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. Last Updated: 07/27/2016

Czech Budweiser Thrives Despite Trademark Feud

CESKE BUDEJOVICE, Czech Republic -- The sun has yet to rise over the hills of southern Bohemia and Josef Tolar is already hard at work - drinking his first beer of the day.

By the time he knocks off, the head brewmaster at Budejovicky Budvar has taste-tested as much as a quart of one of the Czech Republic's most popular exports.

Budejovicky Budvar is a rarity in the post-communist Czech economy: a successful state-owned business with a proven ability to compete in international markets.

The company has almost tripled its sales since the Czechs gained independence from the Soviet Union in 1989, and it claims a 35 percent share of total beer exports from a country renowned for its strong, bitter-tasting lagers.

Budejovicky - known also by its German name, Budweiser - is now sold in 56 countries.

"We're prepared for competition," Tolar says. "We're not standing aside in the corner."

No one knows this better than Anheuser-Busch Cos., the largest U.S. brewer and home to the other - American - Budweiser. The two companies have been squaring off over use of the brand name since 1911.

Unlike its main domestic competitors, Budejovicky Budvar has flourished in the post-communist era without selling a stake to private investors.

While state ownership is more closely associated with the country's inefficient industrial conglomerates, Budejovicky Budvar stands out for its good management and high degree of independence.

General director Jiri Bocek declines to give financial details, but insists Budejovicky Budvar is profitable.

Yet on a global scale, the firm is still tiny. Anheuser-Busch produced 12.6 billion liters of beer in 1998, 100 times the Czech company's output.

"They are huge," Bocek says. "We are original."

Anheuser-Busch says it registered the Budweiser trademark in the U.S. in 1878, 19 years before the Czech brewery formally adopted the same name.

Bocek counters that the name Budweiser refers to a specific location - the town of Budweis, which is the German name for Ceske Budejovice. Residents have been brewing here since 1265, and their beer was known centuries ago as Budweiser.

Talks aimed at a global settlement of the trademark dispute ended in failure in 1994, and the two competitors are embroiled in 60 lawsuits across Europe.

Tolar recalls feeling "some emotion" the first time he saw bottles of the competing brands displayed side by side in a shop in Britain, one of the few countries where both companies can sell their beer under the Budweiser name. "I have never thrown cans of Anheuser-Busch off the shelf," he says with a grin.

Bocek, too, claims to harbor no personal grudge against his American adversaries. To underscore his argument, one need only to look at the somewhat surprising display on one of the tables in his office: On it sits a pewter silver model of eight Clydesdale horses, pulling an Anheuser-Busch beer wagon.