I spotted this on The Prague Post's website at
By Zuzana Kawaciukova Staff Writer, The Prague Post (October 30, 2003) Workers at the Budvar brewery in Ceske Budejovice. In 2003 beer exports are expected to break the 2 million hectoliter (52.8 million gallon) mark. (relates to image)
CZECH BEER BASICS
- Domestic consumption per capita: 159 liters (42 gallons), No. 1 in the world
- Production: 48 breweries, out of which 27 smaller breweries have output below 200,000 hectoliters
- Typical price of a half-liter of draft beer in Prague: 20 Kc (74 cents)
- 2002 production: 18.18 million hectoliters, up 1.5 percent from 2001
- 2002 exports: 1.975 million hectoliters
- First half of 2003 production: 8.98 million hectoliters
- Anticipated exports for 2003: 2.05 to 2.10 million hectoliters Source: Czech Association of Breweries and Malt Houses
Czech pubs occupied with more beer drinkers emptying more pints are not in the business plans of domestic breweries. Instead, they are continuing to put emphasis on exporting their products to thirsty markets. The market here, they say, is saturated, while demand for Czech beer is continuing to increase from drinkers abroad.
According to local brewers, Czechs, who are already the No. 1 beer drinkers on Earth, have very little capacity to drink more then they already do. Statistics indicate that on average Czechs drink 159 liters (42 gallons) of beer per person annually. This amount represents nearly a half-liter daily for each of the more than 10 million men, women and children in this country. The No. 2 beer consumer, Germany, is significantly behind at 125 liters per head.
The most optimistic prognoses are for an increase in national consumption of only 1 percent annually. Additionally, Czech beer drinkers are reluctant to pay more for their favorite beverage, which is on average cheaper than soft drinks. In Prague, for example, a customer can purchase a half-liter of draft beer for 20 Kc (74 cents), a lower price than 3 deciliters (10.5 ounces) of soda or mineral water.
As a result, in 2003 this country's beer exports will hit record figures, said Jan Vesely, chairman of the Czech Association of Breweries and Malt Houses. Exports are predicted to break the 2 million hectoliter (52.8 million gallon) mark. "Export is an extremely important area for beer producers, considering the limit of domestic consumption," said Vesely. "This stands at 18 million hectoliters, while the industry has the capacity to produce up to 22.5 million hectoliters of beer." In 2002, overall beer output was 18.18 million hectoliters, from which around 1.98 million hectoliters were exported.
The leading beer exporter is Plzensky Prazdroj, now owned by multinational brewery giant SABMiller. Prazdroj has significantly increased its exports over the past few years. In 2002, the company sold over 9 million hectoliters, a 6 percent year-on-year increase.
Meanwhile, during that same year sales in foreign countries rose a healthy 36 percent over 2001 to 1.5 million hectoliters. This increase was partially due to the launch of licensed production in strategic markets abroad.
The company says such increases are only the start of better results. "There are plenty of markets which have not yet been reached by Czech beer," said Prazdroj spokesman Alexej Bachtin. Recently the brewery started to sell its products in South Africa, for example, and according to preliminary figures sales of the brewery's signature beer, Pilsner Urquell, were 16 percent higher than anticipated.
Closer to home, the brewery plans to expand to Italy. "The Italian market continues to grow and has good potential to exceed present sales, which are below 10,000 hectoliters," said Bachtin.
Other attractive markets for Prazdroj are Latin America and China, which would be entered under the aegis of SABMiller. The conglomerate, the world's No. 2 brewer, has held an overwhelming majority in Prazdroj since 1999. At the moment Prazdroj has a 47 percent share of the Czech beer market. The second-largest domestic brewery, Prague-based Pivovary Staropramen, reported an encouraging 23 percent increase in exports in the first three quarters of 2003, for a total of 409,000 hectoliters. In 2002, the brewery sold 2.6 million hectoliters, out of which
349,000 hectoliters were exported. Compared to 2001, exports rose by 12.6 percent that year.Two key factors are contributing to the significant rise in sales abroad, according to Pivovary Staropramen spokeswoman Simona Krautova. "The stagnant domestic market does not provide room for growth, while the renowned name, popularity and high demand for Czech beer abroad facilitate exports," she said. Additionally, like Prazdroj, the company recently licensed production in breweries abroad, which cuts the high costs of transporting its goods to foreign countries.
Pivovary Staropramen exports its beverages to 36 nations, with its flagship product, the lager Staropramen, making up nearly 95 percent of company exports. This past February the company debuted its products on the Canadian market, and in the near future it plans to expand to markets further abroad such as Australia and South Africa.
At present, Pivovary Staropramen holds a 14.4 percent domestic market share. Since 2000, the company's majority owner has been Belgian beer group Interbrew.
It's not only giant breweries that must fight for their place in the world. Smaller beer producers are also forced to export, as they have to contend with the shortcomings of the domestic market just like the majors.
One of the smaller producers, Lobkowicz, exports 35 percent of its total production. The brewery reported that its exports doubled in the first nine months of 2003 compared to the same period of 2002, reaching a total 7,000 hectoliters. There has been a general increase in demand for all types of Czech beer in foreign countries, said Libor Witassek, the brewery's director of strategy. This boom can be attributed to the activities of Prazdroj on foreign markets, he added.
Lobkowicz's desire is to export 10,000 hectoliters in 2003 and to double export growth again in 2004. Nearly half of the brewery's exports are sold to Germany, while the rest make their way to Italy, Sweden, the United States, France and Great Britain. One of the oldest Czech breweries, dating to the 15th century, Lobkowicz chose to move its products across the border for financial reasons as well. "Expansion on the domestic market costs more than further expansion abroad," said Wittasek.
Moreover, the country's entry into the European Union will, according to brewers, help broaden exports, particularly to other accession countries. Customs duties for beer will be dropped and trade barriers will fall.
Zuzana Kawaciukova.