Czech Republic: Prazdroj asks competing brewers for support on incentives

In its second attempt to gain state investment incentives, brewing group Plzeňský Prazdroj enlisted help from the Czech Beer and Malt Association (ČSPAS) board of directors, which agreed to ask all its members if they would sign a letter of support for Prazdroj’s incentive application. Michal Kačena, Prazdroj’s director of corporate affairs, confirmed the news for Czech Business Weekly on February 17.

Now in the second phase of negotiations with the Ministry for Industry and Trade regarding criteria that must be fulfilled to receive incentives, Prazdroj needs to demonstrate that despite the company’s almost 50-percent market share, other brewers don’t object to Prazdroj receiving incentives.

ČSPAS will discuss the issue at its next meeting at the beginning of March and should the association decide not to proceed further, a move that Prazdroj anticipates, Kačena said, the brewer will consider this issue closed.

This is Prazdroj’s second attempt for incentives; the anti-monopoly office (ÚOHS) ruled more than a year ago that Prazdroj wasn’t eligible for the support, citing its near dominant position. To date no investment incentives have been awarded to the brewing industry, and Prazdroj argues that doing so now would benefit the entire industry, not just the one brewer.

Most ČSPAS members don’t agree with Prazdroj’s use of the association to promote its own agenda and say the move is disturbing. Several ČSPAS insiders, speaking on condition of anonymity, told CBW that Prazdroj’s lobbying efforts could potentially lead to a deadlock — or worse — at the organization.

František Krakeš, managing director at Moravian brewery Starobrno and ČSPAS chairman, said the majority of ČSPAS members don’t agree with the proposed letter of support for Prazdroj.
Jiří Fusek, owner of Pivovar Černá Hora and president of the Czech Association of Small and Independent Brewers (ČSMNP), said that meeting Prazdroj’s request wouldn’t benefit other brewers. It doesn’t make sense to support Prazdroj’s drive for incentives when it already has a commanding market share — and access to foreign capital; “It will only give them more room to eliminate the competition,” he said. “We say no.”

Pavel Gregorič, managing director of Královský pivovar Krušovice, said investment incentives concern just one company, and therefore ČSPAS members shouldn’t become involved.
Kačena said that ČSPAS, on Prazdroj’s request, is also trying to use this opportunity to draw the government’s attention to the long-term “underinvestment” in the area of beer technology and the regeneration of hops fields.

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