Czech mate

John Harley, CEO of Budweiser Budvar UK, is prepared to spend many hours in the pub in order to understand his customers. And it’s paying off, too, says Chris Orr

THE DOORS slide open and I step forward into the reception area.  "Hello, I have an appointment with John Harley, CEO of Budweiser Budvar UK."  "You’ll find him in his office," says the receptionist.

"Take the lift back to the bottom of the building, exit the doors and head straight over the road to the pub opposite. You can’t miss him.  He looks like George Clooney and he’s with the marketing director – he looks more like Colin Farrell."

It shouldn’t come as a surprise to find the head of one of Britain’s fastest growing beer brands in a pub. (Or that he doesn’t actually look like George Clooney).  As Harley himself points out, "Selling beer is all about these establishments – you have to know them and you have to be prepared to spend a lot of your life in places like this if you want to get to know your customers." Judging from the latest ACNielsen figures, Harley does know his customers, or at the very least, how to reach more of them.

The brand saw sales growth last year of 47% in the 330ml bottle format, and 56% in sales of draught in the on-trade; growth that helped it jump more than 10  places in Nielsen’s Top 200 brands in the ontrade report, going from the 81-90 band, up to the 71-80 brands.

All this despite having a marketing budget of just £1.5m – a paltry amount compared to the competition such as Anheuser Busch’s Budweiser and the likes of Stella Artois or Grolsch. That’s not a lot to spend on advertising is it? "Er, that’s not just advertising, that’s the lot.

Events, PR, all of it," explains Harley.  "We do achieve an enormous amount on our budget, however.  We do practically everything in-house, with a very small team – that’s me, my marketing manager and public relations controller.

It puts us under an enormous amount of pressure sometimes, but it also makes us enormously flexible when it comes to new opportunities as they arise.  There’s no cumbersome chain of command, endless meetings and all the other rubbish with which some organisations seem to clutter themselves. I think the result is that we box, very successfully, above our weight."

But doesn’t it make it difficult to compete with bigger brands? "Look," says Harley, "I don’t visualise our growth going on like this year after year.  To be frank, we are now in our third year of operations [Budweiser Budvar UK], and there has been a lot of slack to take up.

In fact we wouldn’t want that sort of growth to continue because in doing so I feel we would probably lose the magic of the brand. We’d become like any other mainstream leviathan, kept afloat by burning millions on gallons of marketing hype."

If there’s one thing that becomes clear talking to Harley it’s that he is quite happy to call a spade a spade – particularly when it involves the competition.  "Everybody knows that the beer market as a generic is in decline.  With the exception, that is, of our kind of brand. 

This is the reason that practically all the other major brewers are now tearing around like headless chickens, trying to find a specialist niche beer for their sickly portfolios. Frankly," says a merciless Harley, "they’ve only got themselves to blame for creating this situation.

For instance, the increase in price differences between the onand off-trades with certain brands may well be giving a lot of drinkers the sense of being ripped off.  Ever increasing prices in the ontrade are making drinkers more concerned about getting value for their money and this is another reason why more of them are turning to authentic imported beers like Budvar, beers that have a genuine provenance."

It’s a trend Harley sees growing as life gets increasingly tough for the big players.  "I think this year we are going to see some mainstream and premium brands finding it harder to claw back the returns they have calculated from their investments in megasponsorship deals.

It’s not solely to do with the beer industry, but with the drinks industry in general.  The legislative climate is pretty hostile at the moment and likely to get worse. Actually, in some of its manifestations it is likely to favour brands like us as opposed to the big boys.

The clampdown on on-trade promotions, for instance, that are aimed at the drinker will have the effect of putting more brands on a more level playing field.  The curtailment of these seductive price inducements means more and more drinkers will be looking for value for money.

"Without wishing to sound goody-two-shoes, we pride ourselves on taking a responsible attitude to the question of drinking.  We have sponsored Pub Watch activities, and when we launched Bud Premier Select, with an ABV of 7.6%, we decided, despite a lot of interest from on-trade customers, to keep it essentially an off-trade product – something to be drunk by consenting adults within the confines of their own home."

The latter, of course, exists thanks in the main to the Law Lords of Great Britain.  While Harley’s parent company, Ceske Budejovice, is still in litigation with Anheuser Busch over the legality of the two trademarks existing side by side, the UK’s eminently sensible Law Lords have ruled that the two brands can co-exist alongside each other.

They have also ruled that Budweiser Budvar UK can use the term Bud in the UK. That’s a little bit like Pepsi being able to use the strapline "Treat yourself to a coke", surely? "Well, the Law Lords are good enough for me," comments Harley, though it’s clearly difficult for him to keep a wide grin from creeping across his face.

"The reason they’ve ruled that the brands can co-exist is because the two beers are distinctly different, and at Budvar UK we are constantly banging on about those differences.  The result is that there is a high level of understanding with consumers and the trade about what the differences are.

"At the end of the day, what you’ve got to remember is that the consumer is not stupid.  They choose a product like Budweiser Budvar because they know what it stands for.  What it represents."

The other day, explains Harley, he was nterviewed by CNN. The New York Mets were defending their right to use the New York Mets logo in the UK, in the face of a suit from the UK Meteorological office, claiming it owned the trademark to the term Met in the UK.

The news channel wanted to talk to others involved in such complex trademark cases, and Budweiser Budvar was an obvious one to go for.  "They asked me a very straightforward question: how do two Budweisers get on in the UK? And I gave them a very honest answer, which was that, in all honesty, it would be a shame if Anheuser lost the right to use the brand in the UK, and it be would a great shame if we lost the right to use the brand in the UK.

Our two brands overlap only very, very marginally. We can co-exist, we are very different.  I don’t have a problem with that and I certainly don’t think the consumer does either."  Harley is pretty big on giving the consumer his own head.

"Well, we’re sitting in a pub talking about this, because that’s who my customer is and where my consumers drink my product in the main.  It’s important to understand what makes them do that, and that not everyone conforms to a single stereotype."

He also believes they are far more intelligent than most people give them credit for. "I do think that, generally, most consumers can make informed decisions.  And I think we are seeing increased growth in part because they are making a decision against the big brands.

 I think there is a move towards anti-globalisation across all product levels. A good proportion of consumers want a product that comes from source, not one that is brewed by licence in different countries across the world."

The question is, however, how long can Budweiser Budvar resist globalisation? Every year the Czech government comes under more pressure to create additional funds for an increasingly cash-strapped parliament.

The queue to buy the national brewery is a long one and, up until now, it’s only escaped by the narrowest of margins, thanks to protests from the Czech people, and hard lobbying within the parliament by pressure groups against the privatisation process.

Even the British group, CAMRA, has added its considerable support to the campaign.  Harley is surprisingly diplomatic: "I am not privy in any way to what goes on between our brewery and its owners, the Ministry of Agriculture.

I can only tell you that as recently as a few weeks ago a Czech government spokesman, discussing government-owned enterprises to be privatised, stated quite categorically, without any equivocation, that the brewery will not be privatised at this time."

At this time? Does that mean Harley and the Czech government think it will happen some time, that it is inevitable? "Well, in my opinion it is not likely to be until the trademark issue is resolved [internationally] but then, of course, talking in a general philosophical sense, anything might happen."

He stares for a second into the middle distance and smiles.  "I don’t really worry about it because it involves issues over which I have no control."  That is the essence of Harley.

He doesn’t strike one as a time waster, as one given to wondering what might have been. If he can affect something he will. If it’s in his control, it gets done; if not, then it’s someone else’s problem.

And given the small team and tight budget the UK office has to work with, that’s probably the best attitude one could have.  Talking to Harley, its clear he’s passionate about the subject of beer in general, even going so far as to claim it can be more complex and diverse than wine. It’s also clear that he is a Budvar man through and through.

His first job in the drinks trade was with the now defunct Marsh’s, where he worked – surprise, surprise – selling Budvar to pubs and bars.  That was more than 18 years ago.

So enthusiastic is he about his subject matter, that you can almost imagine him sitting in class telling all the other children at school that he wanted to be the head of a brewery company, preferably Czech.

"Actually, no," says Harley, "I always wanted to be an astronaut." Really? "Yep, although, in actual fact, it was as a small child that I first came into contact with the brewery industry.  On holiday one year my father entered me as a bottle of Double Diamond in a kids’ fancy dress competition. I won and he got free beer for the rest of the holiday. 

I have often pondered why it was a kids’ fancy dress competition, and yet there was nothing in winning it for me – only my dad?" Harley looks momentarily perplexed, then orders another round of Budvar.

Being dressed as a bottle of Double Diamond clearly wasn’t in his control.  Boosting the profits and potential of Budwieser Budvar clearly are.

Curriculum Vitae

1980 – Journalist (Westminster Press)

1983 – South Africa (working inindustrial electrics industry)

1985 – Moves back to UK and joined the drinks industry for the first time at Marsh’s (wholesaler, now defunct)

1987 – Joined Carlsberg

1991 – Joined Cabana Soft Drinks

1998 – Joined HB Clark & Co.,Wakefield

2000 – Joined BB Supply Centre, in charge of marketing (for Budweiser Budvar)

2002 – Appointed CEO and set up Budweiser Budvar UK Limited