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Interview with Doug Brodman, Managing Director of Plzeňský Prazdroj

Doug Brodman is CEO and Chairman of the Board of Plzensky Prazdroj, a SABMiller Plc. Company. His professional CV represents about thirty years of experience in the beer business, building brands, and sales in general. In 1999 Doug Brodman joined The Miller Brewing Company which is a part of the global SABMiller brewing company operating on the U. S. market. Since 2006, Doug has headed up Miller Brewing International. Prior to these roles, Doug was Senior Vice President of Sales & Distribution at The Miller Brewing Company.

“I moved to the Czech Republic to develop Pilsner Urquell as a global respected brand and to help figure out how to develop a market that is fairly mature. In our business, mature markets are a pretty prevalent thing all around the globe. Having the skills to develop these types of markets therefore becomes an important skill to have. That is why it was so important to have here someone who had those skills and capabilities.”

Pilsner Urquell as a globally respected brand

When entering the Plzeňský Prazdroj in 1999, SABMiller was merging a modern brewery with a traditional local brand. The original company was still emerging from the era of state-ownership. Over the first ten years, SABMiller invested over CZK 17 billion in infrastructure. “That was the most essential thing we did. It proved to our employees and community that we were committed to the beer, and to making it at the highest quality possible.  And they, in turn, committed to us to make the best beer on the Czech market.”

Within four years after acquiring the brewery, SABMiller had determined that Pilsner Urquell would become one of its flagship brands. It has been developing this brand worldwide. It is now in 50 countries around the world, with the largest penetration in Europe, of course.

“To become such a brand, Pilsner Urquell had a unique proposition. The beer was the original Pilsner, and, of course, had a unique brewing style that makes it probably the most balanced beer in the world, with a high hop content but a smooth drinkability. It is a characteristic that no other beer really has. This is what we thought we could sell all around the world.”

Pushing Pilsner Urquell into the West

“With beer, you have two things you look at: how do you present the beer on tap and how do you present the beer to the retail market. In other words, we had to establish a single serving ritual for the draft beer in every market, and a unique packaging of beer for sales in a store. You want to have a clear consistent message.”

At the same time, SABMiller needed to build the global marketing for the brand.  It invested heavily in this area as well. “Doing this, you need to build up what you could call the people side of the business. We had to create clear roles and career paths so that people could see their own future inside the company. Now we have quite a few good and talented people in the mid-thirties who have been working for the company for fifteen or so years, so I think we have been able to achieve this.”

Getting Pilsner Urquell outside its traditional market is being done a pub at a time. Brewers from Prazdroj ad salesmen from SABMiller need to explain to people how special this beer is. It helps that it is the original beer of its type; that is an incentive for drinkers to try it. “Our greatest spokespeople are the bartenders. I have been really impressed with the passion these individuals have for the beer, and how much they know about the history of the beer. We are supplementing this interest with education programs on the brewing process, and how it should be poured, and all of this is creating a very appealing story around the beer.”

Big Beer in a Small Niche

“In the Czech Republic, Pilsner Urquell is a powerhouse brand. It is the best and it is one of the biggest. In other markets, for instance in the US, it has an entirely different face. It is competing more against the microbreweries than the major brands.  This forces us to use a different type of marketing.” They have to focus more on the unique brewing process, about the craft of making the beer. But Prazdroj does not have to manufacture any fiction: Pilsner Urquell does have a very special brewing process. “We are truly unique in that we combine a unique brewing process more associated with craft brewing with a massive production scale. It gives a great advantage if we can explain it to the customer.”

Attracting the modern people to more enjoyable pubs

“We are living in the era of easy electronic entertainment and communication, and it makes it much easier for people to enjoy their lives without going outside their homes. We are trying to counter that by modernizing the pub culture, by making it easier for families to go to pubs, and by getting a true understanding of hospitality in the pub culture.”

That’s why Prazdroj wants to make the experience of having its beer in a pub more enjoyable. Delivering to approximately 25,000 on-trade (pubs, bars, restaurants) customers, Prazdroj strives to work with those publicans to make the atmosphere livelier, more entertaining, more of an experience.

“Now we have five different branded concepts associated with a specific beer brand – Pilsner Urquell, Gambrinus, Radegast, Velkopopovický Kozel. We are working with entrepreneurs to develop the concepts. It is becoming quite clear that we are offering something that people really wanted.” Every new pub that has opened under this concept has done double the amount of business of a standard pub.

This experience contradicts the argument that the only thing that works is an extremely price sensitive product. People will pay more for a better experience. It is just that the experience really has to be better.

“Of course, it requires a big investment in these branding pubs. While we are working with individual entrepreneurs to make sure each pub is unique, we are doing most of the concept, including architectural design, in-house so that everything stays in line with our vision of the brand. We have 30 on the market now, and have 15 more on the drawing board this year.”

Ambitions and 2020 vision

“We are here to create a portfolio of (not only beer) brands that Czech consumers will want to enjoy. Therefore, innovating within our category is very critical to us, because it is how we will make more people interesting in our slice of the market.  This year, 10% of our revenues came from innovations. Three years ago it was zero. “

Prazdroj plans to extend its category beyond the lager by introducing novelties and specialties. Brewers from Plzeň conclude the public is prepared for Plzeňský Prazdroj to make also something other than Pilsner Urquell, and they think putting Plzeňský Prazdroj on the label will be a guarantee of quality in the eyes of the customer. “This is the way that we can move along with the trend of local brewing while keeping our primary brands strong and distinctive.”

What clue gives Prazdroj study of where the market will be in 2020?. A smoking ban will put a crimp in the market, maybe even provoke a downturn in public consumption, but then it will start growing again. The market will be much more segmented, with more specialties, with a renaissance of craft beer. The brands that have heritage and quality will have an advantage if they invest in them.

“We do not see much room for another big brand, but we see a multitude of opportunities for smaller ones. How fast this market will grow will be dependent on how well we can convince Czech consumers to try new tastes. We think our brand reputation will help open their minds and mouths. We just have to make sure that once they do decide to drink it, its quality will make them want to experiment even more. “