Budvar’s Struggle: A Look into the Decline in Profits

Budějovický Budvar, a Czech brewery known for producing Budweiser Budvar beer, has seen a significant decline in profits over the past year. The company’s pre-tax profits fell by 39.5% to 255.8 million Czech korunas, with revenue from sales of products and services decreasing by just under 3% to 3.03 billion Czech korunas. This decline in profits has been attributed to several factors, including the effects of the war in Ukraine, the halt in exports to Russia, and the impacts of inflation.

Despite these challenges, Budvar has partially compensated for the loss in revenue. The company’s director, Petr Dvořák, stated that he was “pleased” with the company’s performance in what he called an “extraordinary” year. “We managed to compensate for this loss in volume and revenue to a significant extent,” he said.

Budvar also had to deal with the effects of rising energy, fuel, and packaging costs, which negatively impacted over 250 million Czech korunas on the company’s profits after tax. Despite these challenges, the company has continued progressing in production and sales. It has plans to increase revenue to over three billion Czech korunas this year.

One of the most significant factors in Budvar’s declining profits was the halt in exports to Russia. After the war in Ukraine began, the company was forced to stop exporting to Russia, one of its five main export markets. The other four markets include Germany, Poland, Slovakia, and the UK. However, Budvar has partially compensated for this loss in revenue by selling its new non-alcoholic beer, BirGo, produced in collaboration with Mattoni.

Another factor contributing to Budvar’s declining profits is the rising costs of energy and fuel, which have been affected by the war in Ukraine. These costs have led to increased inflation, negatively impacting the prices of raw materials and products necessary for production.

Despite these challenges, Budvar has remained committed to its production and sales goals. The company’s export volume decreased by 3.8% to 1.27 million hectoliters last year, and exported 71.5% of its production. However, Budvar plans to export over 1.3 million hectoliters of beer in 2023 and has already sold over 90,000 hectoliters in the UK alone.