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Budvar argues that only beer that is brewed in this corner of the Czech Republic can be called Budweiser. The founders of Anheuser-Busch in St. Louis used the name for their product because it was so well-known. The brewer, founded in 1852, began producing Budweiser, America's first national beer brand, in 1876
-- 19 years before Budvar was founded. The two companies have been in a legal battle since 1906. Today, the dispute is being waged through 61 suits in 11 countries. Budvar has some leverage in the dispute in that AB InBev may be missing out on a larger bulk of sales until a settlement is found, since its operations are so much bigger. It brewed 349.8 million hectoliters last year compared with Budvar's 1.32 million hectoliters. That's the equivalent of 73.9 billion pints against 279 million pints. "Budvar blocks the markets where AB InBev, due to its trading power, marketing and distribution potential, would likely gain significantly more," said Karel Potmesil an analyst at stock brokerage Cyrrus AS. "The dispute limits the development of the brands that the company considers the most valuable in the industry." If the issue is frustrating AB InBev, the company is not showing it. "The dispute has not hindered our global expansion," said Couck, the spokeswoman. She cited figures showing AB InBev's global sales were up 3.1 percent in 2011 and 6.2 percent in the first nine months of 2012. The U.S. Budweiser is brewed in more than 15 countries and sold in more than 80 others. Its key markets are the United States, China, Canada and Britain.
Budvar holds rights for Germany and other European markets as well as 11 Asian countries, including Japan, Korea, China and Vietnam. "It's certainly quite unpleasant for AB InBev that it cannot sell the well-known brand it has developed on some key markets, especially in Germany, which is the most important market for Budvar," said Potmesil. Budvar is also being hurt by the legal standoff: because of the legal issues, it takes seven to 10 years for the company to enter a new market. But Potmesil noted Budvar does not gain much by entering new markets. It has a smaller marketing budget and its beer typically costs more, which hurts sales in lower-income countries like China. In the end, the dispute mainly provides Budvar with protection against competition from AB InBev. Against such a large rival, Bocek said, it is essential that Budvar use all the legal leverage it can. "We have a right to exist," he said.
[Associated
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