The Czechs are the biggest beer drinkers on earth, as beer costs less than bottled water or Coca-Cola. The nation that gave the world the term "pilsner" beer from the western Czech city of Pilsen, brews well-known beers such as Budvar Budweiser and Pilsner Urquell, Reuters said in a statement. Beer is not only cheap, the Czechs say it is also very good. About 10 million Czechs on average drink 160 litres per head per year -- that's nearly half a litre for every man, woman and child every day.

But one thing that Czechs do not want is to pay more for the nation's favourite drink. The problem for the biggest Czech brewer, Plzensky Prazdroj, which is owned by the world's number two brewer SABMiller Plc, is how to get people to pay more for their famous brews and make its brewing more profitable, Reuters said.

The country is a key area for the brewer of Castle and Miller beers -- the fifth largest national profit earner after South Africa, the U.S., China and Poland. Its managing director, Steve Woodward, admits that the Czechs have little capacity to be able to drink more beer and expects the 16-million-hectolitre market to contract in volume terms by one percent a year. "We've got good beer, low prices and no inclination for the consumer to pay more. Brewers here mess with the beer price at their peril," said Woodward on Friday at the Pilsen brewery, some 120 kilometres west of Prague and one of its three breweries. Woodward's plan is to increase revenues 3% a year by raising market share and boosting exports. Price rises also may become easier with Czech accession to the European Union in May 2004. He has made a good start with market share. Since 1999, when SABMiller bought the brewer, its national share has risen to 47 % from 43 % on the back of the country's two leading brands, Gambrinus and Radegast. He is now looking to boost exports of its premium brand, Pilsner Urquell, particularly to Britain, the U.S. and Germany. The plan includes investing $10 million to boost Pilsner Urquell production at the Pilsen brewery to five million hectolitres from 1.5 million currently, with most of that increase destined for export. Currently half of the brewery's Pilsner Urquell output goes abroad.

Belgium's Interbrew bought control of Prazske Pivovary in 2000, giving it the Staropramen brewery in the capital and a market share of 14.5%. Heineken has built a 4% share helped by its BBAG acquisition this year. The number three player with a 6.7% share is state-owned Budejovichy Budvar, a maker of Budweiser beer and brand rival of U.S. giant Anheuser-Busch. Budvar is seen as an attractive takeover candidate for an international brewer, especially Anheuser-Busch, to stop a constant flow of litigation with its smaller Czech rival over who can sell beer as the real Budweiser. But the Czech finance ministry has said a sale is off the agenda until at least 2006.

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