The St. Louis Business Journal is reporting that Anheuser-Busch InBev is negotiating with Heineken to sell its Czech brands to the Dutch brewer. The paper places Staropramen’s valuation between $255 million and $306 million.

We’ve seen this before. Almost exactly a year ago, Heineken’s takeover of the Czech Drinks Union brands was given the green light. That move pushed Heineken into third place on the Czech market, just ahead of the legendary Budweiser Budvar, but still lower than Heineken’s traditional market share. At the time, Ron Pattinson sagely noted that Heineken doesn’t enter a market to take third place.

By purchasing Staropramen — and thus the group’s other brands Braník, Měšťan, Ostravar, Kelt, Velvet and Vratislav — Heineken would move to a very solid second place behind SAB Miller’s Pilsner Urquell group, standing roughly three times larger than still-state-owned Budweiser Budvar in third place (with around 30% of the Czech market vs. about 10%). It would combine the above-mentioned Staropramen brands with its current Czech portfolio of Krušovice, Hostan, Starobrno, Zlatopramen, Velké Březno, Louny and Kutná Hora.

Interestingly, the exit of Anheuser-Busch InBev from the Czech market might finally put an end to the idea of American Budweiser ever buying Czech Budweiser. However, Budweiser Budvar is still on schedule to be privatized in the next year or two. With its expanding presence here, Heineken would be a natural suitor. That would move it to around 40% market share, right behind SAB Miller’s approximate 49%.

What remains to be seen with the current takeover is if the Czech anti-monopoly office will rise from its slumber (prediction: not freakin’ likely). So assuming the takeover of Staropramen by Heineken goes forward, it might be time to name your Czech Beer Brand Dead Pool.

In Slovakia, for example, Heineken has shuttered many of the breweries they’ve purchased (such as Martiner and Corgoň), keeping the brands alive but moving production to the massive Hurbanovo brewery. And many of Staropramen’s brands here are similar zombies: Braník is no longer brewed at Braník; Měšťan is no longer brewed in Holešovice.

So make your predictions now. What Staropramen or Heineken breweries will be closed? How many more zombie beers will we see here? And will Heineken really end up buying Budvar Budvar?

NB: of the Czech brands that Heineken already owns, Hostan is pretty much over: it’s been partly brewed at Starobrno for ages. And over at Pivní deník, Honza Kočka jokingly predicts that it is the Staropramen brewery — located in prime real estate overlooking the Vltava river — that will end up being sold and turned into upscale loft apartments, just like what happened to the Holešovice brewery after Staropramen sold it. As always, “irony follows hubris” seems like a fairly safe bet.

Here are a few more photos from Prague’s Salesian Beer Museum, an “accidental” collection of more than 2,000 bottles, 4,000 beermats and the weird, beer-themed collectibles known as breweriana, many of which come from the Czech lands.

Looking through the shelves, I was struck by how much evidence these artifacts provide for the way people here once lived, as well as a contrast to the way we live now. One of the most interesting items in the collection is the advertising placard (above) for the Měšťanský pivovar na Královských Vinohradech, the brewery in the Vinohrady neighborhood which ran from 1893 to 1943, along with scores of other beer makers once working in the Czech capital. In a sign of changing priorities, the Vinohrady brewery has recently been converted into luxury apartments.

So we don’t need historic breweries — we need plush digs. But our old beer culture had at least one advantage: much better graphic design, as witnessed by the museum’s collection of unusual beermats.

While many current pubs just serve beer on the branded mats they get from their beer suppliers, the Salesian Beer Museum has a collection from brewers as well as individual pubs, which often had their own well-designed coasters, many of which marvelously reflect the great history of Czech and Slovak typography and graphic design. The next time I meet one of my publican friends in Prague, I’m going to ask why his place doesn’t have custom beermats instead of the generics handed over by the delivery guy. Design is an important means of communicating many things on many levels, often going far beyond mere words. Using your beer supplier’s cheap, standard beermats seems to say that, as a bar owner, you simply don’t care. Not such a classy message.

Among the bottles, I found examples from both Pivovar Benešov and Pivovar Holešovice. Located less than an hour south of Prague, Pivovar Benešov is still hanging on, making the very good Ferdinand beers that are stocked at Prague’s Ferdinanda pub.

Pivovar Holešovice in Prague is a different story. My mother-in-law said that when she was growing up in Holešovice during and just after the war, her father used to send her to the brewery to pick up a pitcher of beer for dinner. Always, she said, she was sent to buy the brewery’s 8° lager, which probably had at most 3% alcohol by volume. Today, almost no one here brews such table beers. And somewhat unsurprisingly, the old Holešovice brewery is also being converted into luxury apartments.

Even the tiniest text on a label can hide some interesting details. Check out the bottles from Opava’s Zlatovar brewery, which has recently been sold to a group of Irish real estate developers who plan to convert it into a shopping center. In the middle is the brewery’s 12° lager, shown being served in dimpled glasses by a fully clothed waitress whose underwear doesn’t even scratch off. See the part that says “Obsah alkoholu min. 3,1%”? That is very low for a 12° lager, right? Not really — before, labels here listed amount of alcohol by weight, not by volume. (As an ABV, that works out to about 3.9% — still a bit low, but not ridiculous.) Were our 12° beers really weaker — and thus even sweeter — back in the day?

And here is the promotional bottle I mentioned in the earlier post, a German Budvar flaška that holds two full liters, though it is proportioned to look just like a normal one, thus creating a sudden sense of gigantism when you see it. The bottle is marked as coming from “Tschechoslowakei,” and it bears witness to the days when Budvar was shoring up support in Germany in its fight for the name controlled by Anheuser-Busch: this one label says “Budweiser” three times, as well as one use of the parenthetical “(Budweis),” in a big push to get the point across. (Easy guys — we get it.)

Of course, no collection would be complete without its own bottles, and it turns out the Salesians in Prague have brewed and bottled four of their own beers, perhaps the rarest brews in the country. (Don’t ask: there aren’t any left.)

On that note, we’ve received a pile of new beer-themed goodies to hand out in our big Beer Culture reader-contest-slash-giveaway, which runs through March: shirts and glasses from Pivovarský klub, hats and shirts from the Ostravar and Staropramen breweries, as well as some great incoming swag from Pilsner Urquell.

Getting your hands on this stuff is simple: just send a beer-flavored haiku to GBGPrague@gmail.com and you’re entered in the contest. (Send two and you’re entered twice.) And don’t overlook the beer poetry contest at A Good Beer Blog, which has even cooler (meaning Canadian) stuff to give away.

Who knows — the prizes you win from us could form the foundations of your very own beer museum.

There’s more news in the Budvar privatization saga: the Czech government’s tender for an adviser is now complete, with the contract going to the Prague law firm of Kříž & Bělina, as the Prague Daily Monitor reported yesterday, via Hospodářské noviny (subscription required). Kříž & Bělina will help the Czech government take the initial step toward privatization, that of turning Budvar into a joint-stock company.

Though the path forward remains unclear, we now know four of the parties stumbling down it: the Czech government, Budvar, Kříž & Bělina and, inevitably, Anheuser-Busch, described in the article as “considered the most serious bidder in the privatisation.” The article also takes a stab in the dark at Budvar’s worth, suggesting 1 billion dollars or perhaps even 1 billion euros.

Why so much? Well, it’s not what Budvar sells, currently just 1.25 million hectoliters of high-grade lager per year. It’s what Budvar’s regional rights to the name Budweiser might keep Anheuser-Busch from selling.

Some back-of-the-beermat math: if you figured, very optimistically, that Budvar could generate a profit of $.30 on every half-liter — which only wholesale for about $1 on the local market anyway — that would only come out to about $37 million annually. The latest figure I could find was for 2006, when Budvar earned 267.2 million Kč, or about $15.7 million at today’s rates. There are many ways to calculate the sale price of a company, but as far as I know, very few of them suggest multiplying a company’s annual take by a hundred.

However, once you factor in all of those countries around the world where Budvar has the right to use the name Budweiser, then throw in all the money that Anheuser-Busch has spent on billable hours, you end up with a very large number. I personally can’t count that high, so I’ll shrug and say $1 billion. Sure.

More details from the report:

• Kříž & Bělina are getting 12.5 million CZK (about $777,000) for the job of helping convert Budvar to a joint-stock company.

• Another tender, later, will choose another adviser for the actual sale of Budvar.

• Prague Airport and Czech Airlines should both be privatized before Budvar.

• Again, Czech Agriculture Minister Petr Gandalovič says that Budvar should not be privatized before the end of 2008.

People who know people who know things have just passed the message that the price for Budvar won’t have anything to do with Budvar’s annual sales, cash flow or profits, and it won’t have anything to do with the brewery itself in České Budějovice. It is only about the brand — period. I’ve been told that I should make it clear that the brand in question is, of course, Budweiser.

Sometimes when anonymous tips come through they sign off in ominous ways. Like this: “The Budvar trademark isn’t worth jack.”

Here’s an interesting bit from the Czech news wires: an article at actualne.cz notes that the term “Czech beer” is moving closer to protected name status. Much like the AOCs and DOCs of the wine world, the special status will mean that brewers in the EU can only use the term “české pivo” if the beer is, in fact, brewed in the Czech Republic, as well as if it meets certain requirements of ingredients and quality.

If the application is successful, “české pivo” will join 10 other Czech geographically protected names in the EU, including “žatecký chmel” (“Saaz hops”). The big one that’s missing outside the country itself (barring “Budweiser,” of course), is “Pilsner,” used all over the world for widely different beers of varying ingredients and varying quality, even though it originally meant a certain style of beer from a certain place: a clear golden lager from the west Bohemian town of Plzeň, known as Pilsen in German. I can’t remember how many times I’ve heard people say it’s too bad the Czechs didn’t retain control over the name.

Ah, but they tried.

According to an article in the New York Times of December 25, 1910, “United States Circuit Court Judge Hough is considering an application by the Brewers’ Association of Pilsen, Bohemia, for an injunction restraining an importer from using the word ‘Pilsner’ to describe the Bohemian beer brewed outside that municipality.” The upshot: a distributor in New York was selling beer from the Bohemian town of Aussig (in Czech, Ústí nad Labem, presumably today’s Zlatopramen brewery) under the name “Pilsner.”

“The contention of the Pilsen Brewers’ Association is that no genuine Pilsner beer can be brewed outside of Pilsen,” the article continues, noting that US Treasury Department rulings on sardines (from Sardinia) and Malaga grapes gave their case legal precedents. The article, however, undermines their argument by itself referring to Pilsner beer as a style, not a specific product from a specific place. “It is contended that Pilsner has become by usage in the beer trade simply a descriptive title applying to beer brewed in a certain manner,” it says, noting that a local brewer “makes a specialty of brewing Pilsner beer in Brooklyn,” selling it as “Pilsner” in conjunction with the name of his brewery.

I mentioned this in an email to Garrett Oliver, author of The Brewmaster’s Table and brewmaster at Brooklyn Brewery, who noted that German brewers use the name “Pils” in order to avoid just this conflict. (And when “Pilsner” is used as the name of a German beer, it appears with an adjectival place name so it’s clear precisely where the beer is from, as in the case of Radeberger Pilsner, brewed in the Saxon town of Radeberg, just outside Dresden.)

It’s pretty clear how the US ruling from 1910 worked out, as many American beers — and indeed, beers all over the world — now call themselves “Pilsner.” Here, of course, I use the terms “Pilsner-style beer” or “Czech golden lager” when referring to brews that are not Pilsner Urquell. That is because in the Czech Republic, there is only one Pilsner, and everything else that is similar is pivo plzeňského typu, or “beer of the Pilsner type.”

In the big picture, this story is just a small historical footnote, but it does provide an interesting context to the story of Budvar’s fight with Anheuser-Busch today, as well as Pilsner Urquell’s decision to brew new beers with the same name in Russia and Poland.

Just imagine, for example, if Anheuser-Busch were somehow forced to rename their product “Budweiser-style beer.” Or imagine if every brewery in Germany produced a golden lager called “Bud,” alternately labeled something like “Radeberger Budweiser.”

It’s a weird image, I admit. As for “Czech beer,” it doesn’t seem like a bad idea to limit its use to beers that are in fact Czech, produced from 100% barley malt and Saaz hops. But labels can only do so much. If consumers don’t pay attention to how beers actually taste — buying, for example, low-quality brews ostensibly produced from high-quality ingredients — the term “Czech beer” could end up being a distinction without much difference. In many countries, that’s exactly what happened to “Pilsner.”

The great British beer writer Roger Protz has posted an update on the situation at Budvar on his blog. This echoes the news about Budvar that was posted here, but with more insight and opinion. Please read it. Now.

To me, Roger’s post shows Budvar’s firm place in the heart of beer fans outside of the Czech Republic, probably due to the easy-to-recognize David vs. Goliath story line in Budvar’s fight with America’s Anheuser-Busch over the name Budweiser. I do think that foreign beer lovers’ emotional attachment to Budvar sometimes tends to cloud their our judgment: it’s as if we are certain Anheuser-Busch is pure evil, therefore Budvar, as its opponent, must be perfectly righteous. Of course, this line of thinking would make sense only in a comic book — in real life, situations are generally more nuanced.

Roger’s been a great help to me personally, and I do agree with his basic premise. But assuming you’ve read the post, I’ll pick a few bones with it in order to present what I think is the truth about Budvar as it appears on the ground here in its home country.

Let’s start with the second paragraph:

Budvar’s success is all the more remarkable when you consider that the Czech beer market is dominated by two global giants. SABMiller, which owns Pilsner Urquell and Gambrinus, and InBev, the world’s biggest brewing group, which owns Prague Breweries, have invested massively in their brands.

It’s true that SABMiller and InBev are the two largest brewing groups in the Czech lands, but what Roger doesn’t mention is that, at least for now, Budvar is the third largest brewer in the country and growing, a full order of magnitude larger in annual production (at 1.2 million hectoliters) than a beloved independent like Bernard (156,000 hectoliters). In fact, Budvar is relatively close to InBev’s Staropramen (about 3 million hectoliters), and thus has economies of scale that small Czech brewers could only dream of.

In other words, in terms of production, Budvar is hardly getting man-handled by the “big guys.” For the real independents here, Budvar is a big guy.

To continue:

They [SABMiller and InBev] have built branded pubs and restaurants,

Yes, they have, creating the Pilsner Urquell Original Restaurants and Staropramen’s Potrefená husa franchise. But Budvar has done the same, however slowly (more on this later), launching its own line of Budvarka pubs.

and [SABMiller and InBev] have discounted their beers heavily.

This would be surprising news to anyone who lives here, as Pilsner Urquell remains the most expensive standard golden lager in the country, with Staropramen not far behind. Just about every January, Pilsner Urquell announces its latest price increase, with the InBev breweries and others then following suit. (This happens so regularly that it feels like the arrival of some weird annual holiday: Yay! It’s Pilsner Urquell Price Increase Day!)

As my colleague Max Bahnson pointed out on his excellent Pivní Filosof blog, a keg of SABMiller’s lowbrow Gambrinus is more expensive here than a keg of premium lager from a great small brewery like Klášter. Pilsner Urquell is, of course, even more expensive. You can check out wholesale prices for Czech beers at JiMi and see that Pilsner Urquell and Staropramen světlý ležák are the two most expensive 50-liter kegs on the list. How exactly are SABMiller and InBev discounting their beers by charging more?

For from being hidebound or conservative — the usual charges made against nationalised companies — it has been innovative and has introduced new brands, including the acclaimed Budvar Dark.

To be honest, Budvar practically defines hidebound and conservative, at least in Czech terms. It was extremely slow to move forward with its Budvarka pubs while Pilsner Urquell and Staropramen pushed hard in this direction. And the introduction of a dark lager can hardly count as cutting-edge: 95% of Czech consumption is Pilsner-style golden lager, while the remainder is dark lager. Coming up with a version of your country’s second most-popular beer style after 110 years is far from groundbreaking.

In the Czech Republic, there are perhaps four current beer trends: well-made non-alcoholic beers; amber (aka polotmavý, or half-dark); strong dark lagers brewed at 18° or above; and the return of wheat beers. Budvar has introduced a great non-alcoholic, hitting one out of four, and several years back it came out with Bud Super Strong, a high-alcohol golden beer. Make of that what you will; I personally like it, though I should point out that Michael Jackson called it “not what Budvar should be doing” while he was in Prague. Currently, Budvar has no wheat beer, no amber beer and no strong dark lager.

Innovative? It may be a great, historic brewery, but it is far from an innovative one.

And year after year it tops the poll in the annual awards — chosen by beer lovers — in the competition organised by the newspaper Pivni Kuryr (Beer Courier).

For me, those awards would be much more convincing if the issue of Pivní kurýr announcing the prizes didn’t include a a full-page advertisement paid for by the winner.

Actually, I’m surprised that Roger, as a member of CAMRA, doesn’t mention the awards from SPP, the Czech beer consumer’s union which is CAMRA’s counterpart in the Czech lands. SPP produces, without doubt, the most reputable of all Czech beer awards (there are about a dozen other contests, many of which are highly questionable). As Max reports on the winners of the 2007 SPP awards (in Spanish and Czech, but you’ll figure it out), Budvar picked up just one silver medal last year: second place for dark beer of the year.

That is to say Budvar got nothing for 10° or 12° golden lager of the year. And nothing in the category of half-dark beer of the year — because remember, they don’t produce one.

As I wrote before on Beer Culture and elsewhere, I think the sale of Budvar would be an unpopular political move here: most Czechs I know are proud of the brewery, and they’re glad they still own it. However, that doesn’t mean Budvar is the country’s favorite beer. The empirical evidence: repeated surveys reported by ČTK, the Czech news agency, say that Pilsner Urquell is widely considered the beer with the highest overall quality.

The allegorical evidence: I’ve spent Christmas with three Czech families over the past nine years, and last year’s dinner at my future in-laws’ was identical to all of the preceding meals. Although my fiancée’s family comes from Southern Bohemia — the same region as České Budějovice, Budvar’s home — most of the year they drink Platan, their local, independent brew. Christmas, however, is a special occasion, so they put out Pilsner Urquell.

Don’t take this the wrong way: I love Budvar. I’m rooting for Budvar. But it would just be easier to root for them if they would respond to the growing interest on the ground here and brew an amber lager, a wheat beer, a strong dark, or all of the above. And it would be even easier to be on their side if they didn’t pull stupid moves like the ridiculous marketing stunt in late 2004 by which CAMRA members denounced Pilsner Urquell, a move which completely backfired, incensing many local beer fans toward both CAMRA and Budvar. It was a nice little firestorm with underlying overtones of cultural imperialism, and as I wrote at the time, many people here were certain “that the comments of CAMRA were part of a marketing ploy by the rivals of Pilsner Urquell,” meaning the state-owned one. If you were at the meeting in Prague when the group of Czech beer lovers told the Budvar marketing representative exactly what they thought of this ploy, you’d know that not everyone here approves of the way the nation’s third-largest brewery has operated.

To be clear, I do agree with Roger’s basic premise: state-owned breweries can compete successfully with the private sector. He’s absolutely right. I just don’t think that, in Czech terms, Budvar is the best example of this. I’d rather point to a brewery like Primátor, which is gaining ground across the Czech Republic with its excellent wheat beer, its new English Pale Ale, as well as its outstanding new amber and its noteworthy line of strong lagers brewed at 16°, 21° and 24°.

With a list like that, Primátor is among the most innovative breweries in the country, and it doesn’t hurt to know that the profits go to its owner, the eastern Bohemian city of Náchod, paying for schools and roads and parks and more. In terms of innovation, responding to consumer interest, and creating goodwill, Budvar could take a lesson.

There’s a new twist in the Budvar sale story. As most readers of these pages are probably already well aware, Budějovický Budvar (pictured above) is the last brewery to remain Czech national property and its privatization seems to be proposed about every two years. Due to Budvar’s claim to the name Budweiser and its numerous ongoing legal battles with Anheuser-Busch on the issue, many argue that Budvar should not ever be privatized, lest it be bought by the maker of American Budweiser and shuttered — or worse, forced to brew bad beer.

Last month I mentioned that the current Czech government has announced a tender for its legal advisor in the sale of Budvar — a first step toward privatization. Yesterday, Forbes reported that the proposed sale of Budvar will not take place before the current government leaves office in 2010, contrary to what was suggested in December.

In this story, Czech Agriculture Minister Petr Gandalovič is quoted as saying that the sale won’t take place in 2008, but it’s “still a question” if the sale will take place in 2009, the first half of which is scheduled for the Czech Republic to hold the EU presidency. (2010, of course, will be dedicated to the national elections. Budvar might or might not be the country’s favorite beer, but many, many people here do take pride in the brewery and its history, and selling off a prized possession could end up being a very unpopular issue with voters. There’s a reason governments tend to do things like this right after they get into office, not right before elections.)

However, follow-up reports in today’s Lidové noviny and Hospodářské noviny newspapers confirm that the sale will be left to the next government. As Prague Daily Monitor’s English-language Czech press review explains, Gandalovič said his ministry plans only to transform the company into a joint-stock company in preparation of future privatization. For now, the joint-stock conversion is no big deal, as the Czech government will still own 100% of the stock. What happens after the elections of 2010 is up in the air.

Incidentally, Budvar is currently doing very well indeed: Budvar’s production climbed 8.7% in 2007, according to CNNMoney. Domestic sales climbed by 11% and exports rose 5.8% to 587,000 hectoliters, the highest export figure yet, aided in part due to an agreement last year by which, ironically, Anheuser-Busch began to distribute Budvar in the United States, though only under Budvar’s alternate name of Czechvar.

Yeah right, sell it off. If Budvar would only deign to add a polotmavý and a wheat beer to its excellent lineup, it just might take over the world.

A few months ago, a friend mentioned that when he was just starting out as a young lawyer in the mid-1990s, he did some work at a law firm here in Prague. One of his projects back then was the contract for a possible sale of Budějovický Budvar to Anheuser-Busch.

That sale never went through, of course, and Budvar and Anheuser-Busch maintain a “frenemy” relationship today, entering into distribution deals for Budvar (only under its “Czechvar” pseudonym) in the United States while continuing international legal battles over the name “Budweiser.”

But talk of Budvar’s sale (subscription required) has returned, as the Prague Daily Monitor news desk reports, via Hospodářské noviny.

This time, it looks like things really are going forward. First up is a tender in January to decide which of three firms will serve as the Czech government’s advisor for the conversion of state-owned Budvar into a joint-stock company — the initial step toward a sale.

Since the advisor has yet to be chosen, it’s hard to guess how this will play out. Initially, the Czech government will hold 100% of the shares. After that, you’ll have to grab your Magic 8-Ball. Will the Czech government maintain a stake and a say in what goes on, just as the German state of Niedersachsen does with Volkswagen? Will the whole thing be sold off in one fell swoop? Or will they make it a publicly traded brewer, like InBev or Sam Adams?

The only thing we know for sure is that the current government hopes to privatize Budvar before its term is up in 2010. Heineken is currently on a buying streak here, picking up Krušovice earlier this year and reportedly in negotiations for the four breweries from Drinks Union (Zlatopramen, Louny, Dačický and Březňák). In fact, given its $9.6 million net profit in 2006 and strong sales growth internationally, I’m sure many groups would love to get their hands on a plum like Budvar. But given its American distribution deal and the, um, affinity for the name, the most likely buyer simply has to be Anheuser-Busch.

Yes, I know that sounds like sacrilege to many beer fans. But if Budvar is privatized, can you imagine that anyone other than Anheuser-Busch would end up owning it? And does anyone out there consider for a second that maybe, just maybe, this might be a good thing — and not only in terms of the reduced legal fees for both companies?

To put it another way, if you were advising the Czech government on the privatization of Budvar, what would you do?

Both reasoned answers and nonsensical howls are welcome in the comments.