agree or settle their differences. Competitors may try to convince the public that Budvar’s beer lowered its standards. Bibliography: Bibliography bre World Web Site (www.breworld.com) January 1, 1999 “Swiss favour Budvar and tell us bud to rename brand” Bre World Web Site (www.breworld.com) February 2, 1999 “Anheuser Bush pursue Budweiser Budvar Again” The Real Beer Page (www.realbeer.com) February 7, 2000 “English find two Buds better than one” The Prague Post Online (www.praguepost.com) Wednesday, February 9, 2000 “Bud vs. Bud Czech ‘Budweiser’ and St. Louis ‘Budweiser’ face off over name” Business Journal, Inc. (www.findarticles.com) February 28, 2000 “Budvar thrives despite trademark spat. (Budejovicky Budvar)(Brief article)” College Term Papers Web Site (www.college-term-papers.com) “Anhauser-Bush Vs Budvar”

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