I spotted this on The Prague Post's website at
http://www.praguepost.com/P03/2003/Art/1030/busi1.php
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Beer there
Breweries continue to emphasize exports and licensed production
abroad, say local market is saturated.

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.