Prazdroj sues K Brewery over name

In the latest round of an ongoing copyright fight, Plzeňský Prazdroj (PP), the company that produces Pilsner Urquell, is now suing K Brewery and a subsidiary, while competitive pressure in the beer market tightens as consumption numbers drop.

The suit will be heard in court Nov. 25, and is the latest effort by PP to stop K Brewery and subsidiary Pivovar Janáček brewery from using the "Prima" name for a brand of their beer, which PP says is too similar to their "Primus" brand. In a copyright infringement suit last year, both the municipal court, and later the high court under appeal, ruled that the name and packaging of the beers was different enough.

PP is asking the court to prohibit K Brewery from "storing, distributing and selling the beer packaged in 0.5 L bottles" carrying the "Prima" name, according to a statement from the company provided by PP corporate brand manager Vladimir Jurina. The company believes the similarities don't end with the name but include the color, font and angle of the letters on the label. 

"PP has been using the Primus trademark on a massive scale," the statement said. "The massive use has [created] awareness of the Primus brand among consumers; therefore, PP appeals for the protection of the Primus brand's reputation."

Barbora Burešová, a spokeswoman for K Brewery, said the company would not comment on the suit.

The series of efforts by PP to battle K Brewery coincides with bitter competition on the Czech beer market as bigger companies see a significant drop in consumption while smaller, more specialty breweries are reaping increasing profits.

"Beer consumption is decreasing, so of course breweries tend to defend their positions on the market," Jan Veselý, head of the Czech Beer and Malt Association said. "And our market has always been competitive; now the pressure rises, and competition is tougher."

The chasm between the larger and smaller breweries was already evident in June, when K Brewery's subsidiaries withdrew from the Czech Beer and Malt Association because of aggressive advertising campaigns from larger international brewery conglomerates, as well as PP, as reported by The Prague Post.

Overall Czech beer production is down 12 percent in 2010, Veselý said, after dropping 6 percent in 2009 due to decreased consumer spending paired with higher beer prices caused by value-added tax (VAT), which has gone up 33 percent this year.

"To illustrate the beer cost, for example, you have a 3.90 Kč beer, and the VAT would be 1.9 Kč, and it would be 2 Kč for the beer," Veselý said. "Czech breweries refuse to produce such awful beers because with this price, you cannot use proper ingredients. It is being produced in countries with incomparable beer traditions that use improper ingredients," Veselý said, adding that cheap imports from countries like Poland had doubled.

But smaller breweries have remained virtually untouched, like those of K Brewery and the Svijany and Bernard breweries, Veselý said.

"I am surprised that the decline in consumption takes place with 10° beers - that shows the crisis hit the people with lower incomes," he said. "The more expensive 11° and 12° beers still have the same amount of consumers, so there is a group of people untouched by the crisis consuming the same amount of beers."

PP, which is the largest brewery in the country, saw revenue drop 2.5 percent in 2010, to 15.411 billion Kč from 15.840 billion Kč in 2009, according to company financial statements, which they cited as the result of the VAT increase and rising unemployment.

At the same time, K brewery production increased about 7 percent to 900,000 hectoliters of beer, up from 850,000 last year, Burešová said, but would not reveal profit levels because she said it was against company policy. K Brewery, a conglomerate of six breweries in the country that make it the largest Czech-owned brewing group, actually raised their prices for some of their beer by around 5 percent starting Oct. 1, according to a statement on their website.

"Consumers are moving away from products produced by multinational breweries in preference for beer produced by smaller, regional breweries," Burešová said. "The unfavorable economic situation probably contributed to this - the growing crisis in general increases peoples' patriotism for products from their region. It also causes people to consider quality versus price."

Primátor is another small brewery that has flourished during the crisis, according to Jiří Holubář, a sales manager there.

"We have fully accomplished our sales, which we managed by the introduction of a new 11° lager last year by our business team," Holubář said. "This helped stabilize the sales."

Holubář said the secret to their success was in the sentiments of the market for more local, specialty beer, but also in their ability to keep prices comparatively low for the type of beer they are producing.

 "Many of the Czech consumers go back to the tradition of regional beers consumption - because of its quality with stabilized ingredients," Holubář said.

- Klára Jiřičná contributed to this report.

Cat Contiguglia can be reached at
ccontiguglia@praguepost.com