One man who probably more than anyone else can claim to represent one of the Czech Republic’s biggest success stories ― beer ― is Jan Veselý, general director of the Czech Beer and Malt Association. The association groups the biggest Czech breweries and hop producers. In today’s programme, Mr. Veselý talks about the massive changes he has witnessed in the industry which had moved from the planned economy to privatization and the take off of micro-breweries.
I met up with Jan Veselý in the Beer and Malt Association’s central Prague headquarters above its own micro-brewery and restaurant which serves a selection of special beers brewed on the premises. It was through these doors that Mr. Veselý, trained in economics, accounting and finance, came in the late 1970s not really knowing what he was letting himself in for or suspecting how long he would stay. I asked him how he came to start in the brewing industry.
“It was by chance, as usually happens in life. I was simply found by some head hunters because in the former Socialist times there was a pyramid model of organisation in every industry: the beer industry, sugar industry, poultry and meat industry and so on. It was organised pyramidically with one headquarters. And the headquarters ruling the beer business was seeking a head of the finance department. And I simply came in. When I was addressed by the directors, I did not know it was brewing. I just thought it was some nutritional beverage industry. It was very anonymous. I came to this very building where we are sitting now. And I remember that time very well. I still remember that feeling. It was the first or second of January, at the beginning of the year, and I was feeling enthusiastic. And there was some special atmosphere here. And since that time I have enjoyed it and I have never even had a second when I felt uncomfortable. I am still as happy as I was 33 years ago because this is a special industry. I can feel that at a pan-European level and global level but it is even more special in this country where it is something like a religion.”
“You know, at that time there were Marxist economic theories being practiced. So development priorities were for heavy industry, the chemical industry, nuclear energy and so on. And all of the national resources were focused there. And beer was a Cinderella, the capital investment was extremely poor. And so I have to say that the beer industry at this time between the 1970’s and 1980’s was in a very poor technical shape. There were some 95-97 breweries hardly surviving. There were old fashioned old brew houses, no stainless steel, you know. Every brew master was some of magician just to keep the ball rolling. It was not so easy.
“As for the technical shape it was poor with some exceptions. There were two or three breweries that were privileged: Pilsner Urquell and Budweiser Budvar and that was all. That was the first feature, the very bad technical shape. The second factor was that distribution of beer was not sales, it was not a commercial activity, it was not marketing. It was just basic distribution. Only six breweries with six brands had the chance to be national brands with national distribution. It was Pilsner Urquell, Budweiser Budvar, Gambrinus, Staropramen in Prague, Velkopopovický Kozel near Prague and Radegast in northern Moravia. Just these six brands. It was also politically controlled. The regional organisation of the Communist Party before Christmas; before Easter, because of May 1st and May 9th being national liberation day; and on October 21st, the anniversary of the founding of Czechoslovakia, gave orders that the working class must have beer. And there were meetings and the directors would say ‘Yes, we have prepared all the beer. Yes, we have prepared all the rolls…’ It was politically controlled and extremely closely watched.”
After the Communist regime ended, you were soon afterwards involved in the privatisation of breweries. Looking back on that period, have you got any regrets about some of the breweries that disappeared and do you think that the overall trend of privatisation was a good thing?
“You know that in 1900 there were about 1,000 breweries here. At the time of the Velvet Revolution in 1989 it was about 97. The process of concentration has been going on for centuries. It is just a trend, it had to happen. It would have happened if there had bee no political changes. Regret, that is hard to say. I must say that the beer business in this country is not only surviving, it is blossoming and expanding. And it is only in the last two years, this year and in 2009, that there has been a decline in consumption because of the crisis and so on. But up to 2008 it was constant increase and updating technical equipment or whatever. Secondly, there has been a huge increase in exports. We increased exports threefold since the revolution.
“But it was all connected with a continuing concentration. There were, I would say, around 97 breweries. Now there are about 47, 50 breweries disappeared. You know it was a difficult period after the revolution. Everything was new, all that pyramid system disappeared. Every brewery was relatively independent but brewery directors were fermentation chemists. The directors of the meat industry were butchers and so on. So they had no experience in law, in economics, in financing or licensing or whatever. And they started to invest because everything was easy. There were representatives from the West and they said you can buy this and that because the field was wide open for investment.
“Sometimes a lot of breweries died because of overinvestment. They died because of a lack of cash flow, it was sudden death. It simply happened. It was not because of any commercial disaster or bad policies, no. All of the breweries could have survived but there were fatal mistakes, not in brewing but in all the other complex of activities that brewers were not prepared for. But still, all the other breweries were expanding, getting better and now, in the last five or six years, the number of industrial breweries has practically stabilised and the pub, small gastronomic breweries are increasing. That is a rocketing trend. In 1990 there was only one microbrewery, U Fleků, which had been running for about 400-500 years. Now there are about 100 outlets of that type.”
In the restaurant down below they have some rather special beers; banana, cheery…
Nettle …and other special flavours. Are those still beers?
“Yes, sure they are. Beer is a very wide product. Knowledge of fermentation and brewing started about 6,000 years ago in Mesopotamia. I have known the people working in the brewery downstairs for the last 30 years. And every time they come up with a new special beer I test it.”
The episode featured today was first broadcast on November 15, 2010.
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