Two beer brands both lay claim to the name Budweiser. For decades, an American company, Anheuser-Busch, has been locked in fierce legal battles with a Czech company, Budvar, over who makes the real Budweiser beer. On Monday the two breweries announced a surprise agreement.
Under the deal, Anheuser-Busch, the maker of American Budweiser, will distribute and market Czech Budweiser beer to American consumers. Surprising news, yes, but it makes good business sense, says Yesim Yemni a food and drink analyst with Business Monitor International in London.
"Anheuser Busch is the leader in the US market, and given the vast size of the US market, it gives Budvar access to the market as well as Anheuser's powerful distribution and marketing network. And for Anheuser-Busch, it gives them a chance to broaden their portfolio which they've been trying to do aggressively."
American Budweiser currently makes up close to half of all the beer sold in the United States, but has seen little growth in recent years. Imports, however, have increased significantly - seven percent in 2005.
Anheuser-Busch's brew will continue to be sold in the United States under the name Budweiser, while the Czech stuff will be sold as Czechvar, as it already is in 30 states. The two brands won't be in direct competition, since Czechvar will be marketed as a sophisticated European Import, while Budweiser is associated with race car driving and college parties.
Both breweries emphasize that the deal does not affect any of the long-running legal battles around the world over who has rights to the name.
"Anheuser Busch argues that it's been using the trademark since 1876, 19 years before Budvar was established. While the Czech company argues that the name should be protected because it described the place where the beer was brewed. These are known as appellation laws. So all over the world they've been disputing these. And although Anheuser-Busch holds the unchallenged rights to most of the world, there are still some courts that have ruled in favor of Budvar."
Among them, courts in Germany and Austria. The term Budweiser comes from Budweis, the German name for Ceske Budejovice, the South Bohemian town where Budvar is produced. Anheuser Bush brews its Budweiser beer in locations all over America, and is based in St. Louis.
In terms of annual volume of beer produced, it's a partnership of David and Goliath. Budvar brewed a little over a million hectolitres of beer last year, while Anheuser Busch produces about 143 million hectolitres annually.